N2  Permian Partners (PP) produces from aging oil fields in west Texas. Production is currently 1.91 million barrels per year, but is declining at 8% per year for the foreseeable future. Costs of production, transportation, and administration add up to $26.10 per barrel. The current oil price is $66.10 per barrel. PP has 8.1 million shares outstanding. The cost of equity is 10%. All of PP’s

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.