Time Value of Money Money Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 US$ in wallet US$ in bank Inflation Interest Rate Cumulative Interest Rate Cost of printer ink Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 US$ flat US$ inflation Cumulative inflation Amount of printer ink Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 2029 US$ no inflation or interest US after inflation US$ after inflation with interest Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Discount Rate 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 2 ##### Real and Nominal Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Total Real Cost of plant (today) 100 100 100 300 Nominal Cost of plant (MoD) 105 110 116 331 Inflation Inflation Factor Capex US$2023 Nominal Oil Price Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Real Nominal Inflation Inflation Factor ##### Sheet/List 3 ##### Example Discounted Cashflow Example 1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cashflow -10 -10 -10 20 20 20 20 20 20 20 Discount Factor Discounted Cashflow NPV (Net Present Value) Discount Rate 0% Excel Calculation IRR Example 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Capital Cost Revenue Operating Cost Net Cashflow Discount Factor Discounted Cashflow NPV Discount Rate IRR Excel Calculation ##### Sheet/List 4 ##### WACC Calculation Risk Free Rate 0.00% Corporate Interest Rate 0.00% Equity market return 0.00% Company Beta 0 Corporate Tax Rate 0% Debt Equity Debt:Equity Split 100% 0% Cost of Debt 0.00% Cost of Equity 0.00% WACC 0.00% ##### Sheet/List 5 ##### An Example Shale Gas Field Sensitivities 1 0% Base Results Oil or Gas Price 1 2 15% High NPV 439 US$mm Production 1 3 30% Upside IRR 128% % Operating Costs & Transport 1 4 -15% Low Capex 1 5 -30% Downside 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Revenues 0 180 90 58 44 39 35 32 29 26 23 21 19 17 15 14 12 11 10 9 8 7 7 6 Operating Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Transport Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 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 0 180 90 58 44 39 35 32 29 26 23 21 19 17 15 14 12 11 10 9 8 7 7 6 Depreciation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Straight Line (0) or Unit of Prod (1) 1 EBIT 0 180 90 58 44 39 35 32 29 26 23 21 19 17 15 14 12 11 10 9 8 7 7 6 Tax on EBIT 0 -36 -18 -12 -9 -8 -7 -6 -6 -5 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 Corporate Tax Rate 20% Post tax cashflow 0 144 72 47 35 32 28 26 23 21 19 17 15 14 12 11 10 9 8 7 6 6 5 5 CAPEX -70 -28 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 Free Cashflow (FCF) -70 116 70 45 34 30 27 24 21 19 17 15 14 12 11 9 8 7 7 6 5 4 4 3 Cumulative FCF -70 46 116 161 195 225 251 276 297 316 333 349 362 374 385 394 403 410 417 422 427 432 435 439 Discount Rate 0.0% Discount Factor 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Discounted Cashflow (DCF) -70 116 70 45 34 30 27 24 21 19 17 15 14 12 11 9 8 7 7 6 5 4 4 3 NPV ($mm) 439 IRR (%) 128.2% Payback (years) 0 When does cumulative cashflow turn positive Excel Calculation $439 Breakeven Gas Price $3.90 After Goal Seek Function in Data:What If Alternative NPV (terminal value) FCF for 10 years -70 116 70 45 34 30 27 24 21 19 17 Terminal Value 419 Implied FCF -70 116 70 45 34 30 27 24 21 19 17 419 Implied DCF -70 116 70 45 34 30 27 24 21 19 17 419 NPV 752 Plus Cash 0 Less Debt 0 Total NPV 752 IRR 128% EBITDA Multiple 20 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Revenues 0 180 90 58 44 39 35 32 29 26 23 21 19 17 15 14 12 11 10 9 8 7 7 6 Lifting Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Transport 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 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 Corporate Tax 0 -36 -18 -12 -9 -8 -7 -6 -6 -5 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 Capex -70 -28 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 Free Cashflow -70 116 70 45 34 30 27 24 21 19 17 15 14 12 11 9 8 7 7 6 5 4 4 3 ##### Sheet/List 6 ##### Production Oil Gas Total mmbbls kbpd Bcf mmcfd Resources 100 500 Recovery Factor 10% 10% Reserves 10 50 18 Start date 5 years after first capex Peak as % Reserves 5 years after first capex Peak as % Reserves Peak Production (mmbbls) 2.5 7 25% 12.5 34 25% Time to Peak (yrs) 1 1 Length of Peak (yrs) 1 1 "Decline rate (%) Yrs 2,3,4,5+" 50% 35% 25% 10% 50% 35% 25% 10% 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Oil production 0.00 2.50 1.25 0.81 0.61 0.55 0.49 0.44 0.40 0.36 0.32 0.29 0.26 0.24 0.21 0.19 0.17 0.15 0.14 0.13 0.11 0.10 0.09 0.08 Total oil produced to 2040 9.9 Barrels per day 6849 3425 2226 1670 1503 1352 1217 1095 986 887 799 719 647 582 524 472 424 382 344 309 278 251 226 Gas Production 0.00 12.50 6.25 4.06 3.05 2.74 2.47 2.22 2.00 1.80 1.62 1.46 1.31 1.18 1.06 0.96 0.86 0.77 0.70 0.63 0.56 0.51 0.46 0.41 Total gas produced to 2040 49.6 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Oil Production (mmbbls) 0.0 2.5 1.3 0.8 0.6 0.5 0.5 0.4 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 Gas Production (mmboe) 0.0 2.1 1.0 0.7 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Total (mmboe) 0.0 4.6 2.3 1.5 1.1 1.0 0.9 0.8 0.7 0.7 0.6 0.5 0.5 0.4 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 Production Scenarios Total Produced Oil Production Scenarios 1 9.92 2 11.40 3 12.89 4 8.43 5 6.94 Gas Production Scenarios 1 49.58 2 57.01 3 64.45 4 42.14 5 34.70 ##### Sheet/List 7 ##### Revenue Calculation Export % Oil 20% Gas 25% 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Oil Production 0.0 2.5 1.3 0.8 0.6 0.5 0.5 0.4 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 Domestic Sales 0.0 2.0 1.0 0.7 0.5 0.4 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Export Sales 0.0 0.5 0.3 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Domestic Oil Price 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 Export Oil Price 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 Domestic Revenue 0 75 38 24 18 16 15 13 12 11 10 9 8 7 6 6 5 5 4 4 3 3 3 2 Export Revenue 0 38 19 12 9 8 7 7 6 5 5 4 4 4 3 3 3 2 2 2 2 2 1 1 Total Oil Revenue 0 113 56 37 27 25 22 20 18 16 15 13 12 11 10 9 8 7 6 6 5 5 4 4 Gas Production 0.0 12.5 6.3 4.1 3.0 2.7 2.5 2.2 2.0 1.8 1.6 1.5 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.6 0.5 0.5 0.4 Domestic Gas Price 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 Export Gas Price 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 Domestic Sales 0 9 5 3 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 Export Sales 0 3 2 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Domestic Revenue 0 37 18 12 9 8 7 6 6 5 5 4 4 3 3 3 3 2 2 2 2 1 1 1 Export Revenue 0 30 15 10 7 7 6 5 5 4 4 4 3 3 3 2 2 2 2 2 1 1 1 1 Total Gas Revenue 0 67 34 22 16 15 13 12 11 10 9 8 7 6 6 5 5 4 4 3 3 3 2 2 Total Revenues 0 180 90 58 44 39 35 32 29 26 23 21 19 17 15 14 12 11 10 9 8 7 7 6 Oil Production Scenarios 1 0.0 2.5 1.3 0.8 0.6 0.5 0.5 0.4 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 2 0.0 2.9 1.4 0.9 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 15% 3 0.0 3.3 1.6 1.1 0.8 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 30% 4 0.0 2.1 1.1 0.7 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 -15% 5 0.0 1.8 0.9 0.6 0.4 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 -30% Gas Production Scenarios 1 0.0 12.5 6.3 4.1 3.0 2.7 2.5 2.2 2.0 1.8 1.6 1.5 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.6 0.5 0.5 0.4 2 0.0 14.4 7.2 4.7 3.5 3.2 2.8 2.6 2.3 2.1 1.9 1.7 1.5 1.4 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.6 0.5 0.5 15% 3 0.0 16.3 8.1 5.3 4.0 3.6 3.2 2.9 2.6 2.3 2.1 1.9 1.7 1.5 1.4 1.2 1.1 1.0 0.9 0.8 0.7 0.7 0.6 0.5 30% 4 0.0 10.6 5.3 3.5 2.6 2.3 2.1 1.9 1.7 1.5 1.4 1.2 1.1 1.0 0.9 0.8 0.7 0.7 0.6 0.5 0.5 0.4 0.4 0.3 -15% 5 0.0 8.8 4.4 2.8 2.1 1.9 1.7 1.6 1.4 1.3 1.1 1.0 0.9 0.8 0.7 0.7 0.6 0.5 0.5 0.4 0.4 0.4 0.3 0.3 -30% Export Oil Price 439 Base Case 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 Scenario 2 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 86.3 Scenario 3 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 Scenario 4 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 63.8 Scenario 5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 Domestic Oil Price Base Case 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 Scenario 2 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 43.1 Scenario 3 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 48.8 Scenario 4 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 31.9 Scenario 5 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 26.3 Domestic Gas Price Base Case 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 Scenario 2 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 Scenario 3 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 4 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 Scenario 5 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7 Export Gas Price Base Case 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8 Scenario 2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 11.2 Scenario 3 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 Scenario 4 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 Scenario 5 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 Slope 13% ##### Sheet/List 8 ##### Capital Expenditure Total Oil Gas mmboe mmbls bcf Reserves 18 10 50 Bcf per well Wells Wells 0 8 6.3 Capex per well 0.0 Capex per bbl 0.00 0 Total capex 0 % up to first prod 75% 0 % first oil to peak 0% 0 Maintenance capex 25% 0 First Capex First gas 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 US$mm 70 28 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 Before first oil 98 Maintenance 33 Total 131 Sensitivities 2 81 32 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 91 36 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 4 60 24 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 5 49 20 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 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 US shale $10mm per well Ultimate recovery per well 8.0 bcf per well Global Comparisons Capex US$/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 9 ##### Operating Costs Lifting Costs 0.00 US$/boe real Total for model 0 US$mm Variable 0.00 US$/bbl 80% Fixed 0 US$mm 20% Years production 23 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 US$mm 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 0 Base Case and Sensitivities 1 0.00 2 15% 3 30% 4 -15% 5 -30% Global Comparisons Lifting Costs Transport Lifting Transport US$/bbl US$/bbl Iran 1.94 Saudi Arabia 2.49 Iraq 2.16 Iran 2.67 Russia 2.98 Iraq 2.47 Saudi Arabia 3.00 Russia 2.69 Norway 4.24 Indonesia 3.63 US conv 5.15 US conv 3.11 US shale 5.85 Norway 3.12 Indonesia 6.87 US shale 3.52 Venezuela 7.94 Canada 2.92 Nigeria 8.81 Venezuela 2.54 Brazil 9.45 Nigeria 2.97 Canada 11.56 Brazil 2.80 UK 17.36 UK 4.30 Company examples Rosneft 3.10 Lukoil 4.26 BP 6.90 Chesapeake 2.92 Transport Costs Oil 0.00 US$/bbl Gas 0.00 US$/mcf 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Oil (US$mm) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Gas (US$mm) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total (US$mm) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Base Case and Sensitivities 1 0.00 2 15% 3 30% 4 -15% 5 -30% ##### Sheet/List 10 ##### Operating Taxes Oil Tax Export Tax Sliding of export barrels Royalty 0.0% of oil revenues Other taxes 0.0% of total revenues Export Oil Price 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Export Tax 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Royalty 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 0 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Export Tax Cut-off point 0 US$/bbl Tax 0% above cut-off point Export Tax ($/bbl) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Gas Tax Export Tax 0% export revenues Royalty 0 US$/mcf 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Export Tax 0 0 0 0 0 0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Royalty 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Operating Taxes 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total US$/boe 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Gross Taxes US$/bbl Saudi Arabia 0 Iran 0 Iraq 0.91 Russia 8.44 Indonesia 1.55 US conv 5.03 Norway 0.19 US shale 6.42 Canada 2.48 Venezuela 10.48 Nigeria 4.11 Brazil 6.66 UK 0 ##### Sheet/List 11 ##### Depreciation Straight Line Total Capex 0 Years of Production 23 Annual Depreciation (US$mm) 0.0 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Depreciation 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Production 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Total 0 Unit of Production Total Reserves 18 Total Produced 18 Total Capex 0 Depreciation per barrel 0.00 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Depreciation 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 0 ##### Sheet/List 12 ##### Sensitivities Oil Price Oil Price Capex NPV 30% 3318 15% 2392 0% 1465 -15% 539 -30% -388 Production NPV 30% 4257 15% 3203 0% 2149 -15% 1094 -30% 40 Production Opex Capex NPV 30% 1012 15% 1580 0% 2149 -15% 2717 -30% 3285 Opex NPV 30% 1735 15% 1942 0% 2149 -15% 2356 -30% 2563 Corporate Tax Rate Tax Rate NPV Discount Rate 10% 2682 15% 2415 20% 2149 25% 1882 30% 1615 Discount Rate NPV 5.0% 5152 7.5% 2932 10.0% 2149 12.5% 496 15.0% -154 Summary Oil Price Production Capex Opex Corp Tax Disc. Rate Downside -388 40 1012 1735 1615 -154 Low 539 1094 1580 1942 1882 496 Base 1465 2149 2149 2149 2149 2149 High 2392 3203 2717 2356 2415 2932 Upside 3318 4257 3285 2563 2682 5152 ##### Sheet/List 13 ##### Exploration Well Analysis Chance of Success 0% Cost of Well 0 US$mm NPV of Success 439 Dry Hole 0.0 Successful Well 0 EMV 0 ##### Sheet/List 14 ##### PSA Regime 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Company Revenues 0 89 44 29 22 19 18 16 14 13 12 10 9 8 8 7 6 6 5 4 4 4 3 3 Operating Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Transport Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Operating Taxes 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 EBITDA 0 89 44 29 22 19 18 16 14 13 12 10 9 8 8 7 6 6 5 4 4 4 3 3 Depreciation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 EBIT 0 89 44 29 22 19 18 16 14 13 12 10 9 8 8 7 6 6 5 4 4 4 3 3 Tax on EBIT 0 -17.77359375 -8.886796875 -5.776417969 -4.332313477 -3.899082129 -4 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 Corporate Tax Rate 20% Post tax cashflow 0 71 36 23 17 16 14 13 11 10 9 8 7 7 6 5 5 4 4 4 3 3 3 2 CAPEX -70 -28 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 Free Cashflow (FCF) -70 43 34 22 16 14 13 11 10 9 8 7 6 5 5 4 3 3 2 2 2 1 1 1 Cumulative FCF -70 -27 7 29 45 59 71 82 92 101 109 115 121 127 131 135 138 141 144 146 148 149 150 151 Discount Rate 10% Discount Factor 1.10 1.21 1.33 1.46 1.61 1.77 1.95 2.14 2.36 2.59 2.85 3.14 3.45 3.80 4.18 4.59 5.05 5.56 6.12 6.73 7.40 8.14 8.95 9.85 Discounted Cashflow (DCF) -64 36 26 15 10 8 6 5 4 3 3 2 2 1 1 1 1 1 0 0 0 0 0 0 NPV ($mm) 62 IRR (%) 38% 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 0 180 90 58 44 39 35 32 29 26 23 21 19 17 15 14 12 11 10 9 8 7 7 6 Govt Royalty 0 2 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1% Taxable Revenues 0 178 89 58 43 39 35 32 28 26 23 21 19 17 15 14 12 11 10 9 8 7 7 6 Cost Oil 80% of Revenues 0 142 71 46 35 31 28 25 23 20 18 17 15 13 12 11 10 9 8 7 6 6 5 5 Accumulated Cost Oil 142 213 259 294 325 353 379 401 422 440 457 472 485 497 508 518 527 535 542 548 554 559 564 Annual Costs -28 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 Accumulated Costs -28 -30 -31 -33 -34 -36 -37 -39 -40 -42 -43 -45 -46 -48 -49 -51 -52 -54 -55 -57 -58 -60 -61 114 184 228 262 291 318 342 363 382 399 414 427 439 450 459 467 475 481 487 492 496 500 503 Payback 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Cost Oil to Company 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Profit Oil 0 178 89 58 43 39 35 32 28 26 23 21 19 17 15 14 12 11 10 9 8 7 7 6 Profit Oil Company 0 89 44 29 22 19 18 16 14 13 12 10 9 8 8 7 6 6 5 4 4 4 3 3 Govt 0 89 44 29 22 19 18 16 14 13 12 10 9 8 8 7 6 6 5 4 4 4 3 3 Total Company Revenues 0 89 44 29 22 19 18 16 14 13 12 10 9 8 8 7 6 6 5 4 4 4 3 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 Company Revenues 0 89 44 29 22 19 18 16 14 13 12 10 9 8 8 7 6 6 5 4 4 4 3 3 Govt. Revenues 0 91 45 29 22 20 18 16 14 13 12 11 10 9 8 7 6 6 5 5 4 4 3 3 ##### Sheet/List 15 ##### 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