presentation 031208

8/9/2019 Presentation 031208

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IMPORTANT FACTORS IN OVERALL ECONOMIC ASSESSMENT

Geological potential of the areas harbouring reserves of oil and gas

Nature of the physical environment in which exploration and developmentoperations are carried out.

Time and cost of defining drillable prospects (Seismic,etc); drilling of wild catexploration wells; time and cost of delineation after a discovery is made ;natureof discovery for development and put in production

Annual production expectations, operational expenditure

Storage and transport facilities and costs

Fiscal regimes and time value of money


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OIL AND GAS EXPLORATION IS COMPLEX AND RISKY

Most exploratory wells are dry holes and a fraction of them lead tocommercial development (Success chance)

Pre-estimates after discovery (Size and Nature)

Technology increasingly complex and varies

Financial and regulatory environment are becoming complex

Oil prices Meaningful planning and evaluation of exploration ventures must embrace all

the above items. Necessary to evaluate various aspects for effective communication with senior

corporate management


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Fiscal Regime

Work Commitment

Bonus Payment

Royalties

Cost Recovery (Cost Oil)

Profit Oil

Government participation


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Reserves-In-Place

OIL

R = A * t * * So * 1/FVF * 6.28 MMBLR Reserve-In-Place

A area in Sq. Km

t Thickness in metres - Effective porositySo Oil Saturation

FVF Formation Volume Factor


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Qi = 7.082Kh (Pe-Pw)M ln (re/rw) B

Where Qi = initial production rate, in bbls/day

k = formation permeability, in darciesh = contributing pay thickness, feet

Pe = pressure at external boundary (reservoir),

Pw = flowing bottom hole wellbore pressures i

M = reservoir oil viscosity, centipoiseB = oil formation volume factor

re= radius of well drainage, in feet

rs = well bore radius, in feet

ln= natural logarithm, base e


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Plateau

Declin

e

Decline

Years

Pro

duc

tion

Production Profile

Economic Limit


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Factors determining production No of wells More wells per large reservoir/ low productivity reservoirs Plateau factor(%)

Production rate per well Plateau production rate Remaining oil/gas at start decline Decline rate (%) Cut off rate


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Economic Evaluation Case Study

Year CAPEX Production(MMBL)

OPEX GrossRevenues

NetRevenues

DiscountFactor

NPV CumilativeNPV

Exploration Development

1 30 -30 1 -30 -30

2 40 -40 0.909 -36.36 -66.36

3 100 -100 0.826 -82.6 -148.96

4 190 -190 0.751 -142.69 -291.65

5 3.75 20.3 168.75 148.45 0.683 101.3914 -190.25865

6 3.75 20.3 168.75 148.45 0.564 83.7258 -106.53285

7 3.75 20.3 168.75 148.45 0.513 76.15485 -30.378

8 3.1875 20.3 143.4375 123.1375 0.467 57.50521 27.1272125

9 2.709375 20.3 121.921875 101.621875 0.424 43.08768 70.2148875

10 2.30296875 20.3 103.6335938 83.3335938 0.386 32.16677 102.3816547

11 1.957523438 20.3 88.08855469 67.7885547 0.35 23.72599 126.1076488

12 1.663894922 20.3 74.87527148 54.5752715 0.319 17.40951 143.5171604

13 1.414310684 20.3 63.64398076 43.3439808 0.29 12.56975 156.0869149

14 1.202164081 20.3 54.09738365 33.7973836 0.263 8.888712 164.9756268

15 1.021839469 20.3 45.9827761 25.6827761 0.239 6.138183 171.1138102

16 0.868563549 20.3 39.08535969 18.7853597 0.218 4.095208 175.2090187

17 0.738279016 20.3 33.22255573 12.9225557 0.198 2.558666 177.7676847

18 0.627537164 20.3 28.23917237 7.93917237 0.18 1.429051 179.1967357

19 0.533406589 20.3 24.00329652 3.70329652 0.164 0.607341 179.804076320 0.453395601 20.3 20.40280204 0.10280204 0.149 0.015318 179.8193938


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Expected Monetary Value

EMV=(R*SP)-(RC*(1-SP))

EMV=Expected Monetary Value

R = Reward = Net Present Value (NPV)

SP= Success Probability

RC= Risk Capital = Dry Hole Cost


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presentation 031208

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