Offshore Field Feasibility Study - Economic Analysis

Feasibility Study conducted at end of Exploration Period, therefore only Development, Production and Decomissioning cash flows considered
All cash flows in 2007 CAN$, end-of-year accounting used.
Provided data based on engineering evaluation:
a) development costs $900M over 4 year period
b) 17 production life in four stages: i) 4 years @ 90,000 bbl/day with COP = $20/bbl
ii) 5 years @ 145,000 with COP = $30/bbl
iii) 5 years @80,000 bbl/day with COP = $25/bbl
iv) remaining
iv) remaining
production
production
at $40,000
at $40,000
bbl/daybbl/day
with COP
with= COP
$20/bbl
= $20/bbl
c) Annual sustained non-production expenses = $98M
e) Decomissioning cost = $180M over two years after production period
f) Expected market price for crude oil ranges between $30 and $60 CAD/bbl with 80% confidence. (Use minimum of 4 steps over this expected range.)

30

Costs - Negative CF
Year

Prod. year Prod Rate

(bbl/day)

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

COP
($/bbl)

Develop. Annual Decom.

Sust.

COP

40

50

60

Revenues - Positive CF
Price =
$30/bbl

Price =
$40/bbl

Price =
$50/bbl

Price =
$60/bbl

$30/bbl

$40/bbl

$50/bbl

$60/bbl

-$225
-$225
-$225
-$225
$231
$231
$231
$231
-$98
-$98
-$98
-$98
-$98
$48
$48
$48
$48
$48
$48
$48
$48
-$90
-$90

-$225
-$225
-$225
-$225
$559
$559
$559
$559
$431
$431
$431
$431
$431
$340
$340
$340
$340
$340
$194
$194
$194
-$90
-$90

-$225
-$225
-$225
-$225
$888
$888
$888
$888
$961
$961
$961
$961
$961
$632
$632
$632
$632
$632
$340
$340
$340
-$90
-$90

-$225
-$225
-$225
-$225
$1,216
$1,216
$1,216
$1,216
$1,490
$1,490
$1,490
$1,490
$1,490
$924
$924
$924
$924
$924
$486
$486
$486
-$90
-$90

NPV @ 5% =
NPV @ 10% =
NPV @ 15% =

($308)
($334)
($346)

$3,037
$1,699
$956

$6,382
$3,732
$2,258

$9,726
$5,765
$3,560

PVR @ 5% =
PVR @ 10% =
PVR @ 15% =

-0.386
-0.469
-0.539

3.806
2.382
1.488

7.999
5.232
3.515

12.191
8.083
5.543

-$225
-$225
-$225
-$225
1
2
3
4
1
2
3
4
5
1
2
3
4
5
18
19
20

90,000
90,000
90,000
90,000
145,000
145,000
145,000
145,000
145,000
80,000
80,000
80,000
80,000
80,000
40,000
40,000
40,000

$20
$20
$20
$20
$30
$30
$30
$30
$30
$25
$25
$25
$25
$25
$20
$20
$20

-$98
-$98
-$98
-$98
-$98
-$98
-$98
-$98
-$98
-$98
-$98
-$98
-$98
-$98
-$98
-$98
-$98

-$657
-$657
-$657
-$657
-$1,588
-$1,588
-$1,588
-$1,588
-$1,588
-$730
-$730
-$730
-$730
-$730
-$292
-$292
-$292

$986
$986
$986
$986
$1,588
$1,588
$1,588
$1,588
$1,588
$876
$876
$876
$876
$876
$438
$438
$438

$1,314
$1,314
$1,314
$1,314
$2,117
$2,117
$2,117
$2,117
$2,117
$1,168
$1,168
$1,168
$1,168
$1,168
$584
$584
$584

$1,643
$1,643
$1,643
$1,643
$2,646
$2,646
$2,646
$2,646
$2,646
$1,460
$1,460
$1,460
$1,460
$1,460
$730
$730
$730

$1,971
$1,971
$1,971
$1,971
$3,176
$3,176
$3,176
$3,176
$3,176
$1,752
$1,752
$1,752
$1,752
$1,752
$876
$876
$876

-$90
-$90

$2,000
$1,500

Before Tax Cash Flows

$1,000
ROR = negative
$500
$0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
-$500
-$1,000
-$1,500
-$2,000

Revenue
COP
Decom.
Annual
Develop.

34%

49%

60%

es between $30 and $60 CAD/bbl with 80% confidence. (Use minimum of 4 steps over this expected range.)