Economic Analysis of AB Oil Project
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Hans SamEconomic Analysis of AB Oil Project
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Hans SamBrief Description of the Problem
Tronoh Oil Company is evaluating the investment opportunity by the oil field AB. Since
the company is confident that the field contains productive capacity, they will pursue the project.
However, there are two concerns regarding the proposal. First concern is the distribution system
(pipeline) in which the options are (1) make use of the existing pipeline (capacity is 20 Mbopd)
and just construct a 60 km pipeline and tap it to the existing and (2) construct the whole 1060 km
pipeline (costing is provided below).
Second concern is the price. The oil price cannot be controlled, so first option is to have it
$60/bbl until the last year of production or second, $60/bbl on the first year of production and
$65/bbl on the succeeding years until end of production.
Table 1 – Production Forecast
Year Production Rate, Production Rate, Production Rate, MBOPD
MBOPD MBOPD (Max)
(Min) (Most-likely)
2017 16 20 24
2018 16 20 24
2019 28 35 42
2020 28 35 42
2021 28 35 42
2022 28 35 42
2023 25 31 37
2024 22 28 34
2025 20 25 30
2026 28 23 28
2027 17 21 25
2028 15 19 23
2029 14 18 22
Table 1 suggest that we make an economic analysis based on the production forecast.
Meaning, we have to determine which particular production rate will give the best economic
indicator (NPV and IRR).
Table 2 – Capital Expenditure (CAPEX)
Items 1st year 2nd year 3rd year
Drilling (28 wells), MM$ 90 36
Facilities, MM$ 10 52 7
Power Plant, MM$ 8 22
Pipeline Cost (60km) MM$ 3 20 10
New Pipeline Cost MM$ 120 273 152
Table 3 – Operating Expenditure (OPEX)
Items Cost Unit
Operating and Maintenance 70 MM$/yr
Variable Cost 3.5 $/bbl
Transportation Tariff 16 $/bbl
New Pipeline 79 MM$/yr
Table 4 – Production Sharing Contract
Oil - 40%
Cost Recovery Limit (oil & gas)
Gas - 60%
Excess Cost oil Added to profit oil
Exploration costs 20% per year
Depreciation rates for cost recovery Operating costs 100%
Development CAPEX 20% per year
Profit Oil 60%
Profit Sharing splits
70%:30%
(Gov:Contractor)
Signature Bonus USD 1.5 million
Commercial Discovery Bonus USD 2.0 million
Social, Scholarship, Training and Technical
USD 0.5 million
Bonus
Tax rate 38%
Contract Period 25 years
After doing the economic analysis for Tronoh Oil Company using the data given above,
the following questions must be answered:
(i) Evaluate the feasibility of utilizing the existing pipeline or constructing a new pipeline
on the assumption that the oil price remains constant at $60/bbl.
(ii) Calculate the NPV, Payback Period, IRR and PIR of the AB Project. Assume that the
oil price will rise to $65/bbl for your recommended case.
(iii) Calculate the NPV, Payback Period, IRR and PIR of the AB Project on the assumption
that the production of pipeline’s owner will decline and there will be ullage (i.e. more
space) in pipeline capacities which can allow exporting total production.
(iv) Make sensitivity analysis to identify most sensitive project parameters for your
recommended case.
Economic Model
Assumptions and Formulas:
Item Formula
Production Mstb/yr Production rate (Mstb/day) * 365
Total Revenue Production Mstb/yr * Price
Royalty Total Revenue * 10%
Production after Royalty Production Mstb/yr – (Production Mstb/yr * 0.10)
CAPEX Amortization Total CAPEX * 0.2 (Meaning for 5 years)
Total Fixed Cost Operating and Maintenance + Overhead Cost
Total Variable Cost Summation of Variable and Pipeline Tariff or New Pipeline cost
Total Cost For Capex (Summation of Drilling Cost, Facilities Cost and Pipeline
Cost; For Opex (Summation of Total Fix Opex and Total Variable
cost
Net cash flow (General Total Revenue – Royalty – Opex (First year of Production)
Model)
Recoverable Cost Total Opex + Capex Amortization
Cost Oil Limit (Total Revenue – Royalty )*0.4
Excess Cost Oil Cost Oil Limit – Recoverable Cost
Note: If Cost oil limit > Recoverable Cost, the difference is added to
profit but if Cost oil limit < Recoverable Cost, it will be carry
forwarded to the next year.
Profit Oil (Total Revenue – Royalty) * 0.60
Contractor Cost Oil If Cost oil limit > Recoverable Cost, Contractor is entitled only to
recoverable cost but if Cost oil limit < Recoverable Cost, then the
entitlement is the cost oil limit
Contractor Share in If Excess cost oil is less than 0, nothing is entitled to contractor but
Excess Cost Oil if it is greater than zero, the contractor is entitled 30% of it.
Contractor Profit Oil Profit Oil * 0.30
Total Contractor PSA Payment + Contractor Cost oil + Contract Share in excess cost
Entitlement oil
Income Before Tax Total Contractor Entitlement excluding the PSA Payment – OPEX
Taxable Income Income Before Tax – CAPEX Amortization
Tax @ 38% Taxable Income * 0.38
Note: If taxable income < 0, the tax will be carry forwarded on the
next year, else it is Taxable Income * 0.38
Contractor Net Cash Total Contractual Entitlement – Cash Out
Flow If tax < 0, take it as 0.
Government Share in If Excess cost oil is less than 0, nothing is entitled to government but
Excess Cost Oil if it is greater than zero, the contractor is entitled 70% of it.
Government Profit Oil Profit Oil * 0.70
Total Government -PSA Payment + Government Share in Excess cost oil + Government
Entitlement Profit Oil + Royalty + Tax
There were 3 cases in which the economic model was subjected to (the minimum, most
likely and maximum) based on the production forecast in Table 1. For each cases, feasibility study
regarding pipeline consideration and price were considered also. Sensitivity analysis was also
done to determine which particular parameter really affects the economic model of the
recommended case.
The economic model was subdivided into two: General Model and Production Sharing
Contract (PSC) Model. The general model was based on before tax net cash flow and the PSC
model was based on the parties’ entitlement and after tax net cash flow.
AB Project of the Tronoh Oil Company proposed three production rates which is subjected
to change in oil price and two options for pipeline system. Upon completion of the economic
model, the results were as follows:
Table 5 - Results of the GENERAL MODEL
Economic Indicators
Price Pipeline
NPV IRR PIR
Fixed 60 Existing 524 49% 8.03
Fixed 60 New 315 24% 2.86
Minimum 60 then 65 Existing 640 53% 9.61
60 then 65 New 432 27% 3.40
Fixed 60 Existing 778 60% 11.3
Fixed 60 New 688 32% 4.51
Most Likely 60 then 65 Existing 924 64% 13.28
60 then 65 New 834 35% 5.19
Fixed 60 Existing 1,033 70% 14.57
Fixed 60 New 1,060 39% 6.16
Maximum 60 then 65 Existing 1,208 74% 16.96
60 then 65 New 1,236 42% 6.98
Table 6 - Results of PSC MODEL
Economic Indicators
NPV IRR PIR
Price Pipeline Contractor Government Contractor Government Contractor Government
Fixed 60 Existing -69 845 N/A -0.48
Fixed 60 New -117 845 -3% -0.08
Minimum
60 then 65 Existing -13 919 9% 0.24
60 then 65 New -63 921 5% 0.14
Fixed 60 Existing 2 1,073 16% 0.37
Most Fixed 60 New 36 1,110 21% 0.51
Likely 60 then 65 Existing 57 1,180 39% 1.09
60 then 65 New 93 1,215 31% 0.75
Fixed 60 Existing 60 1,313 44% 1.07
Fixed 60 New 173 1,389 51% 1.07
Maximum
60 then 65 Existing 124 1,445 69% 1.93
60 then 65 New 225 1,532 63% 1.28
The results shown above (Table 5 and Table 6) were based on the calculations
made using Microsoft Excel spreadsheet which is attached in the appendix.
Minimum Production Rates
The plot of the net cash flow versus the cumulative net cash flow of the general
model for the case of minimum production are presented below:
Cash Flow Profile for Minimum Rate Using Existing
Pipeline with Fixed Price ($60/bbl)
2,500 2,500
2,000 2,000
1,500 1,500
MM USD
1,000 1,000
500 500
0 0
(500) (500)
Year
Net Cash Flow NCF Cumulative NCF
Figure 1- Cash Flow Profile for Minimum Rate Using Existing Pipeline with Fixed Price
($60/bbl)
Cash Flow Profile for Minimum Rate Using Existing
Pipeline with Fixed Price ($60-$65/bbl)
3,000 3,000
2,500 2,500
2,000 2,000
MM USD
1,500 1,500
1,000 1,000
500 500
0 0
2014201520162017201820192020202120222023202420252026202720282029
(500) (500)
YEAR
Net Cash Flow NCF Cumulative NCF
Figure 2- Cash Flow Profile for Minimum Rate Using Existing Pipeline with Varying Price
($60-$65/bbl)
Cash Flow Profile for Minimum Rate Using New Pipeline
with Fixed Price ($60/bbl)
3,000 3,000
2,500 2,500
2,000 2,000
MM USD
1,500 1,500
1,000 1,000
500 500
0 0
(500) (500)
(1,000) (1,000)
YEAR
Net Cash Flow NCF Cumulative NCF
Figure 3- Cash Flow Profile for Minimum Rate Using New Pipeline with Fixed Price
($60/bbl)
Cash Flow Profile for Minimum Rate Using New Pipeline
with Varying Price ($60-$65/bbl)
3,000 3,000
2,500 2,500
2,000 2,000
1,500 1,500
MM USD
1,000 1,000
500 500
0 0
(500) (500)
(1,000) (1,000)
YEAR
Net Cash Flow NCF Cumulative NCF
Figure 4 - Cash Flow Profile for Minimum Rate Using New Pipeline with Varying Price
($60-$65/bbl)
Cash Flow Profile for Most Likely Rate Using Existing
Pipeline with Fixed Price ($60/bbl)
3,000
3,000
2,000
2,000
MM UUSD
1,000 1,000
0 0
(1,000) (1,000)
Year
Net Cash Flow NCF Cumulative NCF
Figure 5 - Cash Flow Profile for Most Likely Rate Using Existing Pipeline with Fixed Price
($60/bbl)
Cash Flow Profile for Most Likely Rate Using Existing
Pipeline with Varying Price ($60-$65/bbl)
3,500 3,500
2,500 2,500
MM USD
1,500 1,500
500 500
(500) (500)
Year
Net Cash Flow NCF Cumulative NCF
Figure 6 - Cash Flow Profile for Most Likely Rate Using Existing Pipeline with Varying
Price ($60-$65/bbl)
Cash Flow Profile for Most Likely Rate Using New Pipeline
with Fixed Price ($60/bbl)
4,000 4,000
3,000 3,000
MM USD
2,000 2,000
1,000 1,000
0 0
(1,000) (1,000)
Year
Net Cash Flow NCF Cumulative NCF
Figure 7 - Cash Flow Profile for Most Likely Rate Using New Pipeline with Fixed Price
($60/bbl)
Cash Flow Profile for Most Likely Rate Using New Pipeline
with Varying Price ($60-$65/bbl)
4,000 4,000
3,000 3,000
MM USD
2,000 2,000
1,000 1,000
0 0
(1,000) (1,000)
Year
Net Cash Flow NCF Cumulative NCF
Figure 8 - Cash Flow Profile for Most Likely Rate Using New Pipeline with Varying Price
($60-$65/bbl)
Cash Flow Profile for Maximum Rate Using Existing
Pipeline with Fixed Price ($60/bbl)
4,000 4,000
3,500 3,500
3,000 3,000
2,500 2,500
MM USD
2,000 2,000
1,500 1,500
1,000 1,000
500 500
0 0
(500) (500)
Year
Net Cash Flow NCF Cumulative NCF
Figure 9 - Cash Flow Profile for Maximum Rate Using Existing Pipeline with Fixed Price
($60/bbl)
Cash Flow Profile for Maximum Rate Using Existing
Pipeline with Varying Price ($60-$65/bbl)
4,500 4,500
3,500 3,500
MM USD
2,500 2,500
1,500 1,500
500 500
(500) (500)
Year
Net Cash Flow NCF Cumulative NCF
Figure 10 - Cash Flow Profile for Maximum Rate Using Existing Pipeline with Varying Price
($60-65/bbl)
Cash Flow Profile for Maximum Rate Using New Pipeline
with Fixed Price ($60/bbl)
4,200 4,200
3,200 3,200
MM USD
2,200 2,200
1,200 1,200
200 200
(800) (800)
Year
Net Cash Flow NCF Cumulative NCF
Figure 11 - Cash Flow Profile for Maximum Rate Using New Pipeline with Fixed Price
($60/bbl)
Cash Flow Profile for Maximum Rate Using New Pipeline
with Varying Price ($60-$65/bbl)
5,000 5,000
4,000 4,000
MM USD
3,000 3,000
2,000 2,000
1,000 1,000
0 0
(1,000) (1,000)
Year
Net Cash Flow NCF Cumulative NCF
Figure 12 - Cash Flow Profile for Maximum Rate Using New Pipeline with Varying Price
($60-65/bbl)
The cash flow profile presented above shows the trend at which net cash flow and
cumulative net cash flow goes up and down every year. Also it indicates the payback
period for each case which is the year at which the cumulative net cash flow crosses the
x-axis, also called the breakeven point.
Answers are based on General Model:
1. With the three production rates and assuming that the oil price remains
constant ($60/bbl), based on NPV, IRR and PIR, the utilization of the existing
pipeline would be more favorable compared to constructing new one.
However, among the three production rates, we recommend that the best case
would be the maximum rate with NPV of 1,033, IRR of 70% and PIR of 14.57.
This is much more higher compared to the other cases.
2. Using the maximum rate and utilizing existing pipeline, and now the price rose
from $60/bbl to $65/bbl after the first year of production ,the NPV is now 1,208
with an IRR of 74% and PIR of 16.96. The payback period which is the
breakeven point is at the second month of 2018 (February 2018) or 4 years and
2 months (4.1667 years).
3. The approach for this question is based on the assumptions that the owner of
the existing pipeline will allow the Tronoh Oil Company to utilize it and that
the it is equal or not exceeding the maximum capacity. Using the maximum
rate and constructing with varying price from $60/bbl to $65/bbl after the first
year of production ,the NPV is now 1,236 with an IRR of 42% and PIR of 6.98.
The payback period which is the breakeven point is at the third month of 2019
(March 2019) or 5 years and 3 months (5.25 years).
4. Among the twelve (12) economic models, our recommended case is to pursue
on the maximum production rate which utilizes the existing pipeline with
varying price from $60/bbl on the first year of production and the $65/bbl on
the second.
Since price, production rates, CAPEX and OPEX may vary anytime depending
on the different factors, we should determine which among these variables is
the most sensitive. This is done through sensitivity analysis. Sensitivity
analysis conducted was based on the rate of change of +20%, +50%, -20% and
+50%.
Rate of
20% 50% -20% -50%
Change
Oil Price 1,719 2,484 698 -68
Capex 1,170 1,112 1,247 1,304
Base Case 1,208 1,208 1,208 1,208
Opex 977 631 1,438 1,784
Oil Production 1,547 2,055 869 361
Sensitivity Analysis
0
0
NPV MM$
0
Oil Price
0 Capex
Base Case
0
Opex
0 Oil
-60% -40% -20% 0% 20% 40% 60% Production
0-
Rate of Change
Figure 13 – Sensitivity Analysis for the Recommended Case of AB Project
Based on the graph presented above, the most sensitive variable is the oil
price since it has the steepest slope, followed by the oil production rate.
Usually, the oil price goes along the oil production rate, that is given that the
price of oil is constant all throughout the duration of the project.
Appendix
Minimum – Existing Pipeline – Fixed Price ($60/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 5,840 5,840 10,220 10,220 10,220 10,220 9,125 8,030 7,300 6,570 6,205 5,475 5,110
Price 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0
Total Revenue MM$ 350.40 350.40 613.20 613.20 613.20 613.20 547.50 481.80 438.00 394.20 372.30 328.50 306.60
Gov. Royalty 10% 35 35 61 61 61 61 55 48 44 39 37 33 31
Production After Royalty Mstb/yr 5,256 5,256 9,198 9,198 9,198 9,198 8,213 7,227 6,570 5,913 5,585 4,928 4,599
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 3 20 10 6.6 6.6 6.6 6.6 6.6
Total 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 20.44 20.44 35.77 35.77 35.77 35.77 31.9375 28.105 25.55 22.995 21.7175 19.1625 17.885
P/L Tariff $ / New Pipeline 93.44 93.44 163.52 163.52 163.52 163.52 146 128.48 116.8 105.12 99.28 87.6 81.76
Total Variable Cost $/bbl 114 114 199 199 199 199 178 157 142 128 121 107 100
Total Costs 21.00 184.00 53.00 193.88 193.88 279.29 279.29 279.29 279.29 257.94 236.59 222.35 208.12 201.00 186.76 179.65
Net Cash Flow NCF -21 -184 -53 121 121 273 273 273 273 235 197 172 147 134 109 96
NPV@15% 524
IRR 49%
PIR 8.03
PSC MODEL
YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Total Opex 193.88 193.88 279.29 279.29 279.29 279.29 257.94 236.59 222.35 208.12 201.00 186.76 179.65
Recoverable Costs 245.48 245.48 330.89 330.89 330.89 279.29 257.94 236.59 222.35 208.12 201.00 186.76 179.65
Cost Oil Limit (MM USD) 126.14 126.14 220.75 220.75 220.75 220.75 197.10 173.45 157.68 141.91 134.03 118.26 110.38
Cost Oil Limit (Mstb) 2,102.40 2,102.40 3,679.20 3,679.20 3,679.20 3,679.20 3,285.00 2,890.80 2,628.00 2,365.20 2,233.80 1,971.00 1,839.60
Excess Cost Oil (MM USD) -119.34 -238.67 -348.81 -458.95 -569.09 -627.62 -688.46 -751.60 -816.27 -882.47 -949.44 -1,017.94 -1,087.21
Excess Cost Oil (Mstb) -1,988.93 -3,977.87 -5,813.50 -7,649.13 -9,484.77 -10,460.40 -11,474.36 -12,526.64 -13,604.48 -14,707.86 -15,824.02 -16,965.73 -18,120.21
Carry Forward -119.34 -238.67 -348.81 -458.95 -569.09 -627.62 -688.46 -751.60 -816.27 -882.47 -949.44 -1,017.94 -1,087.21
Profit Distribution
Average Daily Production Rate (Mstb/Day) 16.00 16.00 28.00 28.00 28.00 28.00 25.00 22.00 20.00 18.00 17.00 15.00 14.00
Profit Oil (Mstb) 3,154 3,154 5,519 5,519 5,519 5,519 4,928 4,336 3,942 3,548 3,351 2,957 2,759
Profit Oil (MM USD) 189.22 189.22 331.13 331.13 331.13 331.13 295.65 260.17 236.52 212.87 201.04 177.39 165.56
Total Contractor Profit Oil (Mstb/yr) 946.08 946.08 1,655.64 1,655.64 1,655.64 1,655.64 1,478.25 1,300.86 1,182.60 1,064.34 1,005.21 886.95 827.82
Total Government Profit Oil (Mstb/year) 2,207.52 2,207.52 3,863.16 3,863.16 3,863.16 3,863.16 3,449.25 3,035.34 2,759.40 2,483.46 2,345.49 2,069.55 1,931.58
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 2,102.400 2,102.400 3,679.200 3,679.200 3,679.200 3,679.200 3,285.000 2,890.800 2,628.000 2,365.200 2,233.800 1,971.000 1,839.600
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 946 946 1,656 1,656 1,656 1,656 1,478 1,301 1,183 1,064 1,005 887 828
Total Contractor Entitlements (Mstb) 3,048 3,048 5,335 5,335 5,335 5,335 4,763 4,192 3,811 3,430 3,239 2,858 2,667
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 126.14 126.14 220.75 220.75 220.75 220.75 197.10 173.45 157.68 141.91 134.03 118.26 110.38
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 56.7648 56.7648 99.3384 99.3384 99.3384 99.3384 88.695 78.0516 70.956 63.8604 60.3126 53.217 49.6692
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 182.41 182.41 319.59 319.59 319.59 319.59 285.30 251.00 228.14 205.27 193.84 170.98 159.55
Income Before Tax -4.00 -0.50 -0.50 -10.97 -10.97 40.80 40.80 40.80 40.80 27.86 14.91 6.29 -2.34 -7.66 -16.29 -20.60
Taxable Income (4.0) (0.5) (0.5) (62.6) (62.6) (10.8) (10.8) (10.8) 40.8 27.9 14.9 6.3 (2.3) (7.7) (16.3) (20.6)
Tax (38%) 0.0 0.0 0.0 (23.8) (47.6) (51.7) (55.8) (59.9) (44.4) (33.8) (28.1) (25.7) (26.6) (29.5) (35.7) (43.5)
Tax loss carry forward (23.8) (47.6) (51.7) (55.8) (59.9) (44.4) (33.8) (28.1) (25.7) (26.6) (29.5) (35.7) (43.5)
Contractor NCF -4.00 -0.50 -0.50 -63.57 -63.57 -11.80 -11.80 -11.80 39.80 26.86 13.91 5.29 -3.34 -7.66 -16.29 -20.60
Contractor Cum NCF -4.00 -4.50 -5.00 -68.57 -132.14 -143.94 -155.74 -167.54 -127.74 -100.88 -86.97 -81.68 -85.03 -92.68 -108.97 -129.57
NPV@15% -69
IRR #NUM!
PIR -0.48
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 132.45 132.45 231.79 231.79 231.79 231.79 206.96 182.12 165.56 149.01 140.73 124.17 115.89
Gov. Royalty 10% 35 35 61 61 61 61 55 48 44 39 37 33 31
Tax 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Government Entitlements (USD) 4.00 0.50 0.50 167.99 167.99 293.61 293.61 293.61 293.61 262.21 230.80 209.86 188.93 178.46 157.52 147.05
NPV@15% 845
Appendix
Minimum – Existing Pipeline – Varying Price ($60-$65/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 5,840 5,840 10,220 10,220 10,220 10,220 9,125 8,030 7,300 6,570 6,205 5,475 5,110
Price 60.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0
Total Revenue MM$ 350.40 379.60 664.30 664.30 664.30 664.30 593.13 521.95 474.50 427.05 403.33 355.88 332.15
Gov. Royalty 10% 35 38 66 66 66 66 59 52 47 43 40 36 33
Production After Royalty Mstb/yr 5,256 5,256 9,198 9,198 9,198 9,198 8,213 7,227 6,570 5,913 5,585 4,928 4,599
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 3 20 10 6.6 6.6 6.6 6.6 6.6
Total 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 20.44 20.44 35.77 35.77 35.77 35.77 31.9375 28.105 25.55 22.995 21.7175 19.1625 17.885
P/L Tariff $ / New Pipeline 93.44 93.44 163.52 163.52 163.52 163.52 146 128.48 116.8 105.12 99.28 87.6 81.76
Total Variable Cost $/bbl 114 114 199 199 199 199 178 157 142 128 121 107 100
Total Costs 21.00 184.00 53.00 193.88 193.88 279.29 279.29 279.29 279.29 257.94 236.59 222.35 208.12 201.00 186.76 179.65
Net Cash Flow NCF -21 -184 -53 121 148 319 319 319 319 276 233 205 176 162 134 119
NPV@15% 640
IRR 53%
PIR 9.61
PSC MODEL
YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Total Opex 193.88 193.88 279.29 279.29 279.29 279.29 257.94 236.59 222.35 208.12 201.00 186.76 179.65
Recoverable Costs 245.48 245.48 330.89 330.89 330.89 279.29 257.94 236.59 222.35 208.12 201.00 186.76 179.65
Cost Oil Limit (MM USD) 126.14 136.66 239.15 239.15 239.15 239.15 213.53 187.90 170.82 153.74 145.20 128.12 119.57
Cost Oil Limit (Mstb) 2,102.40 2,102.40 3,679.20 3,679.20 3,679.20 3,679.20 3,285.00 2,890.80 2,628.00 2,365.20 2,233.80 1,971.00 1,839.60
Excess Cost Oil (MM USD) -119.34 -228.16 -319.90 -411.64 -503.39 -543.53 -587.94 -636.62 -688.15 -742.53 -798.33 -856.98 -917.05
Excess Cost Oil (Mstb) -1,988.93 -3,510.15 -4,921.57 -6,332.98 -7,744.40 -8,361.97 -9,045.24 -9,794.21 -10,586.98 -11,423.55 -12,282.02 -13,184.28 -14,108.45
Carry Forward -119.34 -228.16 -319.90 -411.64 -503.39 -543.53 -587.94 -636.62 -688.15 -742.53 -798.33 -856.98 -917.05
Profit Distribution
Average Daily Production Rate (Mstb/Day) 16.00 16.00 28.00 28.00 28.00 28.00 25.00 22.00 20.00 18.00 17.00 15.00 14.00
Profit Oil (Mstb) 3,154 3,154 5,519 5,519 5,519 5,519 4,928 4,336 3,942 3,548 3,351 2,957 2,759
Profit Oil (MM USD) 189.22 204.98 358.72 358.72 358.72 358.72 320.29 281.85 256.23 230.61 217.80 192.17 179.36
Total Contractor Profit Oil (Mstb/yr) 946.08 946.08 1,655.64 1,655.64 1,655.64 1,655.64 1,478.25 1,300.86 1,182.60 1,064.34 1,005.21 886.95 827.82
Total Government Profit Oil (Mstb/year) 2,207.52 2,207.52 3,863.16 3,863.16 3,863.16 3,863.16 3,449.25 3,035.34 2,759.40 2,483.46 2,345.49 2,069.55 1,931.58
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 2,102.400 2,102.400 3,679.200 3,679.200 3,679.200 3,679.200 3,285.000 2,890.800 2,628.000 2,365.200 2,233.800 1,971.000 1,839.600
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 946 946 1,656 1,656 1,656 1,656 1,478 1,301 1,183 1,064 1,005 887 828
Total Contractor Entitlements (Mstb) 3,048 3,048 5,335 5,335 5,335 5,335 4,763 4,192 3,811 3,430 3,239 2,858 2,667
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 126.14 136.66 239.15 239.15 239.15 239.15 213.53 187.90 170.82 153.74 145.20 128.12 119.57
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 56.7648 61.4952 107.6166 107.6166 107.6166 107.6166 96.08625 84.5559 76.869 69.1821 65.33865 57.65175 53.8083
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 182.41 197.65 346.26 346.26 346.26 346.26 309.11 271.96 247.19 222.42 210.04 185.27 172.88
Income Before Tax -4.00 -0.50 -0.50 -10.97 4.27 67.47 67.47 67.47 67.47 51.67 35.87 25.34 14.81 8.54 -2.00 -7.26
Taxable Income (4.0) (0.5) (0.5) (62.6) (47.3) 15.9 15.9 15.9 67.5 51.7 35.9 25.3 14.8 8.5 (2.0) (7.3)
Tax (38%) 0.0 0.0 0.0 (23.8) (41.8) (35.7) (29.7) (23.7) 2.0 19.6 13.6 9.6 5.6 3.2 (0.8) (3.5)
Tax loss carry forward (23.8) (41.8) (35.7) (29.7) (23.7) 0.0 0.0 0.0 0.0 0.0 0.0 (0.8) (3.5)
Contractor NCF -4.00 -0.50 -0.50 -63.57 -48.33 14.87 14.87 14.87 64.50 31.04 21.24 14.71 8.18 5.29 -2.00 -7.26
Contractor Cum NCF -4.00 -4.50 -5.00 -68.57 -116.90 -102.03 -87.15 -72.28 -7.78 23.26 44.50 59.21 67.39 72.68 70.69 63.43
NPV@15% -13
IRR 9%
PIR 0.24
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 132.45 143.49 251.11 251.11 251.11 251.11 224.20 197.30 179.36 161.42 152.46 134.52 125.55
Gov. Royalty 10% 35 38 66 66 66 66 59 52 47 43 40 36 33
Tax 0 0 0 0 0 2 20 14 10 6 3 0 0
Total Government Entitlements (USD) 4.00 0.50 0.50 167.99 181.95 318.04 318.04 318.04 320.01 303.65 263.62 236.94 210.26 196.53 170.61 159.27
NPV@15% 919
Appendix
Minimum – New Pipeline – Fixed Price ($60/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 5,840 5,840 10,220 10,220 10,220 10,220 9,125 8,030 7,300 6,570 6,205 5,475 5,110
Price 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0
Total Revenue MM$ 350.40 350.40 613.20 613.20 613.20 613.20 547.50 481.80 438.00 394.20 372.30 328.50 306.60
Gov. Royalty 10% 35 35 61 61 61 61 55 48 44 39 37 33 31
Production After Royalty Mstb/yr 5,256 5,256 9,198 9,198 9,198 9,198 8,213 7,227 6,570 5,913 5,585 4,928 4,599
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 120 273 152 109 109 109 109 109
Total 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 20.44 20.44 35.77 35.77 35.77 35.77 31.9375 28.105 25.55 22.995 21.7175 19.1625 17.885
P/L Tariff $ / New Pipeline 79 79 79 79 79 79 79 79 79 79 79 79 79
Total Variable Cost $/bbl 99 99 115 115 115 115 111 107 105 102 101 98 97
Total Costs 138.00 437.00 195.00 179.44 179.44 194.77 194.77 194.77 194.77 190.94 187.11 184.55 182.00 180.72 178.16 176.89
Net Cash Flow NCF -138 -437 -195 136 136 357 357 357 357 302 247 210 173 154 117 99
NPV@15% 315
IRR 24%
PIR 2.86
PSC MODEL
YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Total Opex 179.44 179.44 194.77 194.77 194.77 194.77 190.94 187.11 184.55 182.00 180.72 178.16 176.89
Recoverable Costs 333.44 333.44 348.77 348.77 348.77 194.77 190.94 187.11 184.55 182.00 180.72 178.16 176.89
Cost Oil Limit (MM USD) 126.14 126.14 220.75 220.75 220.75 220.75 197.10 173.45 157.68 141.91 134.03 118.26 110.38
Cost Oil Limit (Mstb) 2,102.40 2,102.40 3,679.20 3,679.20 3,679.20 3,679.20 3,285.00 2,890.80 2,628.00 2,365.20 2,233.80 1,971.00 1,839.60
Excess Cost Oil (MM USD) -207.30 -414.59 -542.61 -670.63 -798.65 -772.66 -766.50 -780.16 -807.03 -847.11 -893.80 -953.70 -1,020.21
Excess Cost Oil (Mstb) -3,454.93 -6,909.87 -9,043.50 -11,177.13 -13,310.77 -12,877.73 -12,775.03 -13,002.64 -13,450.48 -14,118.53 -14,896.68 -15,895.06 -17,003.54
Carry Forward -207.30 -414.59 -542.61 -670.63 -798.65 -772.66 -766.50 -780.16 -807.03 -847.11 -893.80 -953.70 -1,020.21
Profit Distribution
Average Daily Production Rate (Mstb/Day) 16.00 16.00 28.00 28.00 28.00 28.00 25.00 22.00 20.00 18.00 17.00 15.00 14.00
Profit Oil (Mstb) 3,154 3,154 5,519 5,519 5,519 5,519 4,928 4,336 3,942 3,548 3,351 2,957 2,759
Profit Oil (MM USD) 189.22 189.22 331.13 331.13 331.13 331.13 295.65 260.17 236.52 212.87 201.04 177.39 165.56
Total Contractor Profit Oil (Mstb/yr) 946.08 946.08 1,655.64 1,655.64 1,655.64 1,655.64 1,478.25 1,300.86 1,182.60 1,064.34 1,005.21 886.95 827.82
Total Government Profit Oil (Mstb/year) 2,207.52 2,207.52 3,863.16 3,863.16 3,863.16 3,863.16 3,449.25 3,035.34 2,759.40 2,483.46 2,345.49 2,069.55 1,931.58
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 2,102.400 2,102.400 3,679.200 3,679.200 3,679.200 3,246.167 3,182.292 2,890.800 2,628.000 2,365.200 2,233.800 1,971.000 1,839.600
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 946 946 1,656 1,656 1,656 1,656 1,478 1,301 1,183 1,064 1,005 887 828
Total Contractor Entitlements (Mstb) 3,048 3,048 5,335 5,335 5,335 4,902 4,661 4,192 3,811 3,430 3,239 2,858 2,667
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 126.14 126.14 220.75 220.75 220.75 220.75 197.10 173.45 157.68 141.91 134.03 118.26 110.38
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 56.7648 56.7648 99.3384 99.3384 99.3384 99.3384 88.695 78.0516 70.956 63.8604 60.3126 53.217 49.6692
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 182.41 182.41 319.59 319.59 319.59 319.59 285.30 251.00 228.14 205.27 193.84 170.98 159.55
Income Before Tax -4.00 -0.50 -0.50 3.47 3.47 125.32 125.32 125.32 125.32 94.86 64.39 44.09 23.78 12.62 -7.69 -17.84
Taxable Income (4.0) (0.5) (0.5) (150.5) (150.5) (28.7) (28.7) (28.7) 125.3 94.9 64.4 44.1 23.8 12.6 (7.7) (17.8)
Tax (38%) 0.0 0.0 0.0 (57.2) (114.4) (125.3) (136.2) (147.1) (99.5) (63.4) (39.0) (22.2) (13.2) (8.4) (11.3) (18.1)
Tax loss carry forward (57.2) (114.4) (125.3) (136.2) (147.1) (99.5) (63.4) (39.0) (22.2) (13.2) (8.4) (11.3) (18.1)
Contractor NCF -4.00 -0.50 -0.50 -151.53 -151.53 -29.68 -29.68 -29.68 124.32 93.86 63.39 43.09 22.78 12.62 -7.69 -17.84
Contractor Cum NCF -4.00 -4.50 -5.00 -156.53 -308.06 -337.74 -367.42 -397.10 -272.78 -178.92 -115.53 -72.44 -49.67 -37.04 -44.73 -62.57
NPV@15% -117
IRR -3%
PIR -0.08
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 132.45 132.45 231.79 231.79 231.79 231.79 206.96 182.12 165.56 149.01 140.73 124.17 115.89
Gov. Royalty 10% 35 35 61 61 61 61 55 48 44 39 37 33 31
Tax 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Government Entitlements (USD) 4.00 0.50 0.50 167.99 167.99 293.61 293.61 293.61 293.61 262.21 230.80 209.86 188.93 178.46 157.52 147.05
NPV@15% 845
Appendix
Minimum – News Pipeline – Varying Price ($60-$65/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 5,840 5,840 10,220 10,220 10,220 10,220 9,125 8,030 7,300 6,570 6,205 5,475 5,110
Price 60.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0
Total Revenue MM$ 350.40 379.60 664.30 664.30 664.30 664.30 593.13 521.95 474.50 427.05 403.33 355.88 332.15
Gov. Royalty 10% 35 38 66 66 66 66 59 52 47 43 40 36 33
Production After Royalty Mstb/yr 5,256 5,256 9,198 9,198 9,198 9,198 8,213 7,227 6,570 5,913 5,585 4,928 4,599
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 120 273 152 109 109 109 109 109
Total 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 20.44 20.44 35.77 35.77 35.77 35.77 31.9375 28.105 25.55 22.995 21.7175 19.1625 17.885
P/L Tariff $ / New Pipeline 79 79 79 79 79 79 79 79 79 79 79 79 79
Total Variable Cost $/bbl 99 99 115 115 115 115 111 107 105 102 101 98 97
Total Costs 138.00 437.00 195.00 179.44 179.44 194.77 194.77 194.77 194.77 190.94 187.11 184.55 182.00 180.72 178.16 176.89
Net Cash Flow NCF -138 -437 -195 136 162 403 403 403 403 343 283 243 202 182 142 122
NPV@15% 432
IRR 27%
PIR 3.40
PSC MODEL
YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Total Opex 179.44 179.44 194.77 194.77 194.77 194.77 190.94 187.11 184.55 182.00 180.72 178.16 176.89
Recoverable Costs 333.44 333.44 348.77 348.77 348.77 194.77 190.94 187.11 184.55 182.00 180.72 178.16 176.89
Cost Oil Limit (MM USD) 126.14 136.66 239.15 239.15 239.15 239.15 213.53 187.90 170.82 153.74 145.20 128.12 119.57
Cost Oil Limit (Mstb) 2,102.40 2,102.40 3,679.20 3,679.20 3,679.20 3,679.20 3,285.00 2,890.80 2,628.00 2,365.20 2,233.80 1,971.00 1,839.60
Excess Cost Oil (MM USD) -207.30 -404.08 -513.70 -623.32 -732.95 -688.57 -665.98 -665.18 -678.91 -707.17 -742.69 -792.74 -850.05
Excess Cost Oil (Mstb) -3,454.93 -6,216.62 -7,903.11 -9,589.60 -11,276.09 -10,593.35 -10,245.85 -10,233.59 -10,444.82 -10,879.55 -11,426.02 -12,195.98 -13,077.68
Carry Forward -207.30 -404.08 -513.70 -623.32 -732.95 -688.57 -665.98 -665.18 -678.91 -707.17 -742.69 -792.74 -850.05
Profit Distribution
Average Daily Production Rate (Mstb/Day) 16.00 16.00 28.00 28.00 28.00 28.00 25.00 22.00 20.00 18.00 17.00 15.00 14.00
Profit Oil (Mstb) 3,154 3,154 5,519 5,519 5,519 5,519 4,928 4,336 3,942 3,548 3,351 2,957 2,759
Profit Oil (MM USD) 189.22 204.98 358.72 358.72 358.72 358.72 320.29 281.85 256.23 230.61 217.80 192.17 179.36
Total Contractor Profit Oil (Mstb/yr) 946.08 946.08 1,655.64 1,655.64 1,655.64 1,655.64 1,478.25 1,300.86 1,182.60 1,064.34 1,005.21 886.95 827.82
Total Government Profit Oil (Mstb/year) 2,207.52 2,207.52 3,863.16 3,863.16 3,863.16 3,863.16 3,449.25 3,035.34 2,759.40 2,483.46 2,345.49 2,069.55 1,931.58
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 2,102.400 2,102.400 3,679.200 3,679.200 3,679.200 2,996.462 2,937.500 2,878.538 2,628.000 2,365.200 2,233.800 1,971.000 1,839.600
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 946 946 1,656 1,656 1,656 1,656 1,478 1,301 1,183 1,064 1,005 887 828
Total Contractor Entitlements (Mstb) 3,048 3,048 5,335 5,335 5,335 4,652 4,416 4,179 3,811 3,430 3,239 2,858 2,667
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 126.14 136.66 239.15 239.15 239.15 239.15 213.53 187.90 170.82 153.74 145.20 128.12 119.57
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 56.7648 61.4952 107.6166 107.6166 107.6166 107.6166 96.08625 84.5559 76.869 69.1821 65.33865 57.65175 53.8083
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 182.41 197.65 346.26 346.26 346.26 346.26 309.11 271.96 247.19 222.42 210.04 185.27 172.88
Income Before Tax -4.00 -0.50 -0.50 3.47 18.71 151.99 151.99 151.99 151.99 118.67 85.35 63.14 40.93 28.82 6.60 -4.50
Taxable Income (4.0) (0.5) (0.5) (150.5) (135.3) (2.0) (2.0) (2.0) 152.0 118.7 85.4 63.1 40.9 28.8 6.6 (4.5)
Tax (38%) 0.0 0.0 0.0 (57.2) (108.6) (109.4) (110.1) (110.9) (53.1) (8.0) 24.4 24.0 15.6 11.0 2.5 (1.7)
Tax loss carry forward (57.2) (108.6) (109.4) (110.1) (110.9) (53.1) (8.0) 0.0 0.0 0.0 0.0 0.0 (1.7)
Contractor NCF -4.00 -0.50 -0.50 -151.53 -136.29 -3.01 -3.01 -3.01 150.99 117.67 59.96 38.15 24.37 17.87 4.09 -4.50
Contractor Cum NCF -4.00 -4.50 -5.00 -156.53 -292.82 -295.83 -298.83 -301.84 -150.84 -33.17 26.79 64.94 89.31 107.18 111.28 106.77
NPV@15% -63
IRR 5%
PIR 0.14
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 132.45 143.49 251.11 251.11 251.11 251.11 224.20 197.30 179.36 161.42 152.46 134.52 125.55
Gov. Royalty 10% 35 38 66 66 66 66 59 52 47 43 40 36 33
Tax 0 0 0 0 0 0 0 24 24 16 11 3 0
Total Government Entitlements (USD) 4.00 0.50 0.50 167.99 181.95 318.04 318.04 318.04 318.04 284.01 274.38 251.30 220.18 204.24 173.12 159.27
NPV@15% 921
Appendix
Most Likely – Existing Pipeline – Fixed Price ($60/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 7,300 7,300 12,775 12,775 12,775 12,775 11,315 10,220 9,125 8,395 7,665 6,935 6,570
Price 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0
Total Revenue MM$ 438.00 438.00 766.50 766.50 766.50 766.50 678.90 613.20 547.50 503.70 459.90 416.10 394.20
Gov. Royalty 10% 44 44 77 77 77 77 68 61 55 50 46 42 39
Production After Royalty Mstb/yr 6,570 6,570 11,498 11,498 11,498 11,498 10,184 9,198 8,213 7,556 6,899 6,242 5,913
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 3 20 10 6.6 6.6 6.6 6.6 6.6
Total 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 25.55 25.55 44.7125 44.7125 44.7125 44.7125 39.6025 35.77 31.9375 29.3825 26.8275 24.2725 22.995
P/L Tariff $ / New Pipeline 116.8 116.8 204.4 204.4 204.4 204.4 181.04 163.52 146 134.32 122.64 110.96 105.12
Total Variable Cost $/bbl 142 142 249 249 249 249 221 199 178 164 149 135 128
Total Costs 21.00 184.00 53.00 222.35 222.35 329.11 329.11 329.11 329.11 300.64 279.29 257.94 243.70 229.47 215.23 208.12
Net Cash Flow NCF -21 -184 -53 172 172 361 361 361 361 310 273 235 210 184 159 147
NPV@15% 778
IRR 60%
PIR 11.30
PSC MODEL
YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Total Opex 222.35 222.35 329.11 329.11 329.11 329.11 300.64 279.29 257.94 243.70 229.47 215.23 208.12
Recoverable Costs 273.95 273.95 380.71 380.71 380.71 329.11 300.64 279.29 257.94 243.70 229.47 215.23 208.12
Cost Oil Limit (MM USD) 157.68 157.68 275.94 275.94 275.94 275.94 244.40 220.75 197.10 181.33 165.56 149.80 141.91
Cost Oil Limit (Mstb) 2,628.00 2,628.00 4,599.00 4,599.00 4,599.00 4,599.00 4,073.40 3,679.20 3,285.00 3,022.20 2,759.40 2,496.60 2,365.20
Excess Cost Oil (MM USD) -116.27 -232.54 -337.31 -442.09 -546.86 -600.03 -656.27 -714.81 -775.64 -838.01 -901.92 -967.35 -1,033.56
Excess Cost Oil (Mstb) -1,937.83 -3,875.67 -5,621.88 -7,368.08 -9,114.29 -10,000.50 -10,937.81 -11,913.44 -12,927.40 -13,966.91 -15,031.97 -16,122.58 -17,225.96
Carry Forward -116.27 -232.54 -337.31 -442.09 -546.86 -600.03 -656.27 -714.81 -775.64 -838.01 -901.92 -967.35 -1,033.56
Profit Distribution
Average Daily Production Rate (Mstb/Day) 20.00 20.00 35.00 35.00 35.00 35.00 31.00 28.00 25.00 23.00 21.00 19.00 18.00
Profit Oil (Mstb) 3,942 3,942 6,899 6,899 6,899 6,899 6,110 5,519 4,928 4,533 4,139 3,745 3,548
Profit Oil (MM USD) 236.52 236.52 413.91 413.91 413.91 413.91 366.61 331.13 295.65 272.00 248.35 224.69 212.87
Total Contractor Profit Oil (Mstb/yr) 1,182.60 1,182.60 2,069.55 2,069.55 2,069.55 2,069.55 1,833.03 1,655.64 1,478.25 1,359.99 1,241.73 1,123.47 1,064.34
Total Government Profit Oil (Mstb/year) 2,759.40 2,759.40 4,828.95 4,828.95 4,828.95 4,828.95 4,277.07 3,863.16 3,449.25 3,173.31 2,897.37 2,621.43 2,483.46
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 2,628.000 2,628.000 4,599.000 4,599.000 4,599.000 4,599.000 4,073.400 3,679.200 3,285.000 3,022.200 2,759.400 2,496.600 2,365.200
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 1,183 1,183 2,070 2,070 2,070 2,070 1,833 1,656 1,478 1,360 1,242 1,123 1,064
Total Contractor Entitlements (Mstb) 3,811 3,811 6,669 6,669 6,669 6,669 5,906 5,335 4,763 4,382 4,001 3,620 3,430
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 157.68 157.68 275.94 275.94 275.94 275.94 244.40 220.75 197.10 181.33 165.56 149.80 141.91
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 70.956 70.956 124.173 124.173 124.173 124.173 109.9818 99.3384 88.695 81.5994 74.5038 67.4082 63.8604
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 228.14 228.14 399.61 399.61 399.61 399.61 353.89 319.59 285.30 262.43 239.57 216.70 205.27
Income Before Tax -4.00 -0.50 -0.50 6.29 6.29 71.00 71.00 71.00 71.00 53.74 40.80 27.86 19.23 9.60 0.97 -3.34
Taxable Income (4.0) (0.5) (0.5) (45.3) (45.3) 19.4 19.4 19.4 71.0 53.7 40.8 27.9 19.2 9.6 1.0 (3.3)
Tax (38%) 0.0 0.0 0.0 (17.2) (34.4) (27.1) (19.7) (12.3) 14.7 20.4 15.5 10.6 7.3 3.6 0.4 (1.3)
Tax loss carry forward (17.2) (34.4) (27.1) (19.7) (12.3) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (1.3)
Contractor NCF -4.00 -0.50 -0.50 -46.31 -46.31 18.40 18.40 18.40 55.34 32.32 24.30 16.27 10.92 5.95 0.60 -3.34
Contractor Cum NCF -4.00 -4.50 -5.00 -51.31 -97.63 -79.23 -60.83 -42.43 12.92 45.24 69.53 85.80 96.73 102.68 103.28 99.94
NPV@15% 2
IRR 16%
PIR 0.37
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 165.56 165.56 289.74 289.74 289.74 289.74 256.62 231.79 206.96 190.40 173.84 157.29 149.01
Gov. Royalty 10% 44 44 77 77 77 77 68 61 55 50 46 42 39
Tax 0 0 0 0 0 15 20 16 11 7 4 0 0
Total Government Entitlements (USD) 4.00 0.50 0.50 209.86 209.86 366.89 366.89 366.89 381.55 345.44 309.11 272.79 248.58 223.98 199.77 188.93
NPV@15% 1,073
Appendix
Most Likely – Existing Pipeline – Varying Price ($60-$65/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 7,300 7,300 12,775 12,775 12,775 12,775 11,315 10,220 9,125 8,395 7,665 6,935 6,570
Price 60.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0
Total Revenue MM$ 438.00 474.50 830.38 830.38 830.38 830.38 735.48 664.30 593.13 545.68 498.23 450.78 427.05
Gov. Royalty 10% 44 47 83 83 83 83 74 66 59 55 50 45 43
Production After Royalty Mstb/yr 6,570 6,570 11,498 11,498 11,498 11,498 10,184 9,198 8,213 7,556 6,899 6,242 5,913
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 3 20 10 6.6 6.6 6.6 6.6 6.6
Total 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 25.55 25.55 44.7125 44.7125 44.7125 44.7125 39.6025 35.77 31.9375 29.3825 26.8275 24.2725 22.995
P/L Tariff $ / New Pipeline 116.8 116.8 204.4 204.4 204.4 204.4 181.04 163.52 146 134.32 122.64 110.96 105.12
Total Variable Cost $/bbl 142 142 249 249 249 249 221 199 178 164 149 135 128
Total Costs 21.00 184.00 53.00 222.35 222.35 329.11 329.11 329.11 329.11 300.64 279.29 257.94 243.70 229.47 215.23 208.12
Net Cash Flow NCF -21 -184 -53 172 205 418 418 418 418 361 319 276 247 219 190 176
NPV@15% 924
IRR 64%
PIR 13.28
PSC MODEL
YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Total Opex 222.35 222.35 329.11 329.11 329.11 329.11 300.64 279.29 257.94 243.70 229.47 215.23 208.12
Recoverable Costs 273.95 273.95 380.71 380.71 380.71 329.11 300.64 279.29 257.94 243.70 229.47 215.23 208.12
Cost Oil Limit (MM USD) 157.68 170.82 298.94 298.94 298.94 298.94 264.77 239.15 213.53 196.44 179.36 162.28 153.74
Cost Oil Limit (Mstb) 2,628.00 2,628.00 4,599.00 4,599.00 4,599.00 4,599.00 4,073.40 3,679.20 3,285.00 3,022.20 2,759.40 2,496.60 2,365.20
Excess Cost Oil (MM USD) -116.27 -219.40 -301.18 -382.96 -464.73 -494.91 -530.78 -570.92 -615.34 -662.60 -712.70 -765.66 -820.03
Excess Cost Oil (Mstb) -1,937.83 -3,375.38 -4,633.50 -5,891.62 -7,149.73 -7,614.00 -8,165.87 -8,783.44 -9,466.71 -10,193.78 -10,964.65 -11,779.32 -12,615.88
Carry Forward -116.27 -219.40 -301.18 -382.96 -464.73 -494.91 -530.78 -570.92 -615.34 -662.60 -712.70 -765.66 -820.03
Profit Distribution
Average Daily Production Rate (Mstb/Day) 20.00 20.00 35.00 35.00 35.00 35.00 31.00 28.00 25.00 23.00 21.00 19.00 18.00
Profit Oil (Mstb) 3,942 3,942 6,899 6,899 6,899 6,899 6,110 5,519 4,928 4,533 4,139 3,745 3,548
Profit Oil (MM USD) 236.52 256.23 448.40 448.40 448.40 448.40 397.16 358.72 320.29 294.66 269.04 243.42 230.61
Total Contractor Profit Oil (Mstb/yr) 1,182.60 1,182.60 2,069.55 2,069.55 2,069.55 2,069.55 1,833.03 1,655.64 1,478.25 1,359.99 1,241.73 1,123.47 1,064.34
Total Government Profit Oil (Mstb/year) 2,759.40 2,759.40 4,828.95 4,828.95 4,828.95 4,828.95 4,277.07 3,863.16 3,449.25 3,173.31 2,897.37 2,621.43 2,483.46
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 2,628.000 2,628.000 4,599.000 4,599.000 4,599.000 4,599.000 4,073.400 3,679.200 3,285.000 3,022.200 2,759.400 2,496.600 2,365.200
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 1,183 1,183 2,070 2,070 2,070 2,070 1,833 1,656 1,478 1,360 1,242 1,123 1,064
Total Contractor Entitlements (Mstb) 3,811 3,811 6,669 6,669 6,669 6,669 5,906 5,335 4,763 4,382 4,001 3,620 3,430
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 157.68 170.82 298.94 298.94 298.94 298.94 264.77 239.15 213.53 196.44 179.36 162.28 153.74
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 70.956 76.869 134.52075 134.52075 134.52075 134.52075 119.14695 107.6166 96.08625 88.39935 80.71245 73.02555 69.1821
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 228.14 247.19 432.96 432.96 432.96 432.96 383.42 346.26 309.11 284.34 259.57 234.80 222.42
Income Before Tax -4.00 -0.50 -0.50 6.29 25.34 104.34 104.34 104.34 104.34 83.28 67.47 51.67 41.14 29.61 19.07 13.81
Taxable Income (4.0) (0.5) (0.5) (45.3) (26.3) 52.7 52.7 52.7 104.3 83.3 67.5 51.7 41.1 29.6 19.1 13.8
Tax (38%) 0.0 0.0 0.0 (17.2) (27.2) (7.2) 12.9 20.0 39.7 31.6 25.6 19.6 15.6 11.3 7.2 5.2
Tax loss carry forward (17.2) (27.2) (7.2) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Contractor NCF -4.00 -0.50 -0.50 -46.31 -27.26 51.74 38.86 31.70 63.69 50.63 40.83 31.04 24.51 18.36 11.82 8.56
Contractor Cum NCF -4.00 -4.50 -5.00 -51.31 -78.58 -26.83 12.03 43.73 107.42 158.05 198.88 229.92 254.43 272.78 284.61 293.17
NPV@15% 57
IRR 39%
PIR 1.09
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 165.56 179.36 313.88 313.88 313.88 313.88 278.01 251.11 224.20 206.27 188.33 170.39 161.42
Gov. Royalty 10% 44 47 83 83 83 83 74 66 59 55 50 45 43
Tax 0 0 0 13 20 40 32 26 20 16 11 7 5
Total Government Entitlements (USD) 4.00 0.50 0.50 209.86 227.31 397.42 410.31 417.46 437.07 383.70 343.68 303.65 276.97 249.90 223.22 209.88
NPV@15% 1,180
Appendix
Most Likely – New Pipeline – Fixed Price ($60/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 7,300 7,300 12,775 12,775 12,775 12,775 11,315 10,220 9,125 8,395 7,665 6,935 6,570
Price 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0
Total Revenue MM$ 438.00 438.00 766.50 766.50 766.50 766.50 678.90 613.20 547.50 503.70 459.90 416.10 394.20
Gov. Royalty 10% 44 44 77 77 77 77 68 61 55 50 46 42 39
Production After Royalty Mstb/yr 6,570 6,570 11,498 11,498 11,498 11,498 10,184 9,198 8,213 7,556 6,899 6,242 5,913
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 120 273 152 109 109 109 109 109
Total 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 25.55 25.55 44.7125 44.7125 44.7125 44.7125 39.6025 35.77 31.9375 29.3825 26.8275 24.2725 22.995
P/L Tariff $ / New Pipeline 79 79 79 79 79 79 79 79 79 79 79 79 79
Total Variable Cost $/bbl 105 105 124 124 124 124 119 115 111 108 106 103 102
Total Costs 138.00 437.00 195.00 184.55 184.55 203.71 203.71 203.71 203.71 198.60 194.77 190.94 188.38 185.83 183.27 182.00
Net Cash Flow NCF -138 -437 -195 210 210 486 486 486 486 412 357 302 265 228 191 173
NPV@15% 688
IRR 32%
PIR 4.51
PSC MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Total Opex 184.55 184.55 203.71 203.71 203.71 203.71 198.60 194.77 190.94 188.38 185.83 183.27 182.00
Recoverable Costs 338.55 338.55 357.71 357.71 357.71 203.71 198.60 194.77 190.94 188.38 185.83 183.27 182.00
Cost Oil Limit (MM USD) 157.68 157.68 275.94 275.94 275.94 275.94 244.40 220.75 197.10 181.33 165.56 149.80 141.91
Cost Oil Limit (Mstb) 2,628.00 2,628.00 4,599.00 4,599.00 4,599.00 4,599.00 4,073.40 3,679.20 3,285.00 3,022.20 2,759.40 2,496.60 2,365.20
Excess Cost Oil (MM USD) -180.87 -361.74 -443.51 -525.29 -607.06 -534.83 -489.03 -463.05 -456.88 -463.93 -484.20 -517.67 -557.76
Excess Cost Oil (Mstb) -3,014.50 -6,029.00 -7,391.88 -8,754.75 -10,117.63 -8,913.83 -8,150.48 -7,717.44 -7,614.73 -7,732.24 -8,069.97 -8,627.91 -9,295.96
Carry Forward -180.87 -361.74 -443.51 -525.29 -607.06 -534.83 -489.03 -463.05 -456.88 -463.93 -484.20 -517.67 -557.76
Profit Distribution
Average Daily Production Rate (Mstb/Day) 20.00 20.00 35.00 35.00 35.00 35.00 31.00 28.00 25.00 23.00 21.00 19.00 18.00
Profit Oil (Mstb) 3,942 3,942 6,899 6,899 6,899 6,899 6,110 5,519 4,928 4,533 4,139 3,745 3,548
Profit Oil (MM USD) 236.52 236.52 413.91 413.91 413.91 413.91 366.61 331.13 295.65 272.00 248.35 224.69 212.87
Total Contractor Profit Oil (Mstb/yr) 1,182.60 1,182.60 2,069.55 2,069.55 2,069.55 2,069.55 1,833.03 1,655.64 1,478.25 1,359.99 1,241.73 1,123.47 1,064.34
Total Government Profit Oil (Mstb/year) 2,759.40 2,759.40 4,828.95 4,828.95 4,828.95 4,828.95 4,277.07 3,863.16 3,449.25 3,173.31 2,897.37 2,621.43 2,483.46
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 2,628.000 2,628.000 4,599.000 4,599.000 4,599.000 3,395.208 3,310.042 3,246.167 3,182.292 3,022.200 2,759.400 2,496.600 2,365.200
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 1,183 1,183 2,070 2,070 2,070 2,070 1,833 1,656 1,478 1,360 1,242 1,123 1,064
Total Contractor Entitlements (Mstb) 3,811 3,811 6,669 6,669 6,669 5,465 5,143 4,902 4,661 4,382 4,001 3,620 3,430
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 157.68 157.68 275.94 275.94 275.94 275.94 244.40 220.75 197.10 181.33 165.56 149.80 141.91
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 70.956 70.956 124.173 124.173 124.173 124.173 109.9818 99.3384 88.695 81.5994 74.5038 67.4082 63.8604
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 228.14 228.14 399.61 399.61 399.61 399.61 353.89 319.59 285.30 262.43 239.57 216.70 205.27
Income Before Tax -4.00 -0.50 -0.50 44.09 44.09 196.40 196.40 196.40 196.40 155.78 125.32 94.86 74.55 53.24 32.93 22.78
Taxable Income (4.0) (0.5) (0.5) (109.9) (109.9) 42.4 42.4 42.4 196.4 155.8 125.3 94.9 74.5 53.2 32.9 22.8
Tax (38%) 0.0 0.0 0.0 (41.8) (83.5) (67.4) (51.3) (35.2) 39.4 59.2 47.6 36.0 28.3 20.2 12.5 8.7
Tax loss carry forward (41.8) (83.5) (67.4) (51.3) (35.2) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Contractor NCF -4.00 -0.50 -0.50 -110.91 -110.91 41.40 41.40 41.40 155.97 95.59 76.70 57.81 45.22 33.01 20.42 14.12
Contractor Cum NCF -4.00 -4.50 -5.00 -115.91 -226.83 -185.43 -144.03 -102.63 53.34 148.93 225.62 283.44 328.66 361.67 382.08 396.20
NPV@15% 36
IRR 21%
PIR 0.51
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 165.56 165.56 289.74 289.74 289.74 289.74 256.62 231.79 206.96 190.40 173.84 157.29 149.01
Gov. Royalty 10% 44 44 77 77 77 77 68 61 55 50 46 42 39
Tax 0 0 0 0 0 39 59 48 36 28 20 13 9
Total Government Entitlements (USD) 4.00 0.50 0.50 209.86 209.86 366.89 366.89 366.89 406.32 384.21 341.23 298.25 269.60 240.56 211.91 197.58
NPV@15% 1,110
Appendix
Most Likely – New Pipeline – Varying Price ($60-$65/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 7,300 7,300 12,775 12,775 12,775 12,775 11,315 10,220 9,125 8,395 7,665 6,935 6,570
Price 60.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0
Total Revenue MM$ 438.00 474.50 830.38 830.38 830.38 830.38 735.48 664.30 593.13 545.68 498.23 450.78 427.05
Gov. Royalty 10% 44 47 83 83 83 83 74 66 59 55 50 45 43
Production After Royalty Mstb/yr 6,570 6,570 11,498 11,498 11,498 11,498 10,184 9,198 8,213 7,556 6,899 6,242 5,913
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 120 273 152 109 109 109 109 109
Total 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 25.55 25.55 44.7125 44.7125 44.7125 44.7125 39.6025 35.77 31.9375 29.3825 26.8275 24.2725 22.995
P/L Tariff $ / New Pipeline 79 79 79 79 79 79 79 79 79 79 79 79 79
Total Variable Cost $/bbl 105 105 124 124 124 124 119 115 111 108 106 103 102
Total Costs 138.00 437.00 195.00 184.55 184.55 203.71 203.71 203.71 203.71 198.60 194.77 190.94 188.38 185.83 183.27 182.00
Net Cash Flow NCF -138 -437 -195 210 243 544 544 544 544 463 403 343 303 263 222 202
NPV@15% 834
IRR 35%
PIR 5.19
PSC MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Total Opex 184.55 184.55 203.71 203.71 203.71 203.71 198.60 194.77 190.94 188.38 185.83 183.27 182.00
Recoverable Costs 338.55 338.55 357.71 357.71 357.71 203.71 198.60 194.77 190.94 188.38 185.83 183.27 182.00
Cost Oil Limit (MM USD) 157.68 170.82 298.94 298.94 298.94 298.94 264.77 239.15 213.53 196.44 179.36 162.28 153.74
Cost Oil Limit (Mstb) 2,628.00 2,628.00 4,599.00 4,599.00 4,599.00 4,599.00 4,073.40 3,679.20 3,285.00 3,022.20 2,759.40 2,496.60 2,365.20
Excess Cost Oil (MM USD) -180.87 -348.60 -407.38 -466.16 -524.93 -429.71 -363.54 -319.16 -296.58 -288.52 -294.98 -315.98 -344.23
Excess Cost Oil (Mstb) -3,014.50 -5,363.08 -6,267.35 -7,171.62 -8,075.88 -6,610.92 -5,592.95 -4,910.21 -4,562.71 -4,438.70 -4,538.18 -4,861.16 -5,295.88
Carry Forward -180.87 -348.60 -407.38 -466.16 -524.93 -429.71 -363.54 -319.16 -296.58 -288.52 -294.98 -315.98 -344.23
Profit Distribution
Average Daily Production Rate (Mstb/Day) 20.00 20.00 35.00 35.00 35.00 35.00 31.00 28.00 25.00 23.00 21.00 19.00 18.00
Profit Oil (Mstb) 3,942 3,942 6,899 6,899 6,899 6,899 6,110 5,519 4,928 4,533 4,139 3,745 3,548
Profit Oil (MM USD) 236.52 256.23 448.40 448.40 448.40 448.40 397.16 358.72 320.29 294.66 269.04 243.42 230.61
Total Contractor Profit Oil (Mstb/yr) 1,182.60 1,182.60 2,069.55 2,069.55 2,069.55 2,069.55 1,833.03 1,655.64 1,478.25 1,359.99 1,241.73 1,123.47 1,064.34
Total Government Profit Oil (Mstb/year) 2,759.40 2,759.40 4,828.95 4,828.95 4,828.95 4,828.95 4,277.07 3,863.16 3,449.25 3,173.31 2,897.37 2,621.43 2,483.46
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 2,628.000 2,628.000 4,599.000 4,599.000 4,599.000 3,134.038 3,055.423 2,996.462 2,937.500 2,898.192 2,759.400 2,496.600 2,365.200
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 1,183 1,183 2,070 2,070 2,070 2,070 1,833 1,656 1,478 1,360 1,242 1,123 1,064
Total Contractor Entitlements (Mstb) 3,811 3,811 6,669 6,669 6,669 5,204 4,888 4,652 4,416 4,258 4,001 3,620 3,430
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 157.68 170.82 298.94 298.94 298.94 298.94 264.77 239.15 213.53 196.44 179.36 162.28 153.74
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 70.956 76.869 134.52075 134.52075 134.52075 134.52075 119.14695 107.6166 96.08625 88.39935 80.71245 73.02555 69.1821
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 228.14 247.19 432.96 432.96 432.96 432.96 383.42 346.26 309.11 284.34 259.57 234.80 222.42
Income Before Tax -4.00 -0.50 -0.50 44.09 63.14 229.74 229.74 229.74 229.74 185.32 151.99 118.67 96.46 73.25 51.03 39.93
Taxable Income (4.0) (0.5) (0.5) (109.9) (90.9) 75.7 75.7 75.7 229.7 185.3 152.0 118.7 96.5 73.2 51.0 39.9
Tax (38%) 0.0 0.0 0.0 (41.8) (76.3) (47.5) (18.7) 10.1 87.3 70.4 57.8 45.1 36.7 27.8 19.4 15.2
Tax loss carry forward (41.8) (76.3) (47.5) (18.7) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Contractor NCF -4.00 -0.50 -0.50 -110.91 -91.86 74.74 74.74 64.69 141.44 113.90 93.24 72.58 58.81 45.41 31.64 24.75
Contractor Cum NCF -4.00 -4.50 -5.00 -115.91 -207.78 -133.03 -58.29 6.40 147.84 261.74 354.97 427.55 486.36 531.77 563.41 588.16
NPV@15% 93
IRR 31%
PIR 0.75
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 165.56 179.36 313.88 313.88 313.88 313.88 278.01 251.11 224.20 206.27 188.33 170.39 161.42
Gov. Royalty 10% 44 47 83 83 83 83 74 66 59 55 50 45 43
Tax 0 0 0 0 10 87 70 58 45 37 28 19 15
Total Government Entitlements (USD) 4.00 0.50 0.50 209.86 227.31 397.42 397.42 407.47 484.72 422.48 375.79 329.11 297.99 266.49 235.36 219.80
NPV@15% 1,215
Appendix
Maximum – Existing Pipeline – Fixed Price ($60/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 8,760 8,760 15,330 15,330 15,330 15,330 13,505 12,410 10,950 10,220 9,125 8,395 8,030
Price 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0
Total Revenue MM$ 525.60 525.60 919.80 919.80 919.80 919.80 810.30 744.60 657.00 613.20 547.50 503.70 481.80
Gov. Royalty 10% 53 53 92 92 92 92 81 74 66 61 55 50 48
Production After Royalty Mstb/yr 7,884 7,884 13,797 13,797 13,797 13,797 12,155 11,169 9,855 9,198 8,213 7,556 7,227
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 3 20 10 6.6 6.6 6.6 6.6 6.6
Total 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 30.66 30.66 53.655 53.655 53.655 53.655 47.2675 43.435 38.325 35.77 31.9375 29.3825 28.105
P/L Tariff $ / New Pipeline 140.16 140.16 245.28 245.28 245.28 245.28 216.08 198.56 175.2 163.52 146 134.32 128.48
Total Variable Cost $/bbl 171 171 299 299 299 299 263 242 214 199 178 164 157
Total Costs 21.00 184.00 53.00 250.82 250.82 378.94 378.94 378.94 378.94 343.35 322.00 293.53 279.29 257.94 243.70 236.59
Net Cash Flow NCF -21 -184 -53 222 222 449 449 449 449 386 348 298 273 235 210 197
NPV@15% 1,033
IRR 70%
PIR 14.57
PSC MODEL
YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Total Opex 250.82 250.82 378.94 378.94 378.94 378.94 343.35 322.00 293.53 279.29 257.94 243.70 236.59
Recoverable Costs 302.42 302.42 430.54 430.54 430.54 378.94 343.35 322.00 293.53 279.29 257.94 243.70 236.59
Cost Oil Limit (MM USD) 189.22 189.22 331.13 331.13 331.13 331.13 291.71 268.06 236.52 220.75 197.10 181.33 173.45
Cost Oil Limit (Mstb) 3,153.60 3,153.60 5,518.80 5,518.80 5,518.80 5,518.80 4,861.80 4,467.60 3,942.00 3,679.20 3,285.00 3,022.20 2,890.80
Excess Cost Oil (MM USD) -113.20 -226.41 -325.82 -425.22 -524.63 -572.44 -624.08 -678.01 -735.02 -793.56 -854.40 -916.77 -979.90
Excess Cost Oil (Mstb) -1,886.73 -3,773.47 -5,430.25 -7,087.03 -8,743.82 -9,540.60 -10,401.26 -11,300.24 -12,250.33 -13,225.96 -14,239.92 -15,279.43 -16,331.71
Carry Forward -113.20 -226.41 -325.82 -425.22 -524.63 -572.44 -624.08 -678.01 -735.02 -793.56 -854.40 -916.77 -979.90
Profit Distribution
Average Daily Production Rate (Mstb/Day) 24.00 24.00 42.00 42.00 42.00 42.00 37.00 34.00 30.00 28.00 25.00 23.00 22.00
Profit Oil (Mstb) 4,730 4,730 8,278 8,278 8,278 8,278 7,293 6,701 5,913 5,519 4,928 4,533 4,336
Profit Oil (MM USD) 283.82 283.82 496.69 496.69 496.69 496.69 437.56 402.08 354.78 331.13 295.65 272.00 260.17
Total Contractor Profit Oil (Mstb/yr) 1,419.12 1,419.12 2,483.46 2,483.46 2,483.46 2,483.46 2,187.81 2,010.42 1,773.90 1,655.64 1,478.25 1,359.99 1,300.86
Total Government Profit Oil (Mstb/year) 3,311.28 3,311.28 5,794.74 5,794.74 5,794.74 5,794.74 5,104.89 4,690.98 4,139.10 3,863.16 3,449.25 3,173.31 3,035.34
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 3,153.600 3,153.600 5,518.800 5,518.800 5,518.800 5,518.800 4,861.800 4,467.600 3,942.000 3,679.200 3,285.000 3,022.200 2,890.800
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 1,419 1,419 2,483 2,483 2,483 2,483 2,188 2,010 1,774 1,656 1,478 1,360 1,301
Total Contractor Entitlements (Mstb) 4,573 4,573 8,002 8,002 8,002 8,002 7,050 6,478 5,716 5,335 4,763 4,382 4,192
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 189.22 189.22 331.13 331.13 331.13 331.13 291.71 268.06 236.52 220.75 197.10 181.33 173.45
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 85.1472 85.1472 149.0076 149.0076 149.0076 149.0076 131.2686 120.6252 106.434 99.3384 88.695 81.5994 78.0516
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 273.86 273.86 479.64 479.64 479.64 479.64 422.48 388.18 342.45 319.59 285.30 262.43 251.00
Income Before Tax -4.00 -0.50 -0.50 23.54 23.54 101.20 101.20 101.20 101.20 79.63 66.69 49.43 40.80 26.86 18.23 13.91
Taxable Income (4.0) (0.5) (0.5) (28.1) (28.1) 49.6 49.6 49.6 101.2 79.6 66.7 49.4 40.8 26.9 18.2 13.9
Tax (38%) 0.0 0.0 0.0 (10.7) (21.3) (2.5) 16.4 18.8 38.5 30.3 25.3 18.8 15.5 10.2 6.9 5.3
Tax loss carry forward (10.7) (21.3) (2.5) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Contractor NCF -4.00 -0.50 -0.50 -29.06 -29.06 48.60 32.23 29.75 61.74 48.37 40.35 29.65 24.30 16.65 11.30 8.63
Contractor Cum NCF -4.00 -4.50 -5.00 -34.06 -63.11 -14.51 17.71 47.47 109.21 157.58 197.93 227.57 251.87 268.52 279.82 288.45
NPV@15% 60
IRR 44%
PIR 1.07
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 198.68 198.68 347.68 347.68 347.68 347.68 306.29 281.46 248.35 231.79 206.96 190.40 182.12
Gov. Royalty 10% 53 53 92 92 92 92 81 74 66 61 55 50 48
Tax 0 0 0 16 19 38 30 25 19 16 10 7 5
Total Government Entitlements (USD) 4.00 0.50 0.50 251.74 251.74 440.16 456.54 459.01 478.62 418.08 381.76 333.33 309.11 272.41 248.20 236.09
NPV@15% 1,313
Appendix
Maximum – Existing Pipeline – Varying Price ($60-$65/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 8,760 8,760 15,330 15,330 15,330 15,330 13,505 12,410 10,950 10,220 9,125 8,395 8,030
Price 60.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0
Total Revenue MM$ 525.60 569.40 996.45 996.45 996.45 996.45 877.83 806.65 711.75 664.30 593.13 545.68 521.95
Gov. Royalty 10% 53 57 100 100 100 100 88 81 71 66 59 55 52
Production After Royalty Mstb/yr 7,884 7,884 13,797 13,797 13,797 13,797 12,155 11,169 9,855 9,198 8,213 7,556 7,227
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 3 20 10 6.6 6.6 6.6 6.6 6.6
Total 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 30.66 30.66 53.655 53.655 53.655 53.655 47.2675 43.435 38.325 35.77 31.9375 29.3825 28.105
P/L Tariff $ / New Pipeline 140.16 140.16 245.28 245.28 245.28 245.28 216.08 198.56 175.2 163.52 146 134.32 128.48
Total Variable Cost $/bbl 171 171 299 299 299 299 263 242 214 199 178 164 157
Total Costs 21.00 184.00 53.00 250.82 250.82 378.94 378.94 378.94 378.94 343.35 322.00 293.53 279.29 257.94 243.70 236.59
Net Cash Flow NCF -21 -184 -53 222 262 518 518 518 518 447 404 347 319 276 247 233
NPV@15% 1,208
IRR 74%
PIR 16.96
PSC MODEL
YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 21.00 184.00 53.00
Capex Amortization 51.600 51.600 51.600 51.600 51.600
Total Opex 250.82 250.82 378.94 378.94 378.94 378.94 343.35 322.00 293.53 279.29 257.94 243.70 236.59
Recoverable Costs 302.42 302.42 430.54 430.54 430.54 378.94 343.35 322.00 293.53 279.29 257.94 243.70 236.59
Cost Oil Limit (MM USD) 189.22 204.98 358.72 358.72 358.72 358.72 316.02 290.39 256.23 239.15 213.53 196.44 187.90
Cost Oil Limit (Mstb) 3,153.60 3,153.60 5,518.80 5,518.80 5,518.80 5,518.80 4,861.80 4,467.60 3,942.00 3,679.20 3,285.00 3,022.20 2,890.80
Excess Cost Oil (MM USD) -113.20 -210.64 -282.45 -354.27 -426.08 -446.29 -473.62 -505.22 -542.52 -582.66 -627.07 -674.33 -723.02
Excess Cost Oil (Mstb) -1,886.73 -3,240.62 -4,345.43 -5,450.25 -6,555.06 -6,866.03 -7,286.50 -7,772.67 -8,346.44 -8,964.01 -9,647.28 -10,374.35 -11,123.32
Carry Forward -113.20 -210.64 -282.45 -354.27 -426.08 -446.29 -473.62 -505.22 -542.52 -582.66 -627.07 -674.33 -723.02
Profit Distribution
Average Daily Production Rate (Mstb/Day) 24.00 24.00 42.00 42.00 42.00 42.00 37.00 34.00 30.00 28.00 25.00 23.00 22.00
Profit Oil (Mstb) 4,730 4,730 8,278 8,278 8,278 8,278 7,293 6,701 5,913 5,519 4,928 4,533 4,336
Profit Oil (MM USD) 283.82 307.48 538.08 538.08 538.08 538.08 474.03 435.59 384.35 358.72 320.29 294.66 281.85
Total Contractor Profit Oil (Mstb/yr) 1,419.12 1,419.12 2,483.46 2,483.46 2,483.46 2,483.46 2,187.81 2,010.42 1,773.90 1,655.64 1,478.25 1,359.99 1,300.86
Total Government Profit Oil (Mstb/year) 3,311.28 3,311.28 5,794.74 5,794.74 5,794.74 5,794.74 5,104.89 4,690.98 4,139.10 3,863.16 3,449.25 3,173.31 3,035.34
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 3,153.600 3,153.600 5,518.800 5,518.800 5,518.800 5,518.800 4,861.800 4,467.600 3,942.000 3,679.200 3,285.000 3,022.200 2,890.800
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 1,419 1,419 2,483 2,483 2,483 2,483 2,188 2,010 1,774 1,656 1,478 1,360 1,301
Total Contractor Entitlements (Mstb) 4,573 4,573 8,002 8,002 8,002 8,002 7,050 6,478 5,716 5,335 4,763 4,382 4,192
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 189.22 204.98 358.72 358.72 358.72 358.72 316.02 290.39 256.23 239.15 213.53 196.44 187.90
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 85.1472 92.2428 161.4249 161.4249 161.4249 161.4249 142.20765 130.6773 115.3035 107.6166 96.08625 88.39935 84.5559
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 273.86 296.73 519.65 519.65 519.65 519.65 457.72 420.57 371.03 346.26 309.11 284.34 271.96
Income Before Tax -4.00 -0.50 -0.50 23.54 46.41 141.21 141.21 141.21 141.21 114.88 99.08 78.01 67.47 50.67 40.14 34.87
Taxable Income (4.0) (0.5) (0.5) (28.1) (5.2) 89.6 89.6 89.6 141.2 114.9 99.1 78.0 67.5 50.7 40.1 34.9
Tax (38%) 0.0 0.0 0.0 (10.7) (12.6) 21.4 34.1 34.1 53.7 43.7 37.6 29.6 25.6 19.3 15.3 13.3
Tax loss carry forward (10.7) (12.6) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Contractor NCF -4.00 -0.50 -0.50 -29.06 -6.19 67.19 54.56 54.56 86.55 70.22 60.43 47.37 40.83 31.42 24.89 21.62
Contractor Cum NCF -4.00 -4.50 -5.00 -34.06 -40.25 26.94 81.50 136.06 222.61 292.84 353.27 400.63 441.47 472.88 497.77 519.39
NPV@15% 124
IRR 69%
PIR 1.93
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 198.68 215.23 376.66 376.66 376.66 376.66 331.82 304.91 269.04 251.11 224.20 206.27 197.30
Gov. Royalty 10% 53 57 100 100 100 100 88 81 71 66 59 55 52
Tax 0 0 21 34 34 54 44 38 30 26 19 15 13
Total Government Entitlements (USD) 4.00 0.50 0.50 251.74 272.67 498.22 510.86 510.86 530.46 463.75 423.73 370.36 343.68 303.27 276.59 263.24
NPV@15% 1,445
Appendix
Maximum – New Pipeline – Fixed Price ($60/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 8,760 8,760 15,330 15,330 15,330 15,330 13,505 12,410 10,950 10,220 9,125 8,395 8,030
Price 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0
Total Revenue MM$ 525.60 525.60 919.80 919.80 919.80 919.80 810.30 744.60 657.00 613.20 547.50 503.70 481.80
Gov. Royalty 10% 53 53 92 92 92 92 81 74 66 61 55 50 48
Production After Royalty Mstb/yr 7,884 7,884 13,797 13,797 13,797 13,797 12,155 11,169 9,855 9,198 8,213 7,556 7,227
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 120 273 152 109 109 109 109 109
Total 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 30.66 30.66 53.655 53.655 53.655 53.655 47.2675 43.435 38.325 35.77 31.9375 29.3825 28.105
P/L Tariff $ / New Pipeline 79 79 79 79 79 79 79 79 79 79 79 79 79
Total Variable Cost $/bbl 110 110 133 133 133 133 126 122 117 115 111 108 107
Total Costs 138.00 437.00 195.00 189.66 189.66 212.66 212.66 212.66 212.66 206.27 202.44 197.33 194.77 190.94 188.38 187.11
Net Cash Flow NCF -138 -437 -195 283 283 615 615 615 615 523 468 394 357 302 265 247
NPV@15% 1,060
IRR 39%
PIR 6.16
PSC MODEL
YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Total Opex 189.66 189.66 212.66 212.66 212.66 212.66 206.27 202.44 197.33 194.77 190.94 188.38 187.11
Recoverable Costs 343.66 343.66 366.66 366.66 366.66 212.66 206.27 202.44 197.33 194.77 190.94 188.38 187.11
Cost Oil Limit (MM USD) 189.22 189.22 331.13 331.13 331.13 331.13 291.71 268.06 236.52 220.75 197.10 181.33 173.45
Cost Oil Limit (Mstb) 3,153.60 3,153.60 5,518.80 5,518.80 5,518.80 5,518.80 4,861.80 4,467.60 3,942.00 3,679.20 3,285.00 3,022.20 2,890.80
Excess Cost Oil (MM USD) -154.44 -308.89 -344.42 -379.94 -415.47 -297.00 -211.56 -145.93 -106.74 -80.76 -74.59 -81.65 -95.30
Excess Cost Oil (Mstb) -2,574.07 -5,148.13 -5,740.25 -6,332.37 -6,924.48 -4,949.93 -3,525.93 -2,432.24 -1,778.99 -1,345.96 -1,243.25 -1,360.76 -1,588.38
Carry Forward -154.44 -308.89 -344.42 -379.94 -415.47 -297.00 -211.56 -145.93 -106.74 -80.76 -74.59 -81.65 -95.30
Profit Distribution
Average Daily Production Rate (Mstb/Day) 24.00 24.00 42.00 42.00 42.00 42.00 37.00 34.00 30.00 28.00 25.00 23.00 22.00
Profit Oil (Mstb) 4,730 4,730 8,278 8,278 8,278 8,278 7,293 6,701 5,913 5,519 4,928 4,533 4,336
Profit Oil (MM USD) 283.82 283.82 496.69 496.69 496.69 496.69 437.56 402.08 354.78 331.13 295.65 272.00 260.17
Total Contractor Profit Oil (Mstb/yr) 1,419.12 1,419.12 2,483.46 2,483.46 2,483.46 2,483.46 2,187.81 2,010.42 1,773.90 1,655.64 1,478.25 1,359.99 1,300.86
Total Government Profit Oil (Mstb/year) 3,311.28 3,311.28 5,794.74 5,794.74 5,794.74 5,794.74 5,104.89 4,690.98 4,139.10 3,863.16 3,449.25 3,173.31 3,035.34
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 3,153.600 3,153.600 5,518.800 5,518.800 5,518.800 3,544.250 3,437.792 3,373.917 3,288.750 3,246.167 3,182.292 3,022.200 2,890.800
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 1,419 1,419 2,483 2,483 2,483 2,483 2,188 2,010 1,774 1,656 1,478 1,360 1,301
Total Contractor Entitlements (Mstb) 4,573 4,573 8,002 8,002 8,002 6,028 5,626 5,384 5,063 4,902 4,661 4,382 4,192
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 189.22 189.22 331.13 331.13 331.13 331.13 291.71 268.06 236.52 220.75 197.10 181.33 173.45
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Contractor Profit Oil 85.1472 85.1472 149.0076 149.0076 149.0076 149.0076 131.2686 120.6252 106.434 99.3384 88.695 81.5994 78.0516
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 273.86 273.86 479.64 479.64 479.64 479.64 422.48 388.18 342.45 319.59 285.30 262.43 251.00
Income Before Tax -4.00 -0.50 -0.50 84.70 84.70 267.48 267.48 267.48 267.48 216.71 186.25 145.63 125.32 93.86 73.55 63.39
Taxable Income (4.0) (0.5) (0.5) (69.3) (69.3) 113.5 113.5 113.5 267.5 216.7 186.2 145.6 125.3 93.9 73.5 63.4
Tax (38%) 0.0 0.0 0.0 (26.3) (52.7) (9.5) 33.6 43.1 101.6 82.3 70.8 55.3 47.6 35.7 27.9 24.1
Tax loss carry forward (26.3) (52.7) (9.5) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Contractor NCF -4.00 -0.50 -0.50 -70.30 -70.30 112.48 78.90 69.36 164.84 133.36 114.47 89.29 76.70 58.19 45.60 39.30
Contractor Cum NCF -4.00 -4.50 -5.00 -75.30 -145.59 -33.11 45.79 115.15 279.98 413.34 527.82 617.11 693.80 752.00 797.60 836.90
NPV@15% 173
IRR 51%
PIR 1.07
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Government Share in Profit Oil 198.68 198.68 347.68 347.68 347.68 347.68 306.29 281.46 248.35 231.79 206.96 190.40 182.12
Gov. Royalty 10% 53 53 92 92 92 92 81 74 66 61 55 50 48
Tax 0 0 0 34 43 102 82 71 55 48 36 28 24
Total Government Entitlements (USD) 4.00 0.50 0.50 251.74 251.74 440.16 473.74 483.29 541.81 470.17 427.19 369.89 341.23 297.87 269.22 254.89
NPV@15% 1,389
Appendix
Maximum – New Pipeline – Varying Price ($60-$65/bbl)
Economic Evaluation
Course Project
GENERAL MODEL
0 1 2 3 4 5 6 7 8 9 10 11 12
YEARS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Revenue
Production Mstb/yr 8,760 8,760 15,330 15,330 15,330 15,330 13,505 12,410 10,950 10,220 9,125 8,395 8,030
Price 60.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0
Total Revenue MM$ 525.60 569.40 996.45 996.45 996.45 996.45 877.83 806.65 711.75 664.30 593.13 545.68 521.95
Gov. Royalty 10% 53 57 100 100 100 100 88 81 71 66 59 55 52
Production After Royalty Mstb/yr 7,884 7,884 13,797 13,797 13,797 13,797 12,155 11,169 9,855 9,198 8,213 7,556 7,227
Costs
Drilling Cost 90 36 25.2 25.2 25.2 25.2 25.2
Facilities Cost 18 74 7 19.8 19.8 19.8 19.8 19.8
Pipeline Cost 120 273 152 109 109 109 109 109
Total 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Operating Cost
Operating & Maintenance 70 70 70 70 70 70 70 70 70 70 70 70 70
Overhead Cost 10 10 10 10 10 10 10 10 10 10 10 10 10
Total Fix Opex 80 80 80 80 80 80 80 80 80 80 80 80 80
Variable Cost $ 30.66 30.66 53.655 53.655 53.655 53.655 47.2675 43.435 38.325 35.77 31.9375 29.3825 28.105
P/L Tariff $ / New Pipeline 79 79 79 79 79 79 79 79 79 79 79 79 79
Total Variable Cost $/bbl 110 110 133 133 133 133 126 122 117 115 111 108 107
Total Costs 138.00 437.00 195.00 189.66 189.66 212.66 212.66 212.66 212.66 206.27 202.44 197.33 194.77 190.94 188.38 187.11
Net Cash Flow NCF -138 -437 -195 283 323 684 684 684 684 584 524 443 403 343 303 283
NPV@15% 1,236
IRR 42%
PIR 6.98
PSC MODEL
YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
DESCRIPTION
Cost Recovery
Total Capex 138.00 437.00 195.00
Capex Amortization 154.000 154.000 154.000 154.000 154.000
Total Opex 189.66 189.66 212.66 212.66 212.66 212.66 206.27 202.44 197.33 194.77 190.94 188.38 187.11
Recoverable Costs 343.66 343.66 366.66 366.66 366.66 212.66 206.27 202.44 197.33 194.77 190.94 188.38 187.11
Cost Oil Limit (MM USD) 189.22 204.98 358.72 358.72 358.72 358.72 316.02 290.39 256.23 239.15 213.53 196.44 187.90
Cost Oil Limit (Mstb) 3,153.60 3,153.60 5,518.80 5,518.80 5,518.80 5,518.80 4,861.80 4,467.60 3,942.00 3,679.20 3,285.00 3,022.20 2,890.80
Excess Cost Oil (MM USD) -154.44 -293.12 -301.05 -308.99 -316.92 -170.85 -61.10 26.86 58.91 44.38 22.59 8.06 0.80
Excess Cost Oil (Mstb) -2,574.07 -4,509.54 -4,631.58 -4,753.63 -4,875.68 -2,628.49 -940.04 413.18 906.23 682.74 347.50 124.01 12.26
Carry Forward -154.44 -293.12 -301.05 -308.99 -316.92 -170.85 -61.10 0.00 0.00 0.00 0.00 0.00 0.00
Profit Distribution
Average Daily Production Rate (Mstb/Day) 24.00 24.00 42.00 42.00 42.00 42.00 37.00 34.00 30.00 28.00 25.00 23.00 22.00
Profit Oil (Mstb) 4,730 4,730 8,278 8,278 8,278 8,278 7,293 6,701 5,913 5,519 4,928 4,533 4,336
Profit Oil (MM USD) 283.82 307.48 538.08 538.08 538.08 538.08 474.03 435.59 384.35 358.72 320.29 294.66 281.85
Total Contractor Profit Oil (Mstb/yr) 1,419.12 1,419.12 2,483.46 2,483.46 2,483.46 2,483.46 2,187.81 2,010.42 1,773.90 1,655.64 1,478.25 1,359.99 1,300.86
Total Government Profit Oil (Mstb/year) 3,311.28 3,311.28 5,794.74 5,794.74 5,794.74 5,794.74 5,104.89 4,690.98 4,139.10 3,863.16 3,449.25 3,173.31 3,035.34
Parties Entitlements
Contractor Entitlements (Mstb)
Contractor Cost Oil 3,153.600 3,153.600 5,518.800 5,518.800 5,518.800 3,271.615 3,173.346 3,114.385 3,035.769 2,996.462 2,937.500 2,898.192 2,878.538
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 123.95 271.87 204.82 104.25 37.20 3.68
Contractor Profit Oil 1,419 1,419 2,483 2,483 2,483 2,483 2,188 2,010 1,774 1,656 1,478 1,360 1,301
Total Contractor Entitlements (Mstb) 4,573 4,573 8,002 8,002 8,002 5,755 5,361 5,249 5,082 4,857 4,520 4,295 4,183
Contractor Entitlements (MM USD)
Contractor PSA Payments -4 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Contractor Cost Oil 189.22 204.98 358.72 358.72 358.72 358.72 316.02 263.54 197.33 194.77 190.94 188.38 187.11
Contractor Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8.06 17.67 13.31 6.78 2.42 0.24
Contractor Profit Oil 85.1472 92.2428 161.4249 161.4249 161.4249 161.4249 142.20765 130.6773 115.3035 107.6166 96.08625 88.39935 84.5559
Total Contractor Entitlements (MM USD) -4.00 -0.50 -0.50 273.86 296.73 519.65 519.65 519.65 519.65 457.72 401.77 329.80 315.20 293.30 278.70 271.40
Income Before Tax -4.00 -0.50 -0.50 84.70 107.57 307.49 307.49 307.49 307.49 251.96 199.84 132.98 120.93 101.86 89.82 83.80
Taxable Income (4.0) (0.5) (0.5) (69.3) (46.4) 153.5 153.5 153.5 307.5 252.0 199.8 133.0 120.9 101.9 89.8 83.8
Tax (38%) 0.0 0.0 0.0 (26.3) (44.0) 14.3 58.3 58.3 116.8 95.7 75.9 50.5 46.0 38.7 34.1 31.8
Tax loss carry forward (26.3) (44.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Contractor NCF -4.00 -0.50 -0.50 -70.30 -47.43 138.14 94.16 94.16 189.64 155.21 122.90 81.44 73.98 63.15 55.69 51.95
Contractor Cum NCF -4.00 -4.50 -5.00 -75.30 -122.73 15.41 109.58 203.74 393.39 548.60 671.50 752.94 826.92 890.08 945.76 997.72
NPV@15% 225
IRR 63%
PIR 1.28
Government Entitlements (USD)
Government Share in Excess Cost Oil 0.00 0.00 0.00 0.00 0.00 0.00 0.00 18.80 41.23 31.06 15.81 5.64 0.56
Government Share in Profit Oil 198.68 215.23 376.66 376.66 376.66 376.66 331.82 304.91 269.04 251.11 224.20 206.27 197.30
Gov. Royalty 10% 53 57 100 100 100 100 88 81 71 66 59 55 52
Tax 0 0 14 58 58 117 96 76 51 46 39 34 32
Total Government Entitlements (USD) 4.00 0.50 0.50 251.74 272.67 491.15 535.13 535.13 593.65 515.84 480.82 432.48 395.05 338.53 301.11 282.39
NPV@15% 1,532
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