ECONOMIC

Sample Calculation for the scenario B

Economic evaluation is the crucial part in the Oil and Gas Industry. An
economic evaluation process is designed to produce an unbiased estimate of
the value of property. Besides that, this evaluation will examines whether
your project in TABUR field is profitable or not. There are some assumptions
that used in the calculations:

Oil price 2010 = USD 60.43/barrels

Oil price escalation = 3% per year

Oil peak rate = 15% EUR per year (3 years)

Cost escalation = 5% per year

0.085 per year a factor for production decline rate

ECONOMIC EVALUATION FOR SCENARIO B

No

Year

Oil Price

Producti
on

2010

60.43

Cumulat
ive
Producti
on
0

2011

64.110187

2012

2013

2014

2015

2016

2017

2018

10

2019

66.033492
61
68.014497
39
70.054932
31
72.156580
28
74.321277
69
76.550916
02
78.847443
5
81.212866
8

Revenu
e

Royalty

3250000

3250000

6500000

9750000

9750000

1950000
0
2925000
0
3900000
0

2345088
85
4830883
05
7463714
31
7687625
74
7918254
51

2345088
8
4830883
0
7463714
3
7687625
7
7918254
5

9750000
9750000

11

2020

12

2021

13

2022

83.649252
81
86.158730
39
88.743492
3

8955494
8225731
7555435

4795549
4
5618122
6
6373666
2

7491204
46
7087186
22
6704957
63

7491204
4
7087186
2
6704957
6

Starting from Year 6 which is 2015,

Oil price= USD 70.16
Production= 3250000 stb
Revenue= Oil price * Production
= USD 70.16 * 3250000
= USD 234508886
Royalty is 10% from revenue= 0.1 * USD 234508886
= USD 23450888

CAPEX

CAPEX PHASING
Facilities\Year
Jacket
Topside
FSO
Well Cost

2010
0
0
0.3
0

2011
0
0
0.1
0

2012
0
0
0.2
0.5

2013
0.35
0.3
0.1
0.5

2014
0.65
0.7
0.3
0

Jacket
0
0
0
10323033.71
19171348.31
0
0
0
0
0
0
0
0
29494382

Topside
0
0
0
6235955.055
14550561.8
0
0
0
0
0
0
0
0
20786516

CAPEX
FSO
36000000
12000000
24000000
12000000
36000000
0
0
0
0
0
0
0
0
120000000

Well Cost
0
0
46000000
46000000
0
0
0
0
0
0
0
0
0
92000000

Total
36000000
12000000
70000000
74558988
69721910
0
0
0
0
0
0
0
0
262280898

The price on the component on each year obtained from capex phasing
multiply by its components price.
Jacket= USD 29494382
Topside= USD 20786516
FSO= USD 120000000
Well cost= USD 92000000
CAPEX= Jacket+ Topside + FSO+ Well cost
= USD 29494382 + USD 20786516+ USD 120000000 + USD
92000000
= USD 262280898
Total CAPEX= USD 262280898 + (0.05 * Well cost for 17 wells)
= USD 262280898 + (0.05 * USD 92000000)

= USD 266880898

Total CAPEX + Contingency= 1.35 * Total CAPEX

= 1.35 * USD 266880898
= USD 360289213
OPEX
Facilities
Structure

Percent (%)
1

Price
= Percent (%) * (Total
Contingency)
= 0.01 * USD 360289213
= USD 3602892

Well

500000/Well

FSO

15

= 500000 * 17 Wells
= USD 8500000
= Percent (%) * (Total
Contingency)
= 0.15 * USD 360289213
= USD 54043382

TOTAL OPEX

R/C

Cost

Cost

CAPEX

CAPEX

= Structure + Well + FSO

= USD 3602892 + USD 8500000 + USD
54043382
=USD 66146274

Cost Bank

Cost

Cost

Ceilling

Incured

0
0
0
0

0
0
0
0

36000000
24000000
94000000
168558988

0
0
0
0

238280898

238280898

1641562
20
2898529
83
3731857
15
2306287
72
2375476
35
2247361
33
2126155
86
2011487
29

36000000
12000000
70000000
74558988
.
69721910
.
93829754

Unrecovere
d
36000000
24000000
94000000
168558988

332110653

164156220

167954432

99459539

267413972

267413972

10542711
1
11175273
8
11845790
2
12556537
6
13309929
9
14108525
7

105427111

105427111

111752738

111752738

118457902

118457902

125565376

125565376

133099299

133099299

141085257

141085257

1.3962649
39
1.8065185
64
7.0795018
39
6.8791385
8
6.6844459
78
5.9659793
56
5.3247359
31

Recovered

Cost incured= CAPEX+ OPEX

= 0 + USD 93829754
= USD 93829754
Cost bank= Cost incured that year + Cost unrecovered before that year
= USD 93829754 + USD 238280898
= USD 332110653
Cost recovered= Minimum between Cost ceiling and Cost bank
= USD 164156220
R/C= Revenue before that year / Cost unrecovered before that year
When cost recovered starting to 0,

R/C= Revenue before that year / Cost recovered before that year

Cost ceiling depend on the revenue over cost ratios which follow the PSC
1997.

R/C

TCT PORTION

CONTRACTOR TPT

0-1
1-1.4
1.4-2
2-2.5
2.5-3
>3

0.7
0.6
0.5
0.3
0.3
0.3

0.8
0.7
0.6
0.5
0.4
0.3

UNUSED
TCT
0.8
0.7
0.6
0.5
0.4

Cost ceiling= TCT Portion * Revenue

At 6TH year which is the production start, R/C is 0,
Cost ceiling= 0.7 * USD 234508885
= USD 164156220

Cost Unused
0
0
0
0
0
0
22439010
267758603
118876033
119089732
99170757

Cost Unused
Share (C)
0
0
0
0
0
0
17951208
187431022
47550413
47635893
39668302

Cost Unused
(NOC)
0
0
0
0
0
0
4487802
80327581
71325620
71453839
59502454

Profit Oil
0
0
0
0
0
46901777
144926491
298548572
461257544
475095270
449472267

79516287
60063471

31806514
24025388

47709772
36038082

425231173
402297458

At 7th year,
Cost unused= Cost Ceiling Cost Recovered
= USD 289852983 USD 267413972
= USD 22439010
Cost unused share (C) depend on the revenue over cost ratios which
follow the PSC 1997.
At 7th year, R/C is 1.641,
Cost unused share (C) = Unused TCT * Cost Unused
= 0.7 * USD 22439010
= USD 17951208
Cost Unused (NOC) = Cost unused - Cost unused share (C)
= USD 22439010 USD 17951208
= USD 4487802
Profit Oil= Revenue - Royalty Cost Ceiling
= USD 483088305 USD 48308830 USD 289852983
= USD 144926491

Profit Share Profit Share

(C)
(NOC)
0
0
0
0
0
0
0
0
0
0
37521421
9380355
101448544
43477947
179129143
119419429
138377263
322880281
142528581
332566689
134841680
314630587
127569352
297661821
120689237
281608220

Entitlement
C
0
0
0
0
0
201677641
386813724
471987277
297680415
308622377
300075360
292475166
285799883

Entitlement
(NOC)
0
0
0
0
0
32831244
96274580
274384153
471082158
483203074
449045086
416243456
384695880

Income
before tax
0
0
0
0
0
107847887
287354185
366560166
185927676
190164474
174509983
159375866
144714626

Profit Share (C) depend on the revenue over cost ratios which follow the
PSC 1997.
At 6th year, R/C is 0,
Profit Share (C) = Contractor TPT * Profit Oil
= 0.8 * USD 46901777
= USD 37521421
Profit Share (NOC) = Profit Oil * Profit Share (C)
= USD 46901777 USD 37521421
= USD 9380355
Entitlement (C) = Cost recovered + Cost Unused Share (C) + Profit Share
(C)
= USD 164156220 + 0 + USD 37521421
= USD 201677641

Entitlement (NOC) = Revenue + Cost Unused (NOC) + Profit Share (NOC)

= USD 23450888 + 0 + USD 9380355

= USD 32831244

Income before tax= Entitlement (C) OPEX

= USD 201677641 USD 93829754
= USD 107847887

Depreciation obtained using declining balance method by assuming 25%.

Jacket
0
0
0
0
0
7373595
5530196
4147647
3110735
2333051
1749788
1312341
984256

Topside
0
0
0
0
0
5196629
3897471
2923103
2192327
1644245
1233184
924888
693666

Taxable
Income
0
0
0

Tax Paid
0
0
0

Depreciation
FSO
0
0
0
0
0
30000000
22500000
16875000
12656250
9492187
7119140
5339355
4004516

Well Cost
0
0
0
0
0
18255055
13691291
10268468
7701351
5776013
4332010
3249007
2436755

Income
After Tax
0
0
0

NCF After
Tax
-36000000
-12000000
-70000000

Total
0
0
0
0
0
60825279
45618959
34214219
25660664
19245498
14434124
10825593
8119194

CNCF
-36000000
-48000000
-118000000

-74558988

-69721910

47022607

17868591

89979296

89979296

241735225
332345946
160267011
170918975
160075859
148550273
136595431

91859385
126291459
60901464
64949210
60828826
56449104
51906263

195494799
240268706
125026212
125215263
113681156
102926762
92808362

195494799
240268706
125026212
125215263
113681156
102926762
92808362

Taxable Income= Income before tax - Total Depreciation

= USD 107847887 USD 60825279
= USD 47022607
Tax Paid= 0.38 * Taxable Income
= 0.38 * USD 47022607
= USD 17868591
Income after Tax= Income before tax Tax Paid
= USD 107847887 USD 17868591
= USD 89979296

At 6th year,
NCF after Tax= Income after tax CAPEX
= USD 89979296 0
= USD 89979296

Payback periods= End of payback Start of payback

= 6.8 5

192558988.8
262280898.9
172301602.1
23193197.71
263461904.3
388488116.7
513703380.3
627384536.9
730311299.8
823119662

= 1.8 years
PIR= Terminal Cash Surplus (TCS) / Maximum Capital Outlay
= 799009789.3 / 243301119.6
Discounted
Factor
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0.55
0.6
0.65
0.7
0.75
0.8
0.85
0.9
0.95
1

NPV
$823,119,661.
99
$477,557,321.
50
$274,567,249.
05
$152,489,118.
Year
64
0
$77,725,300.7
14
2
$31,356,351.0
37
$2,411,546.99
4
5
($15,638,461.
6
27)
7
($26,770,357.
8
82)
9
($33,455,890.
10
80)
11
($37,259,004.
12
03)
NPV
($39,184,635.
35)
($39,887,072.
60)
($39,796,979.
68)
($39,200,289.
54)
($38,288,036.
51)
($37,188,318.
17)
($35,987,081.
85)
($34,741,813.
29)
($33,490,653.
01)
($32,258,528.
74)

= 3.28404
IRR= 31%

DCNF
-36000000
-12960000
-81648000
-93922852.85
-94855888.97
132209107.1
310225678.1
411778340.4
231414793.5
250305891.3
245429090.9
239988054.1
233707244.3
1735671458