DEVELOPMENT WELL EVALUATION - EXAMPLE

Chance factor for success = 0.950

Working Interest = 0.850
Royalty = 0.150
Net Interest = 0.723
Federal tax = 0.350
State tax = 0.100
Tangible Investment = 250.0 M$
Intangible Investment = 1500.0 M$
Dry Hole Cost = 700.0 M$
Oil Severance Tax = 0.055
Gas Severance Tax = 0.060
Ad Valorem Tax = 0.021

Oil Gas Op. Overhead Oil Gas

Prod. Prod. Costs Costs Price Price
Year MBO MMCF M$ M$ $/BBL $/MCF
2006 250 200 16.0 3 69 6
2007 200 180 50.0 8 69.25 6.1
2008 140 110 50.0 8 69.5 6.2
2009 100 75 50.0 8 69.75 6.3
2010 75 60 50.0 8 70 6.4
2011 55 52 50.0 8 70.25 6.5
2012 50 40 50.0 8 70.5 6.6
2013 38 30 50.0 8 70.75 6.7
2014 30 10 50.0 8 71 6.8
2015 25 5 50.0 8 71.25 6.9
2015 22 5 50.0 8 71.5 7
2016 20 5 50.0 8 71.75 7.1
 Prod. OVH+OPR Total Total Cash
Net Revenue M$ Taxes Costs Invest. Costs Flow
Oil Gas M$ M$ M$ M$ M$
12463.13 867 1017.425 16.15 1518.816 2552.39 10777.73
10006.63 793.305 824.7612 49.3 874.0612 9925.869
7029.925 492.745 574.1866 49.3 623.4866 6899.183
5039.438 341.3813 410.6491 49.3 459.9491 4920.87
3793.125 277.44 310.7501 49.3 360.0501 3710.515
2791.559 244.205 231.9391 49.3 281.2391 2754.525
2546.813 190.74 209.0077 49.3 258.3077 2479.245
1942.441 145.2225 159.3886 49.3 208.6886 1878.975
1538.925 49.13 120.9378 49.3 170.2378 1417.817
1286.953 24.92625 99.82746 49.3 149.1275 1162.752
1136.493 25.2875 88.42172 49.3 137.7217 1024.058
1036.788 25.64875 80.8734 49.3 130.1734 932.2629
 I= 0.06

Percent Taxable Cash

Deprec. Depletion Income Tax Flow Pw(i)
M$ M$ M$ M$ M$ M$
107.525 1999.519 8670.691 3598.337 5072.354 4785.24
11.05 1619.99 8294.829 3442.354 4852.475 4318.686
11.05 1128.401 5759.733 2390.289 3369.444 2829.05
11.05 807.1228 4102.697 1702.619 2400.078 1901.086
11.05 610.5848 3088.88 1281.885 1806.995 1350.292
11.05 455.3647 2288.111 949.5659 1338.545 943.6212
11.05 410.6329 2057.562 853.8882 1203.674 800.5118
11.05 313.1496 1554.776 645.2319 909.5437 570.659
11.05 238.2083 1168.559 484.952 683.607 404.6259
11.05 196.7819 954.92 396.2918 558.6282 311.9351
174.267 849.7913 352.6634 497.1279 261.8808
159.3654 772.8974 320.7524 452.145 224.7022

Total: 18702.29