Exercise : Calculate Cash Flow The following offshore oil development project is being proposed. What would be your approach to address the opportunity ? Production Data : First Oil beginning of Year 3 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Annual Oil Production 5 15 15 10 2.5 1.0 0.5 Technical Costs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Platform 30 30 Facilities 15 30 Tangible Drilling 10 15 10 4 Intangible Drilling 20 32 15 Fixed Opex 8 14 15 15 15 15 15 Variable Opex US$ 0.40/bbl produced Oil Price forecast : US$ 20/bbl, expected to remain constant thereafter Terms and Conditions : Royalty 25% Tax rate 20%, Tax losses not allowed Capital Allowance – Straight line at 25% p.a., Only start after First Oil production
Exercise : Calculate Cash Flow The following offshore oil development project is being proposed. What would be your approach to address the opportunity ? Production Data : First Oil beginning of Year 3 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Annual Oil Production 5 15 15 10 2.5 1.0 0.5 Technical Costs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Platform 30 30 Facilities 15 30 Tangible Drilling 10 15 10 4 Intangible Drilling 20 32 15 Fixed Opex 8 14 15 15 15 15 15 Variable Opex US$ 0.40/bbl produced Oil Price forecast : US$ 20/bbl, expected to remain constant thereafter Terms and Conditions : Royalty 25% Tax rate 20%, Tax losses not allowed Capital Allowance – Straight line at 25% p.a., Only start after First Oil production
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Exercise : Calculate Cash Flow
The following offshore oil development project is being proposed. What would be
your approach to address the opportunity ?
Production Data
: First Oil beginning of Year 3
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Annual Oil Production
5
15
15
10
2.5
1.0
0.5
Technical Costs
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Platform
30
30
Facilities
15
30
Tangible Drilling
10
15
10
4
Intangible Drilling
20
32
15
5
Fixed Opex
14
15
15
15
15
15
Variable Opex
US$ 0.40/bbl produced
Oil Price forecast
: US$ 20/bbl, expected to remain constant thereafter
Terms and Conditions : Royalty 25%
Tax rate 20%, Tax losses not allowed
Capital Allowance - Straight line at 25% p.a.,
Only start after First Oil production
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