An Example Conventional Oil Field Sensitivities 1 0% Base Results Oil Price 1 2 +15% High NPV 2149 US$mm Production 1 3 +30% Upside IRR 14% % Operating Costs & Transport 1 4 -15% Low Capex 1 5 -30% Downside 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Revenues 0 0 0 0 0 0 449 898 1347 1796 2245 2245 2245 2245 2245 2245 2245 2133 2026 1925 1829 1737 1650 1568 Operating Costs 0 0 0 0 0 0 -43 -87 -130 -173 -217 -217 -217 -217 -217 -217 -217 -206 -196 -186 -176 -168 -159 -151 Transport Costs 0 0 0 0 0 0 -33 -65 -98 -131 -163 -163 -163 -163 -163 -163 -163 -155 -148 -140 -133 -126 -120 -114 Operating Taxes 0 0 0 0 0 0 -64 -129 -193 -257 -321 -321 -321 -321 -321 -321 -321 -305 -290 -276 -262 -249 -236 -224 EBITDA 0 0 0 0 0 0 309 617 926 1235 1543 1543 1543 1543 1543 1543 1543 1466 1393 1323 1257 1194 1135 1078 Depreciation 0 0 0 0 0 0 -74 -147 -221 -294 -368 -368 -368 -368 -368 -368 -368 -349 -332 -315 -299 -285 -270 -257 EBIT 0 0 0 0 0 0 235 470 705 941 1176 1176 1176 1176 1176 1176 1176 1117 1061 1008 958 910 864 821 Tax on EBIT 0 0 0 0 0 0 -47 -94 -141 -188 -235 -235 -235 -235 -235 -235 -235 -223 -212 -202 -192 -182 -173 -164 Corporate Tax Rate 20% Post tax cashflow 0 0 0 0 0 0 262 523 785 1047 1308 1308 1308 1308 1308 1308 1308 1243 1181 1122 1066 1012 962 914 CAPEX 0 -500 -750 -800 -1000 -1000 -500 -350 -150 -100 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 Free Cashflow (FCF) 0 -500 -750 -800 -1000 -1000 -238 173 635 947 1288 1288 1288 1288 1288 1288 1288 1223 1161 1102 1046 992 942 894 Cumulative FCF 0 -500 -1250 -2050 -3050 -4050 -4288 -4115 -3480 -2533 -1245 43 1331 2620 3908 5196 6485 7707 8868 9970 11015 12008 12949 13843 Discount Rate 8.7% Discount Factor 1.00 1.09 1.18 1.28 1.40 1.52 1.65 1.79 1.95 2.12 2.31 2.51 2.72 2.96 3.22 3.50 3.80 4.14 4.50 4.89 5.31 5.78 6.28 6.83 Discounted Cashflow (DCF) 0 -460 -635 -623 -716 -659 -144 97 326 446 559 514 473 435 400 368 339 296 258 225 197 172 150 131 NPV ($mm) 2149 IRR (%) 14.3% Payback (years 10 When does cumulative cashflow turn positive Excel Calculation "$2,149 " Brekaeven Oil Price $60.00 After Goal Seek Function in Data:What If Alternative NPV (terminal value) FCF for 10 years 0 -500 -750 -800 -1000 -1000 -238 173 635 947 1288 Terminal Value 10804 Implied FCF 0 -500 -750 -800 -1000 -1000 -238 173 635 947 1288 10804 Implied DCF 0 -460 -635 -623 -716 -659 -144 97 326 446 559 4311 NPV 2502 Plus Cash 0 Less Debt 0 Total NPV 2502 IRR 18% EBITDA Multiple 7 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Revenues 0 0 0 0 0 0 449 898 1347 1796 2245 2245 2245 2245 2245 2245 2245 2133 2026 1925 1829 1737 1650 1568 Lifting Costs 0 0 0 0 0 0 -43 -87 -130 -173 -217 -217 -217 -217 -217 -217 -217 -206 -196 -186 -176 -168 -159 -151 Transport 0 0 0 0 0 0 -33 -65 -98 -131 -163 -163 -163 -163 -163 -163 -163 -155 -148 -140 -133 -126 -120 -114 Operating Taxes 0 0 0 0 0 0 -64 -129 -193 -257 -321 -321 -321 -321 -321 -321 -321 -305 -290 -276 -262 -249 -236 -224 Corporate Tax 0 0 0 0 0 0 -47 -94 -141 -188 -235 -235 -235 -235 -235 -235 -235 -223 -212 -202 -192 -182 -173 -164 Capex 0 -500 -750 -800 -1000 -1000 -500 -350 -150 -100 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 Free Cashflow 0 -500 -750 -800 -1000 -1000 -238 173 635 947 1288 1288 1288 1288 1288 1288 1288 1223 1161 1102 1046 992 942 894 ##### Sheet/List 2 ##### Time Value of Money At Jan 1 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 US$ 100 US$ 100 US$ 100 Interest Rate 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% Multiplier 1.03 1.06 1.09 1.13 1.16 1.19 1.23 1.27 1.30 1.34 Real versus Nominal Costs At Dec 31 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 US$ Nominal 1 1 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Inflation Rate 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Multiplier 1 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Money available 100 Chocolate Bars Money Invested 100.0 Chocolate Bars 100.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 US$ Real (2018) Money Available Cost of Choc Bar ##### Sheet/List 3 ##### Example Discounted Cashflow Example 1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cashflow 0 0 0 0 0 0 0 0 0 0 Discount Factor Discounted Cashflow NPV 0.0 Discount Rate 0% Excel Calculation 0.0 Example 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Capital Cost -100 -100 -100 Revenue 30 60 120 150 150 150 150 Operating Cost -5 -5 -5 -5 -5 -5 -5 Net Cashflow -100 -100 -100 25 55 115 145 145 145 145 Discount Factor 1.08 1.17 1.26 1.36 1.47 1.59 1.71 1.85 2.00 2.16 Discounted Cashflow -92.6 -85.7 -79.4 18.4 37.4 72.5 84.6 78.3 72.5 67.2 NPV 173.2 Discount Rate 8% IRR 18.66% Excel Calculation 173.2 ##### Sheet/List 4 ##### Revenue Calculation Export % Oil 45% Gas 20% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Oil Production 0.0 0.0 0.0 0.0 0.0 0.0 10.0 20.0 30.0 40.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 47.5 45.1 42.9 40.7 38.7 36.8 34.9 Domestic Sales 0.0 0.0 0.0 0.0 0.0 0.0 5.5 11.0 16.5 22.0 27.5 27.5 27.5 27.5 27.5 27.5 27.5 26.1 24.8 23.6 22.4 21.3 20.2 19.2 Export Sales 0.0 0.0 0.0 0.0 0.0 0.0 4.5 9.0 13.5 18.0 22.5 22.5 22.5 22.5 22.5 22.5 22.5 21.4 20.3 19.3 18.3 17.4 16.5 15.7 Domestic Oil Price 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 Export Oil Price 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 Domestic Revenue 0 0 0 0 0 0 165 330 495 660 825 825 825 825 825 825 825 784 745 707 672 638 606 576 Export Revenue 0 0 0 0 0 0 270 540 810 1080 1350 1350 1350 1350 1350 1350 1350 1283 1218 1157 1100 1045 992 943 Total Oil Revenue 0 0 0 0 0 0 435 870 1305 1740 2175 2175 2175 2175 2175 2175 2175 2066 1963 1865 1772 1683 1599 1519 Gas Production 0.0 0.0 0.0 0.0 0.0 0.0 5.0 10.0 15.0 20.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 23.8 22.6 21.4 20.4 19.3 18.4 17.5 Domestic Gas Price 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Export Gas Price 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 Domestic Sales 0 0 0 0 0 0 4 8 12 16 20 20 20 20 20 20 20 19 18 17 16 15 15 14 Export Sales 0 0 0 0 0 0 1 2 3 4 5 5 5 5 5 5 5 5 5 4 4 4 4 3 Domestic Revenue 0 0 0 0 0 0 8 16 24 32 40 40 40 40 40 40 40 38 36 34 33 31 29 28 Export Revenue 0 0 0 0 0 0 6 12 18 24 30 30 30 30 30 30 30 29 27 26 24 23 22 21 Total Gas Revenue 0 0 0 0 0 0 14 28 42 56 70 70 70 70 70 70 70 67 63 60 57 54 51 49 Total Revenues 0 0 0 0 0 0 449 898 1347 1796 2245 2245 2245 2245 2245 2245 2245 2133 2026 1925 1829 1737 1650 1568 Oil Production Scenarios 1 0.0 0.0 0.0 0.0 0.0 0.0 10.0 20.0 30.0 40.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 47.5 45.1 42.9 40.7 38.7 36.8 34.9 2 0.0 0.0 0.0 0.0 0.0 0.0 11.5 23.0 34.5 46.0 57.5 57.5 57.5 57.5 57.5 57.5 57.5 54.6 51.9 49.3 46.8 44.5 42.3 40.2 +15% 3 0.0 0.0 0.0 0.0 0.0 0.0 13.0 26.0 39.0 52.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 61.8 58.7 55.7 52.9 50.3 47.8 45.4 +30% 4 0.0 0.0 0.0 0.0 0.0 0.0 8.5 17.0 25.5 34.0 42.5 42.5 42.5 42.5 42.5 42.5 42.5 40.4 38.4 36.4 34.6 32.9 31.2 29.7 -15% 5 0.0 0.0 0.0 0.0 0.0 0.0 7.0 14.0 21.0 28.0 35.0 35.0 35.0 35.0 35.0 35.0 35.0 33.3 31.6 30.0 28.5 27.1 25.7 24.4 -30% Gas Production Scenarios 1 0.0 0.0 0.0 0.0 0.0 0.0 5.0 10.0 15.0 20.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 23.8 22.6 21.4 20.4 19.3 18.4 17.5 2 0.0 0.0 0.0 0.0 0.0 0.0 5.8 11.5 17.3 23.0 28.8 28.8 28.8 28.8 28.8 28.8 28.8 27.3 25.9 24.6 23.4 22.2 21.1 20.1 +15% 3 0.0 0.0 0.0 0.0 0.0 0.0 6.5 13.0 19.5 26.0 32.5 32.5 32.5 32.5 32.5 32.5 32.5 30.9 29.3 27.9 26.5 25.1 23.9 22.7 +30% 4 0.0 0.0 0.0 0.0 0.0 0.0 4.3 8.5 12.8 17.0 21.3 21.3 21.3 21.3 21.3 21.3 21.3 20.2 19.2 18.2 17.3 16.4 15.6 14.8 -15% 5 0.0 0.0 0.0 0.0 0.0 0.0 3.5 7.0 10.5 14.0 17.5 17.5 17.5 17.5 17.5 17.5 17.5 16.6 15.8 15.0 14.3 13.5 12.9 12.2 -30% Export Oil Price 2149 Base Case 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0 Scenario 2 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 69.0 Scenario 3 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 78.0 Scenario 4 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 Scenario 5 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 Domestic Oil Price Base Case 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 Scenario 2 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 34.5 Scenario 3 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 39.0 Scenario 4 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.5 Scenario 5 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 21.0 Domestic Gas Price Base Case 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Scenario 2 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 Scenario 3 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 Scenario 4 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 Scenario 5 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 Export Gas Price Base Case 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 Scenario 2 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 Scenario 3 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 Scenario 4 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 Scenario 5 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 9 0 ##### Sheet/List 5 ##### Production Oil Gas Total mmbbls kbpd Bcf mmcfd Resources 0 Recovery Factor 0% Reserves 1000 500 1083 Start date 5 years after first capex Peak as % Reserves 5 years after first capex Peak Production (mmbbls) 50 137 5% 25 68 Time to Peak (yrs) 4 4 Length of Peak (yrs) 7 7 Decline rate (%) 5% 5% First capex 1st year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Oil production 10.00 20.00 30.00 40.00 50.00 50.00 50.00 50.00 50.00 50.00 50.00 47.50 45.13 42.87 40.73 38.69 36.75 34.92 Total oil produced to 2040 736.6 Barrels per day 0 0 0 0 0 27397 54795 82192 109589 136986 136986 136986 136986 136986 136986 136986 130137 123630 117449 111576 105997 100698 95663 Gas Production 5 10 15 20 25.0 25.0 25.0 25.0 25.0 25.0 25.0 23.8 22.6 21.4 20.4 19.3 18.4 17.5 Total gas produced to 2040 368.3 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Oil Production (mmbbls) 0.0 0.0 0.0 0.0 0.0 0.0 10.0 20.0 30.0 40.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 47.5 45.1 42.9 40.7 38.7 36.8 34.9 Gas Production (mmboe) 0.0 0.0 0.0 0.0 0.0 0.0 0.8 1.7 2.5 3.3 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.0 3.8 3.6 3.4 3.2 3.1 2.9 Total (mmboe) 0.0 0.0 0.0 0.0 0.0 0.0 10.8 21.7 32.5 43.3 54.2 54.2 54.2 54.2 54.2 54.2 54.2 51.5 48.9 46.4 44.1 41.9 39.8 37.8 Production Scenarios Total Produced Oil Production Scenarios 1 736.58 2 847.07 3 957.55 4 626.09 5 515.61 Gas Production Scenarios 1 368.29 2 423.53 3 478.78 4 313.05 5 257.80 ##### Sheet/List 6 ##### Capital Expenditure Reserves 1083 Capex per bbl 5.00 Total capex 5417 % before first oil 75% 4063 % first oil to peak 20% 1083 Maintenance capex 5% 271 First Capex First Oil Peak Oil 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 US$mm 500 750 800 1000 1000 500 350 150 100 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Before first oil 4050 First oil to peak 1100 Maintenance 280 Total 5430 Sensitivities 2 0 575 863 920 1150 1150 575 403 173 115 23 23 23 23 23 23 23 23 23 23 23 23 23 23 3 0 650 975 1040 1300 1300 650 455 195 130 26 26 26 26 26 26 26 26 26 26 26 26 26 26 4 0 425 638 680 850 850 425 298 128 85 17 17 17 17 17 17 17 17 17 17 17 17 17 17 5 0 350 525 560 700 700 350 245 105 70 14 14 14 14 14 14 14 14 14 14 14 14 14 14 +15% +30% -15% -30% Field Comparisons Cost /bbl Capex Reserves Peak Prod Peak Prod Capex/ peak bbl US$/bbl US$mm mmbbls kbpd mmbbls US$/bbl Kashagan ( Kazakhstan) 10.46 136000 13000 1500 547.5 248 ACG (Azerbaijan) 4.00 20000 5000 620 226.3 88 Thunderhorse (Gulf of Mexico) 5.00 5000 1000 250 91.25 55 Novy Port (Russia onshore) 3.25 4500 1385 161 58.64 77 Ghawar (Saudi) 3.50 248500 71000 5000 1825 136 Lula (Brazil deep water) 9.04 75000 8300 500 182.5 411 Global Comparisons Capex US$/bbl Saudi Arabia 3.50 Iran 4.48 Iraq 5.03 Russia 5.10 Venezuela 6.66 US shale 7.56 Indonesia 7.65 US conv 7.70 Canada 9.69 Nigeria 13.10 Norway 13.76 Brazil 16.09 UK 22.67 ##### Sheet/List 7 ##### Depreciation Straight Line Total Capex 5417 Years of Production 18 Annual Depreciation (US$mm) 301 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Depreciation 0 0 0 0 0 0 301 301 301 301 301 301 301 301 301 301 301 301 301 301 301 301 301 301 Production 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Total 5417 Unit of Production Total Reserves 1083 Total Produced 798 Total Capex 5417 Depreciation per barrel 6.79 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Depreciation 0 0 0 0 0 0 74 147 221 294 368 368 368 368 368 368 368 349 332 315 299 285 270 257 Total 5417 ##### Sheet/List 8 ##### Operating Costs Lifting Costs 4 US$/boe real Total for model 3192 US$mm 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 US$mm 0.0 0.0 0.0 0.0 0.0 0.0 43.3 86.7 130.0 173.3 216.7 216.7 216.7 216.7 216.7 216.7 216.7 205.8 195.5 185.8 176.5 167.7 159.3 151.3 Total 3192 Sensitivities 1 4 2 +15% 3 +30% 4 -15% 5 -30% Global Comparisons Lifting Costs Transport Lifting Transport US$/bbl US$/bbl Iran 1.94 Saudi Arabia 2.49 Iraq 2.16 Iran 2.67 Russia 2.98 Iraq 2.47 Saudi Arabia 3.00 Russia 2.69 Norway 4.24 Indonesia 3.63 US conv 5.15 US conv 3.11 US shale 5.85 Norway 3.12 Indonesia 6.87 US shale 3.52 Venezuela 7.94 Canada 2.92 Nigeria 8.81 Venezuela 2.54 Brazil 9.45 Nigeria 2.97 Canada 11.56 Brazil 2.80 UK 17.36 UK 4.30 Company examples Rosneft 3.10 Lukoil 4.26 BP 6.90 Chesapeake 2.92 Transport Costs Oil 3.02 US$/bbl Gas 0.50 US$/mcf 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Oil (US$mm) 0.0 0.0 0.0 0.0 0.0 0.0 30.2 60.4 90.5 120.7 150.9 150.9 150.9 150.9 150.9 150.9 150.9 143.3 136.2 129.4 122.9 116.8 110.9 105.4 Gas (US$mm) 0.0 0.0 0.0 0.0 0.0 0.0 2.5 5.0 7.5 10.1 12.6 12.6 12.6 12.6 12.6 12.6 12.6 11.9 11.3 10.8 10.2 9.7 9.2 8.8 Total (US$mm) 0.0 0.0 0.0 0.0 0.0 0.0 32.7 65.4 98.1 130.8 163.5 163.5 163.5 163.5 163.5 163.5 163.5 155.3 147.5 140.1 133.1 126.5 120.2 114.1 Sensitivities 1 3.02 2 +15% 3 +30% 4 -15% 5 -30% ##### Sheet/List 9 ##### Operating Taxes Oil Tax Export Tax Sliding of export barrels Royalty 5.0% of oil revenues Other taxes 1.0% of total revenues Export Oil Price 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Export Tax 0.0 0.0 0.0 0.0 0.0 0.0 33.8 67.5 101.3 135.0 168.8 168.8 168.8 168.8 168.8 168.8 168.8 160.3 152.3 144.7 137.4 130.6 124.0 117.8 Royalty 0.0 0.0 0.0 0.0 0.0 0.0 21.8 43.5 65.3 87.0 108.8 108.8 108.8 108.8 108.8 108.8 108.8 103.3 98.1 93.2 88.6 84.1 79.9 75.9 Other 0.0 0.0 0.0 0.0 0.0 0.0 4.5 9.0 13.5 18.0 22.5 22.5 22.5 22.5 22.5 22.5 22.5 21.3 20.3 19.2 18.3 17.4 16.5 15.7 Total 0 0 0 0 0 0 60.0 120.0 180.0 240.0 300.0 300.0 300.0 300.0 300.0 300.0 300.0 285.0 270.7 257.2 244.3 232.1 220.5 209.5 Export Tax Cut-off point 30 US$/bbl Tax 25% above cut-off point Export Tax ($/bbl) 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 Gas Tax Export Tax 30% export revenues Royalty 0.5 US$/mcf 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Export Tax 0 0 0 0 0 0 1.8 4 5 7 9 9 9 9 9 9 9 9 8 8 7 7 7 6 Royalty 0 0 0 0 0 0 2.5 5 8 10 13 13 13 13 13 13 13 12 11 11 10 10 9 9 Total 0 0 0 0 0 0 4.3 9 13 17 22 22 22 22 22 22 22 20 19 18 18 17 16 15 Total Operating Taxes 0 0 0 0 0 0 64 129 193 257 321 321 321 321 321 321 321 305 290 276 262 249 236 224 Total US$/boe 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 5.93 Gross Taxes US$/bbl Saudi Arabia 0 Iran 0 Iraq 0.91 Russia 8.44 Indonesia 1.55 US conv 5.03 Norway 0.19 US shale 6.42 Canada 2.48 Venezuela 10.48 Nigeria 4.11 Brazil 6.66 UK 0 ##### Sheet/List 10 ##### WACC Calculation Risk Free Rate 1.75% Corporate Interest Rate 4.25% Equity market return 10.50% Company Beta 1.2 Corporate Tax Rate 20% Debt Equity Debt:Equity Split 40% 60% Cost of Debt 3.40% Cost of Equity 12.25% WACC 8.71% ##### Sheet/List 11 ##### Sensitivities Oil Price Oil Price Capex NPV 30% 15% 0% -15% -30% Production NPV 30% 15% 0% -15% -30% Production Opex Capex NPV 30% 15% 0% -15% -30% Opex NPV 30% 15% 0% -15% -30% Corporate Tax Rate Tax Rate NPV Discount Rate 10% 15% 20% 25% 30% Discount Rate NPV 5.0% 7.5% 10.0% 12.5% 15.0% Summary Oil Price Production Capex Opex Corp Tax Disc. Rate Downside 0 0 0 0 0 0 Low 0 0 0 0 0 0 Base 0 0 0 0 0 0 High 0 0 0 0 0 0 Upside 0 0 0 0 0 0 ##### Sheet/List 12 ##### PSA Regime 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Company Revenues 0 0 0 0 0 0 400 800 1200 1600 2000 1111 1111 1111 1111 1111 1111 1056 1003 953 905 860 817 776 Operating Costs 0 0 0 0 0 0 -43 -87 -130 -173 -217 -217 -217 -217 -217 -217 -217 -206 -196 -186 -176 -168 -159 -151 Transport Costs 0 0 0 0 0 0 -33 -65 -98 -131 -163 -163 -163 -163 -163 -163 -163 -155 -148 -140 -133 -126 -120 -114 Operating Taxes 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 EBITDA 0 0 0 0 0 0 324 648 972 1296 1620 731 731 731 731 731 731 695 660 627 596 566 537 511 Depreciation 0 0 0 0 0 0 -74 -147 -221 -294 -368 -368 -368 -368 -368 -368 -368 -349 -332 -315 -299 -285 -270 -257 EBIT 0 0 0 0 0 0 250 501 751 1002 1252 363 363 363 363 363 363 345 328 312 296 281 267 254 Tax on EBIT 0 0 0 0 0 0 -50 -100 -150 -200 -250 -73 -73 -73 -73 -73 -73 -69 -66 -62 -59 -56 -53 -51 Corporate Tax Rate 20% Post tax cashflow 0 0 0 0 0 0 274 548 822 1096 1370 658 658 658 658 658 658 626 594 565 536 510 484 460 CAPEX 0 -500 -750 -800 -1000 -1000 -500 -350 -150 -100 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 Free Cashflow (FCF) 0 -500 -750 -800 -1000 -1000 -226 198 672 996 1350 638 638 638 638 638 638 606 574 545 516 490 464 440 Cumulative FCF 0 -500 -1250 -2050 -3050 -4050 -4276 -4078 -3406 -2411 -1061 -423 216 854 1493 2131 2770 3375 3950 4494 5010 5500 5964 6404 Discount Rate 10% Discount Factor 1.10 1.21 1.33 1.46 1.61 1.77 1.95 2.14 2.36 2.59 2.85 3.14 3.45 3.80 4.18 4.59 5.05 5.56 6.12 6.73 7.40 8.14 8.95 9.85 Discounted Cashflow (DCF) 0 -413 -563 -546 -621 -564 -116 92 285 384 473 203 185 168 153 139 126 109 94 81 70 60 52 45 NPV ($mm) -106 IRR (%) 10% Revenue Calculation Company Govt Cost Oil 80% Profit Oil 50% 50% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Total Revenues 0 0 0 0 0 0 449 898 1347 1796 2245 2245 2245 2245 2245 2245 2245 2133 2026 1925 1829 1737 1650 1568 Govt Royalty 0 0 0 0 0 0 4 9 13 18 22 22 22 22 22 22 22 21 20 19 18 17 17 16 1% Taxable Revenues 0 0 0 0 0 0 445 889 1334 1778 2223 2223 2223 2223 2223 2223 2223 2111 2006 1906 1810 1720 1634 1552 Cost Oil 80% of Revenues 0 0 0 0 0 0 356 711 1067 1422 1778 1778 1778 1778 1778 1778 1778 1689 1605 1524 1448 1376 1307 1242 Accumulated Cost Oil 0 0 0 0 0 356 1067 2134 3556 5334 7112 8890 10668 12446 14224 16002 17691 19296 20821 22269 23645 24952 26193 Annual Costs -500 -750 -800 -1000 -1000 -576 -502 -378 -404 -400 -400 -400 -400 -400 -400 -400 -381 -363 -346 -330 -314 -299 -285 Accumulated Costs -500 -1250 -2050 -3050 -4050 -4626 -5128 -5506 -5910 -6310 -6711 -7111 -7511 -7911 -8311 -8711 -9092 -9455 -9801 -10131 -10445 -10744 -11030 -500 -1250 -2050 -3050 -4050 -4270 -4061 -3373 -2354 -976 402 1780 3157 4535 5913 7291 8599 9841 11019 12138 13200 14207 15164 Payback 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 Cost Oil to Company 0 0 0 0 0 0 356 711 1067 1422 1778 0 0 0 0 0 0 0 0 0 0 0 0 0 Profit Oil 0 0 0 0 0 0 89 178 267 356 445 2223 2223 2223 2223 2223 2223 2111 2006 1906 1810 1720 1634 1552 Profit Oil Company 0 0 0 0 0 0 44 89 133 178 222 1111 1111 1111 1111 1111 1111 1056 1003 953 905 860 817 776 Govt 0 0 0 0 0 0 44 89 133 178 222 1111 1111 1111 1111 1111 1111 1056 1003 953 905 860 817 776 Total Company Revenues 0 0 0 0 0 0 400 800 1200 1600 2000 1111 1111 1111 1111 1111 1111 1056 1003 953 905 860 817 776 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Company Revenues 0 0 0 0 0 0 400 800 1200 1600 2000 1111 1111 1111 1111 1111 1111 1056 1003 953 905 860 817 776 Govt. Revenues 0 0 0 0 0 0 49 98 147 196 245 1134 1134 1134 1134 1134 1134 1077 1023 972 923 877 833 792 ##### Sheet/List 13 ##### Exploration Well Analysis Chance of Success 20% Cost of Well 50 US$mm NPV of Success 2149 Dry Hole -40.0 Successful Well 430 EMV 390 ##### Sheet/List 14 ##### Questions Real and Nominal 2018 2019 2020 2021 2022 2023 Q1 100 102.5 105.1 107.7 110.4 113.1 Q2 2018 2019 2020 2021 2022 2023 Real 60 60 60 60 60 60 Nominal 60 61.20 62.42 63.67 64.95 66.24 Inflation 2% Real +1% 60 60.60 61.21 61.82 62.44 63.06 NPV and DCF Q1 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 US$mm 100 100 100 100 100 100 100 100 100 100 Discount factor 1.10 1.21 1.33 1.46 1.61 1.77 1.95 2.14 2.36 2.59 Discount Rate 10% DCF 91 83 75 68 62 56 51 47 42 39 NPV 614 NPV Excel 614 Q2 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Capex -187.5 -187.5 -187.5 -187.5 -187.5 Cashflow 100 150 200 250 300 300 300 300 300 300 270 243 219 197 177 Net Cashflow -188 -188 -188 -188 -188 100 150 200 250 300 300 300 300 300 300 270 243 219 197 177 Discount Factor 1.1 1.21 1.33 1.46 1.61 1.77 1.95 2.14 2.36 2.59 2.85 3.14 3.45 3.80 4.18 4.59 5.05 5.56 6.12 6.73 Discount Rate 10% DCF -170 -155 -141 -128 -116 56 77 93 106 116 105 96 87 79 72 59 48 39 32 26 NPV 381 NPV Excel 381 IRR 16% Cost Inflation 1.25