408
A. R. Tom
Table 13.1 Model assumptions
Kingfisher and Kaiso
Tonya development
Buliisa development
Recoverable reserves
235
MM BBL
819
MM BBL
Project costs
$ MM
$ / BBl
$ MM
$ / BBl
Development costs
2042.00
8.70
6598.00
8.06
Operating costs
2160.00
9.20
6929.00
8.50
Decommissioning costs
243.86
1.04
487.71
0.60
The project assumptions relating to the developments are summarized
in Table 13.1. The analysis was focused on the development decision
considering exploration costs as sunk.
13.3.2 Oil Prices
The base oil price was assumed at US $60 per barrel; real 2015 dollars;
to evaluate the highlighted fiscal regimes. Monte Carlo simulations were
run to account for oil price variability.
13.3.3 Hurdle Rate
The hurdle rate has to cater for time value and other non-price risks such
as political risk related to the political environment prevalent in the location of the oil reserves. Base rates of 9 and 12.5% were utilized with
the corresponding break-even prices and Marginal Effective Tax rates
presented.
13.3.4 Theoretical R-Factor Regime
R-Factor was expressed as the ratio of cumulative contractor net revenues
from the start of the project to total investment. It is also known as
payback ratio and was given by the formula below;
R Factor =
t−1
i=1 (Revenues − OPEX − Replacement CAPEX − Royalty)
t−1
i=1
Exploration + Development CAPEX
A. R. Tom
Table 13.1 Model assumptions
Kingfisher and Kaiso
Tonya development
Buliisa development
Recoverable reserves
235
MM BBL
819
MM BBL
Project costs
$ MM
$ / BBl
$ MM
$ / BBl
Development costs
2042.00
8.70
6598.00
8.06
Operating costs
2160.00
9.20
6929.00
8.50
Decommissioning costs
243.86
1.04
487.71
0.60
The project assumptions relating to the developments are summarized
in Table 13.1. The analysis was focused on the development decision
considering exploration costs as sunk.
13.3.2 Oil Prices
The base oil price was assumed at US $60 per barrel; real 2015 dollars;
to evaluate the highlighted fiscal regimes. Monte Carlo simulations were
run to account for oil price variability.
13.3.3 Hurdle Rate
The hurdle rate has to cater for time value and other non-price risks such
as political risk related to the political environment prevalent in the location of the oil reserves. Base rates of 9 and 12.5% were utilized with
the corresponding break-even prices and Marginal Effective Tax rates
presented.
13.3.4 Theoretical R-Factor Regime
R-Factor was expressed as the ratio of cumulative contractor net revenues
from the start of the project to total investment. It is also known as
payback ratio and was given by the formula below;
R Factor =
t−1
i=1 (Revenues − OPEX − Replacement CAPEX − Royalty)
t−1
i=1
Exploration + Development CAPEX