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Assignment 3

Bayu is a medium-sized oil and gas prospect located offshore Malaysia containing 400 million barrels of oil and 200 trillion cubic feet of natural gas. The estimated development costs are $RM750 million with annual operating expenses of $RM45 million. Construction could begin in 2003 with first oil production in 2007. The assignment requires calculating cash flows under various inflation and pricing scenarios to determine project feasibility metrics such as payback period, NPV, and IRR.

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327 views2 pages

Assignment 3

Bayu is a medium-sized oil and gas prospect located offshore Malaysia containing 400 million barrels of oil and 200 trillion cubic feet of natural gas. The estimated development costs are $RM750 million with annual operating expenses of $RM45 million. Construction could begin in 2003 with first oil production in 2007. The assignment requires calculating cash flows under various inflation and pricing scenarios to determine project feasibility metrics such as payback period, NPV, and IRR.

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frhslmn
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Assignment 3 Submit by 16 Nov 2015

Bayu is a medium size prospect with recoverable reserves of 400 million barrels
of oil and 200 trillion scf of gas.
The estimated development cost is RM750 million, with an annual OPEX of RM45
million. Fabrication could start in 2003 with first oil in 2007.
Assumptions:
1. Oil price is RM110 per barrel.
2. Gas price is RM20 per 1000 scf.
3. Index multiplier for CAPEX and OPEX is 3% per year.
Construct Cash Flow matrix for this project in MOD terms, and
1. Calculate Net Cash Flow with 3% inflation towards OPEX and CAPEX
2. Plot cumulative MOD Cumm Cashflow/Net Cash Flow versus Year.
3. Determine Payback, Maximum Cash Sink, Ultimate Cash Surplus and PIR
for MOD Cashflow only.
4. Determine the NPV at 10% for MOD Cashflow and IRR for range of 125%130% for MOD Cashflow only.
5. Determine the Net Cash Flow and Cumulative Cash Flow for RT2002 for
inflation rate is also 3% per annum.
Table 1 Project Capex
Year

Unit

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2018

Exploration
& Appraisal MM MYR 5

10

Developme
nt
MM MYR
Facilities

MM MYR

16

34

20

211

356

46

23

16

Abandonm
ent
MM MYR

Year

Unit

Oil
production MBbl/d

110

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
86

Gas
Production MMscf/d 44

Year

Unit

170

170

170

148

104

80

58

42

32

24

86

86

86

74

54

40

30

22

16

12

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Tax

MM MYR 3.9

95.6 106. 114. 99.1 62.6 43.1 24.9 11.6


80.5
7
42
18
8
5
3
9
6
3.26 -3.56 3

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