Assignment 3

MYP1113-01/02
2014/15-I

Due: 13 Nov 2014

Determine the contractor's yearly NCF after tax

for the following.

YEAR
1
2
3
4
5
6
7
8
9
10

CAPEX
$70,000,000
$20,000,000

Production
Rate, bbl/d
1,000
1,200
4,000
3,500
1,300
900
850
800
600
550

Oil Price, $/bbl

100
100
100
100
100
100
100
100
100
100

Simple PSC:
Royalty = 10%
Cost oil ceiling = 30%
Contractor's Profit Oil Sharing = 35%
Depreciation rate = 10%
Income Tax rate = 40%
Fixed OPEX per year = $2,000,000
1 year = 365 days
Assumption:
No bonus payments, no research cess, no supplementary payment, all oil for domestic used.

INPUT/YEAR
Oil Production
Oil Price
Capex
Opex
Revenue
Royalty
Cost Recovery Ceiling
Cost Incurred
Cost Bank
Cost Recovered
Cost Oil Unrecovered
Profit Oil
Contractor Profit Share
Entitlement
Opex
Income Before Tax
Capital Allowance
Taxable Income
Tax Paid
Income After Tax
Capex
NCF After Tax
Cumulative NCF after tax
NPV
IRR

1
2
3
1,000
1200
4000
100
100
100
70
20
2
2
2
36.50
43.80
146.00
4
4
15
11
13
44
72
22
2
72
83
72
11
13
44
61
70
28
21.90
26.28
87.60
7.67
9.20
30.66
18.62
22.34
74.46
2
2
2
16.62
20.34
72.46
7.0
9.0
9.0
9.62
11.34
63.46
3.85
4.54
25.38
12.77
15.80
47.08
70
20
(57.23)
(4.20)
47.08
(57.23) (61.43) (14.35)
0%
5%
10%
$632.28 $354.49 $193.69
26.70%

4
3500
100

5
1300
100

2
127.75
13
38
2
30
30
84.87
29.70
59.81
2
57.81
9.0
48.81
19.53
38.29

6
900
100

7
850
100

8
800
100

2
47.45
5
14
2
2
2
40.71
14.25
16.25
2
14.25
9.0
5.25
2.10
12.15

2
32.85
3
10
2
2
2
27.57
9.65
11.65
2
9.65
9.0
0.65
0.26
9.39

2
31.03
3
9
2
2
2
25.92
9.07
11.07
2
9.07
9.0
0.07
0.03
9.04

2
29.20
3
9
2
2
2
24.28
8.50
10.50
2
8.50
9.0
(0.50)
(0.20)
8.70

38.29 12.15
23.94 36.08
15%
20%
$100.25 $43.65

9.39
45.47
25%
$8.71

9.04
8.70
54.52
63.21
26% 26.40%
$3.49
$1.81

9
600
100

10
550
100

11
500
100

2
21.90
2
7
2
2
2
17.71
6.20
8.20
2
6.20
9.0
(2.80)
(1.12)
7.32

2
20.08
2
6
2
2
2
16.07
5.62
7.62
2
5.62
9.0
(3.38)
(1.35)
6.97

12

13
250
100

0
100

2
18.25
2
5
2
2
2
14.43
5.05
7.05
2
5.05
9.0
(3.95)
(1.58)
6.63

2
9.13
1
3
2
2
2
6.21
2.17
4.17
2
2.17
9.0
(6.83)
(2.73)
4.90

2
0.00
2
2
2
2
(2.00)
(2.00)
(0.80)
(1.20)

7.32
6.97
6.63
70.53
77.51 141.37
26.70%
27%
30%
$0.01 ($1.00) ($12.95)

4.90
150.47
40%
($35.49)

(1.20)
102.19

NPV
$700.00
$600.00
$500.00
$400.00
Net Present Value
(USD MM)
$300.00
NPV

IRR = 26.7%

$200.00

NPV (26.7%)= USD 0 MM

$100.00
$0.00
0%
($100.00)

5%

10%

15%

20%

25%

Discount rates

30%

35%

40%

45%

Economic Indicators

200.00

Economic Life
Economic Limit Year

150.00

100.00
Cash Flow (USDMM)

Ultimate Cash Surplus

Production

50.00

Net Cash Flow

Development

Cumulative NCF

10

11

12

13
Abandonment

Breakeven year

(50.00)
First Production

(100.00)

Maximum Cash Sink

Breakeven
First Production
Payback Period
Economic Limit Year
Economic Life
Ultimate Cash Surplus
PIR

Year

(61.43)
3.4
1.7
1.7
11.60
9.90
102.19
(1.66)

USD MM
year
year
year
year

Contractor's Yearly NCF

Units and %
bbl/day
$/BBL
MMUS$

INPUT/YEAR
Oil Production
Oil Price
Capex
Opex
Revenue
10%
Royalty
30%
Cost Recovery Ceiling
Cost Incurred
Cost Bank
Cost Recovered
Cost Oil Unrecovered
Profit Oil
35%
Contractor Profit Share
Entitlement
Opex
Income Before Tax
10% Deprec. Capital Allowance
Taxable Income
40% Tax Tax Paid
Income After Tax
Capex
NCF After Tax

1
1,000
100
70
2
36.50
4
11
72
72
11
61
21.90
7.67
18.62
2
16.62
7.0
9.62
3.85
12.77
70
(57.23)

2
1200
100
20
2
43.80
4
13
22
83
13
70
26.28
9.20
22.34
2
20.34
9.0
11.34
4.54
15.80
20
(4.20)

3
4000
100

4
3500
100

5
1300
100

6
900
100

7
850
100

8
800
100

9
600
100

10
550
100

2
146.00
15
44
2
72
44
28
87.60
30.66
74.46
2
72.46
9.0
63.46
25.38
47.08

2
127.75
13
38
2
30
30
84.87
29.70
59.81
2
57.81
9.0
48.81
19.53
38.29

2
47.45
5
14
2
2
2
40.71
14.25
16.25
2
14.25
9.0
5.25
2.10
12.15

2
32.85
3
10
2
2
2
27.57
9.65
11.65
2
9.65
9.0
0.65
0.26
9.39

2
31.03
3
9
2
2
2
25.92
9.07
11.07
2
9.07
9.0
0.07
0.03
9.04

2
29.20
3
9
2
2
2
24.28
8.50
10.50
2
8.50
9.0
(0.50)
(0.20)
8.70

2
21.90
2
7
2
2
2
17.71
6.20
8.20
2
6.20
9.0
(2.80)
(1.12)
7.32

2
20.08
2
6
2
2
2
16.07
5.62
7.62
2
5.62
9.0
(3.38)
(1.35)
6.97

47.08

38.29

12.15

9.39

9.04

8.70

7.32

6.97