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$2023 Nominal Oil Price Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Real Nominal Inflation Inflation Factor ##### Sheet/List 3 ##### Example Discounted Cashflow Example 1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cashflow -10 -10 -10 20 20 20 20 20 20 20 Discount Factor Discounted Cashflow NPV (Net Present Value) Discount Rate 0% Excel Calculation IRR Example 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Capital Cost -200 -200 -200 Revenue 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Operating Cost -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 Net Cashflow -200 -200 -200 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 Discount Factor 1.08 1.16 1.24 1.34 1.44 1.54 1.66 1.78 1.92 2.06 2.22 2.38 2.56 2.75 2.96 3.18 3.42 3.68 3.95 4.25 Discounted Cashflow -186.0 -173.1 -161.0 59.9 55.7 51.8 48.2 44.9 41.7 38.8 36.1 33.6 31.2 29.1 27.0 25.2 23.4 21.8 20.2 18.8 NPV 87.4 Discount Rate 7.50% IRR 9.57% Excel Calculation ##### Sheet/List 4 ##### WACC Calculation Risk Free Rate 4.50% Corporate Interest Rate 6.50% Equity market return 10.00% Company Beta 1.47 Corporate Tax Rate 25% Debt Equity Debt:Equity Split 40% 60% Cost of Debt 4.88% Cost of Equity 12.59% WACC 9.50% ##### Sheet/List 5 ##### An Example Shale Gas Field Sensitivities 1 0% Base Results Oil or Gas Price 1 2 25% High NPV 129 US$mm Production 1 3 50% Upside IRR 66% % Operating Costs & Transport 1 4 -25% Low Capex 1 5 -50% 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 0 190 95 62 46 42 38 34 30 27 25 22 20 18 16 15 13 12 11 10 9 8 7 6 Operating Costs 0 -22 -12 -8 -6 -6 -5 -5 -4 -4 -4 -3 -3 -3 -3 -3 -2 -2 -2 -2 -2 -2 -2 -2 Transport Costs 0 -16 -8 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 Operating Taxes 0 -30 -15 -10 -7 -7 -6 -5 -5 -4 -4 -3 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 -1 EBITDA 0 122 60 39 29 26 23 21 19 17 15 13 12 11 9 8 8 7 6 5 5 4 4 3 Depreciation 0 -35 -18 -11 -9 -8 -7 -6 -6 -5 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 Straight Line (0) or Unit of Prod (1) 1 EBIT 0 86 43 27 20 18 16 15 13 12 10 9 8 7 6 6 5 4 4 3 3 3 2 2 Tax on EBIT 0 -17 -9 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 0 0 Corporate Tax Rate 20% Post tax cashflow 0 104 52 33 25 22 20 18 16 14 13 12 10 9 8 7 6 6 5 5 4 4 3 3 CAPEX -80 -25 -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) -80 79 50 32 23 21 18 16 14 13 11 10 9 8 7 6 5 4 4 3 2 2 2 1 Cumulative FCF -80 -1 50 81 105 125 144 160 175 187 199 209 217 225 232 237 242 246 250 253 255 257 259 260 Discount Rate 9.50% Discount Factor 1.10 1.20 1.31 1.44 1.57 1.72 1.89 2.07 2.26 2.48 2.71 2.97 3.25 3.56 3.90 4.27 4.68 5.12 5.61 6.14 6.73 7.37 8.07 8.83 Discounted Cashflow (DCF) -73 66 38 22 15 12 10 8 6 5 4 3 3 2 2 1 1 1 1 0 0 0 0 0 NPV ($mm) 129 IRR (%) 65.5% Payback (years) 0 When does cumulative cashflow turn positive Excel Calculation $129 Breakeven oil price $85.00 After Goal Seek Function in Data:What If Alternative NPV (terminal value) FCF for 10 years -73 79 50 32 23 21 18 16 14 13 11 Terminal Value 267 Implied FCF -73 79 50 32 23 21 18 16 14 13 11 267 Implied DCF -67 66 38 22 15 12 10 8 6 5 4 90 NPV 210 Plus Cash 0 Less Debt 0 Total NPV 210 IRR 75% 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 0 190 95 62 46 42 38 34 30 27 25 22 20 18 16 15 13 12 11 10 9 8 7 6 Lifting Costs 0 -22 -12 -8 -6 -6 -5 -5 -4 -4 -4 -3 -3 -3 -3 -3 -2 -2 -2 -2 -2 -2 -2 -2 Transport 0 -16 -8 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 Operating Taxes 0 -30 -15 -10 -7 -7 -6 -5 -5 -4 -4 -3 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 -1 Corporate Tax 0 -17 -9 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 0 0 Capex -80 -25 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 Free Cashflow -80 79 50 32 23 21 18 16 14 13 11 10 9 8 7 6 5 4 4 3 2 2 2 1 ##### Sheet/List 6 ##### Production Oil Gas Total mmbbls kbpd Bcf mmcfd Resources 100 500 Recovery Factor 10% 10% Reserves 10 50 18 mmboe 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 0 Length of Peak (yrs) 1 0 "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 12.39 3 14.87 4 7.44 5 4.96 Gas Production Scenarios 1 49.58 2 61.97 3 74.37 4 37.18 5 24.79 ##### 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 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 Export Oil Price 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 Domestic Revenue 0 85 43 28 21 19 17 15 14 12 11 10 9 8 7 7 6 5 5 4 4 3 3 3 Export Revenue 0 43 21 14 10 9 8 8 7 6 6 5 4 4 4 3 3 3 2 2 2 2 2 1 Total Oil Revenue 0 128 64 41 31 28 25 23 20 18 17 15 13 12 11 10 9 8 7 6 6 5 5 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 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Export Gas Price 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 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 28 14 9 7 6 6 5 4 4 4 3 3 3 2 2 2 2 2 1 1 1 1 1 Export Revenue 0 35 17 11 8 8 7 6 6 5 4 4 4 3 3 3 2 2 2 2 2 1 1 1 Total Gas Revenue 0 63 31 20 15 14 12 11 10 9 8 7 7 6 5 5 4 4 3 3 3 3 2 2 Total Revenues 0 190 95 62 46 42 38 34 30 27 25 22 20 18 16 15 13 12 11 10 9 8 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 3.1 1.6 1.0 0.8 0.7 0.6 0.6 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 25% 3 0.0 3.8 1.9 1.2 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 0.1 0.1 50% 4 0.0 1.9 0.9 0.6 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 0.1 -25% 5 0.0 1.3 0.6 0.4 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 0.1 0.1 0.1 0.0 0.0 -50% 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 15.6 7.8 5.1 3.8 3.4 3.1 2.8 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 25% 3 0.0 18.8 9.4 6.1 4.6 4.1 3.7 3.3 3.0 2.7 2.4 2.2 2.0 1.8 1.6 1.4 1.3 1.2 1.0 0.9 0.8 0.8 0.7 0.6 50% 4 0.0 9.4 4.7 3.0 2.3 2.1 1.9 1.7 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 0.4 0.3 0.3 -25% 5 0.0 6.3 3.1 2.0 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 0.3 0.3 0.3 0.2 0.2 -50% Export Oil Price 129 Base Case 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 85.0 Scenario 2 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.3 Scenario 3 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 127.5 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 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 Domestic Oil Price Base Case 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 42.5 Scenario 2 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1 Scenario 3 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 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 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 21.3 Domestic Gas Price Base Case 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Scenario 2 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 3.8 Scenario 3 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 4 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 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 1.5 Export Gas Price Base Case 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 11.1 Scenario 2 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 13.8 Scenario 3 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 16.6 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 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 Slope 13% ##### Sheet/List 8 ##### Capital Expenditure Total Oil Gas mmboe mmbls bcf Reserves 18 10 50 mmboe per well Wells Wells 14 1.33 13.8 Capex per well 10.0 Capex per bbl 7.64 1.272727273 Total capex 140 % up to first prod 75% 105 % first oil to peak 0% 0 Maintenance capex 25% 35 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 80 25 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 Before first oil 105 Maintenance 35.2 Total 140.2 Sensitivities 2 100 31 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 120 38 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 4 60 19 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 5 40 13 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 25% 50% -25% -50% 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 $10mm per well Ultimate recovery per well 8.0 bcf per well 1.33 mmboe per well Global Comparisons Capex US$/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 5.85 US$/boe real Total for model 106 US$mm Variable 4.68 US$/bbl 80% Fixed 21 US$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$mm 0.0 22.4 11.6 7.9 6.2 5.6 5.2 4.7 4.4 4.0 3.7 3.4 3.2 3.0 2.7 2.6 2.4 2.3 2.1 2.0 1.9 1.8 1.7 1.6 Total 106 Base Case and Sensitivities 1 5.85 2 25% 3 50% 4 -25% 5 -50% Global Comparisons Lifting Costs Transport Lifting Transport US$/bbl US$/bbl Iran 1.94 Saudi Arabia 2.49 Iraq 2.16 Iran 2.67 Russia 2.98 Iraq 2.47 Saudi Arabia 3.00 Russia 2.69 Norway 4.24 Indonesia 3.63 US conv 5.15 US conv 3.11 US shale 5.85 Norway 3.12 Indonesia 6.87 US shale 3.52 Venezuela 7.94 Canada 2.92 Nigeria 8.81 Venezuela 2.54 Brazil 9.45 Nigeria 2.97 Canada 11.56 Brazil 2.80 UK 17.36 UK 4.30 Company examples Rosneft 3.10 Lukoil 4.26 BP 6.90 Chesapeake 2.92 Transport Costs Oil 3.52 US$/bbl Gas 0.59 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 8.8 4.4 2.9 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 Gas (US$mm) 0.0 7.3 3.7 2.4 1.8 1.6 1.4 1.3 1.2 1.1 0.9 0.9 0.8 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.2 Total (US$mm) 0.0 16.1 8.1 5.2 3.9 3.5 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 Base Case and Sensitivities 1 3.52 2 25% 3 50% 4 -25% 5 -50% ##### Sheet/List 10 ##### Operating Taxes Oil Tax Export Tax Sliding of export barrels Royalty 10.0% of oil revenues Other taxes 1.0% of total revenues Export Oil Price 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 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 5.6 2.8 1.8 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 0.3 0.3 0.3 0.2 0.2 0.2 Royalty 0.0 12.8 6.4 4.1 3.1 2.8 2.5 2.3 2.0 1.8 1.7 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 Other 0.0 1.9 1.0 0.6 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 0.1 Total 0 20.3 10.1 6.6 4.9 4.4 4.0 3.6 3.2 2.9 2.6 2.4 2.1 1.9 1.7 1.6 1.4 1.3 1.1 1.0 0.9 0.8 0.7 0.7 Export Tax Cut-off point 40 US$/bbl Tax 25% above cut-off point Export Tax ($/bbl) 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 11.25 Gas Tax Export Tax 10% export revenues Royalty 0.5 US$/mcf 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Export Tax 0 3 2 1 1 1 0.7 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Royalty 0 6.3 3.1 2.0 1.5 1.4 1.2 1.1 1.0 0.9 0.8 0.7 0.7 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.3 0.2 0.2 Total 0 9.7 4.9 3.2 2.4 2.1 1.9 1.7 1.6 1.4 1.3 1.1 1.0 0.9 0.8 0.7 0.7 0.6 0.5 0.5 0.4 0.4 0.4 0.3 Total Operating Taxes 0 30.0 15.0 9.7 7.3 6.6 5.9 5.3 4.8 4.3 3.9 3.5 3.1 2.8 2.5 2.3 2.1 1.9 1.7 1.5 1.4 1.2 1.1 1.0 Total US$/boe 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 6.54 Gross Taxes US$/bbl Saudi Arabia 0 Iran 0 Iraq 0.91 Russia 8.44 Indonesia 1.55 US conv 5.03 Norway 0.19 US shale 6.42 Canada 2.48 Venezuela 10.48 Nigeria 4.11 Brazil 6.66 UK 0 ##### Sheet/List 11 ##### Depreciation Straight Line Total Capex 140 Years of Production 23 Annual Depreciation (US$mm) 6.1 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 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 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 140 Unit of Production Total Reserves 18 Total Produced 18 Total Capex 140 Depreciation per barrel 7.70 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 35.3 17.6 11.5 8.6 7.7 7.0 6.3 5.6 5.1 4.6 4.1 3.7 3.3 3.0 2.7 2.4 2.2 2.0 1.8 1.6 1.4 1.3 1.2 Total 140 ##### 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$mm NPV of Success 129 Dry Hole 0.0 Successful Well 0 EMV 0 ##### Sheet/List 14 ##### PSA Regime 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Company Revenues 0 94 47 31 23 21 19 17 15 14 12 11 10 9 8 7 6 6 5 5 4 4 3 3 Operating Costs 0 -22 -12 -8 -6 -6 -5 -5 -4 -4 -4 -3 -3 -3 -3 -3 -2 -2 -2 -2 -2 -2 -2 -2 Transport Costs 0 -16 -8 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 Operating Taxes 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 EBITDA 0 56 27 17 13 11 10 9 8 7 6 6 5 4 4 3 3 3 2 2 2 1 1 1 Depreciation 0 -35.29865393 -17.64932696 -11.47206253 -8.604046895 -7.743642206 -7 -6 -6 -5 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 EBIT 0 20 10 6 4 4 3 3 2 2 2 2 1 1 1 1 1 0 0 0 0 0 0 0 Tax on EBIT 0 -4.064127677 -1.939592028 -1.196004551 -0.850767508 -0.747196395 -1 -1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Corporate Tax Rate 20% Post tax cashflow 0 52 25 16 12 11 10 9 8 7 6 5 5 4 4 3 3 3 2 2 2 1 1 1 CAPEX -80 -25 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 Free Cashflow (FCF) -80 27 24 15 10 9 8 7 6 5 4 4 3 3 2 2 1 1 1 0 0 0 0 -1 Cumulative FCF -80 -53 -30 -15 -5 5 13 19 26 31 35 39 42 45 47 48 50 51 51 51 51 51 51 50 Discount Rate 10% Discount Factor 1.10 1.21 1.33 1.46 1.61 1.77 1.95 2.14 2.36 2.59 2.85 3.14 3.45 3.80 4.18 4.59 5.05 5.56 6.12 6.73 7.40 8.14 8.95 9.85 Discounted Cashflow (DCF) -73 22 18 10 6 5 4 3 3 2 2 1 1 1 1 0 0 0 0 0 0 0 0 0 NPV ($mm) 6 IRR (%) 13% 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 0 190 95 62 46 42 38 34 30 27 25 22 20 18 16 15 13 12 11 10 9 8 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 0 188 94 61 46 41 37 33 30 27 24 22 20 18 16 14 13 12 10 9 9 8 7 6 Cost Oil 80% of Revenues 0 151 75 49 37 33 30 27 24 22 20 18 16 14 13 12 10 9 8 8 7 6 6 5 Accumulated Cost Oil 151 226 275 312 345 374 401 425 447 466 484 500 514 527 538 549 558 566 574 581 587 592 597 Annual Costs -64 -21 -15 -12 -11 -10 -9 -9 -8 -7 -7 -6 -6 -6 -5 -5 -5 -5 -4 -4 -4 -4 -4 Accumulated Costs -64 -85 -100 -111 -122 -132 -141 -150 -158 -165 -172 -178 -184 -190 -196 -201 -206 -210 -215 -219 -223 -227 -231 87 141 175 200 223 242 260 275 289 301 312 321 329 337 343 348 352 356 359 362 364 366 367 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 0 188 94 61 46 41 37 33 30 27 24 22 20 18 16 14 13 12 10 9 9 8 7 6 Profit Oil Company 0 94 47 31 23 21 19 17 15 14 12 11 10 9 8 7 6 6 5 5 4 4 3 3 Govt 0 94 47 31 23 21 19 17 15 14 12 11 10 9 8 7 6 6 5 5 4 4 3 3 Total Company Revenues 0 94 47 31 23 21 19 17 15 14 12 11 10 9 8 7 6 6 5 5 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 94 47 31 23 21 19 17 15 14 12 11 10 9 8 7 6 6 5 5 4 4 3 3 Govt. Revenues 0 96 48 31 23 21 19 17 15 14 12 11 10 9 8 7 7 6 5 5 4 4 4 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