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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) remiv) remaining production at $40,000 bbl/day with COP = $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 expe

 

30

40

50

60

   

Costs - Negative CF

   

Revenues - Positive CF

Before Tax Cash Flows

 

Year

Prod. year Prod Rate (bbl/day)

 

COP

Develop. Annual

Decom.

COP

Price =

Price =

Price =

Price =

 

($/bbl)

 

Sust.

 

$30/bbl

$40/bbl

$50/bbl

$60/bbl

$30/bbl

$40/bbl

$50/bbl

$60/bbl

1

-$225

   

-$225

-$225

-$225

-$225

2

-$225

-$225

-$225

-$225

-$225

3

-$225

-$225

-$225

-$225

-$225

4

-$225

-$225

-$225

-$225

-$225

5

1

90,000

 

$20

 

-$98

 

-$657

 

$986

$1,314

$1,643

$1,971

$231

$559

$888

$1,216

6

2

 

90,000

$20

-$98

-$657

$986

$1,314

$1,643

$1,971

$231

$559

$888

$1,216

7

3

90,000

$20

-$98

-$657

$986

$1,314

$1,643

$1,971

$231

$559

$888

$1,216

8

4

90,000

$20

-$98

-$657

$986

$1,314

$1,643

$1,971

$231

$559

$888

$1,216

9

1

145,000

$30

-$98

-$1,588

$1,588

$2,117

$2,646

$3,176

-$98

$431

$961

$1,490

10

2

 

145,000

$30

-$98

-$1,588

$1,588

$2,117

$2,646

$3,176

-$98

$431

$961

$1,490

11

3

145,000

$30

-$98

-$1,588

$1,588

$2,117

$2,646

$3,176

-$98

$431

$961

$1,490

12

4

145,000

$30

-$98

-$1,588

$1,588

$2,117

$2,646

$3,176

-$98

$431

$961

$1,490

13

5

145,000

$30

-$98

-$1,588

$1,588

$2,117

$2,646

$3,176

-$98

$431

$961

$1,490

14

1

80,000

$25

-$98

-$730

 

$876

$1,168

$1,460

$1,752

$48

$340

$632

$924

15

2

 

80,000

$25

-$98

-$730

$876

$1,168

$1,460

$1,752

$48

$340

$632

$924

16

3

80,000

$25

-$98

-$730

$876

$1,168

$1,460

$1,752

$48

$340

$632

$924

17

4

80,000

$25

-$98

-$730

$876

$1,168

$1,460

$1,752

$48

$340

$632

$924

18

5

80,000

$25

-$98

-$730

$876

$1,168

$1,460

$1,752

$48

$340

$632

$924

19

18

40,000

$20

-$98

-$292

$438

$584

$730

$876

$48

$194

$340

$486

20

19

40,000

$20

-$98

-$292

$438

$584

$730

$876

$48

$194

$340

$486

21

20

40,000

$20

-$98

-$292

$438

$584

$730

$876

$48

$194

$340

$486

22

 

-$90

   

-$90

-$90

-$90

-$90

23

-$90

-$90

-$90

-$90

-$90

 

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

=

=

=

($308)

$3,037

$6,382

$9,726

 

($334)

$1,699

$3,732

$5,765

($346)

$956

$2,258

$3,560

$2,000

 

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

=

=

=

-0.386

3.806

7.999

12.191

$1,500

           

-0.469

2.382

5.232

8.083

-0.539

1.488

3.515

5.543

$1,000

 
                     

$500

           
Revenue COP
Revenue
COP

Decom.

Annual

Develop.

 

ROR = negative

34%

49%

60%

                                       

$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

 
 

ected range.)