Time Value of Money Money At Jan 1 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 US$ in wallet 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 US$ in bank 105 110 116 122 128 134 141 148 155 163 171 US$ (deflated) 97 94 91 89 86 83 81 78 76 74 72 Inflation 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% Interest Rate 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% Multiplier 1.05 1.10 1.16 1.22 1.28 1.34 1.41 1.48 1.55 1.63 1.71 95.24 90.70 86.38 82.27 78.35 74.62 71.07 67.68 64.46 61.39 58.47 Cost of chocolate 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 US$ flat 1 1 1 1 1 1 1 1 1 1 1 US$ inflation 1.03 1.06 1.09 1.13 1.16 1.19 1.23 1.27 1.30 1.34 1.38 US$ Bars of chocolate 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 US$ 100 100 100 100 100 100 100 100 100 100 100 US$ 97.09 94.26 91.51 88.85 86.26 83.75 81.31 78.94 76.64 74.41 72.24 US$ 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 2020 2021 Year 3 Year 4 Year 5 Real 30 30 30 30 30 Nominal 30.6 31 32 32 33 Inflation 2% 2% 2% 2% 2% Capex US$2019 0 0 ##### Sheet/List 3 ##### Example Discounted Cashflow Example 1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cashflow -10 -10 -10 20 20 20 20 20 20 20 Discount Factor 1.05 1.10 1.16 1.22 1.28 1.34 1.41 1.48 1.55 1.63 Present Value -9.5 -9.1 -8.6 16.5 15.7 14.9 14.2 13.5 12.9 12.3 Net Present Value 72.7 Discount Rate 5% Excel Calculation 72.7 Example 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Capital Cost -100 -200 -300 Revenue 105 105 105 105 105 105 105 105 105 105 105 105 105 105 105 105 105 Operating Cost -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 Net Cashflow -100 -200 -300 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 Discount Factor 1.10 1.21 1.33 1.46 1.61 1.77 1.95 2.14 2.36 2.59 2.85 3.14 3.45 3.80 4.18 4.59 5.05 5.56 6.12 6.73 Present Value -90.9 -165.3 -225.4 58.1 52.8 48.0 43.6 39.7 36.0 32.8 29.8 27.1 24.6 22.4 20.3 18.5 16.8 15.3 13.9 12.6 NPV 30.7 Discount Rate 10.0% IRR 10.9% Internal Rate of Return Excel Calculation ##### Sheet/List 4 ##### WACC Calculation Risk Free Rate 1.75% Corporate Interest Rate 3.50% Equity market return 10.53% Company Beta 2 Corporate Tax Rate 20% Debt Equity Debt:Equity Split 60% 40% Cost of Debt 2.80% Cost of Equity 19.31% WACC 9.40% ##### Sheet/List 5 ##### An Example Shale Gas Field Sensitivities 1 0% Base Results Oil Price 1 2 15% High NPV 49 US$mm Production 1 3 30% Upside IRR 48% % Operating Costs & Transport 1 4 -15% Low Capex 1 5 -30% Downside 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 88 44 28 21 19 17 16 14 13 11 10 9 8 7 7 6 5 5 4 4 4 3 3 Operating Costs 0 -20 -11 -7 -6 -5 -5 -4 -4 -4 -3 -3 -3 -3 -2 -2 -2 -2 -2 -2 -2 -2 -2 -1 Transport Costs 0 -5 -3 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 0 0 0 0 0 Operating Taxes 0 -5 -3 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 0 0 0 0 0 EBITDA (Net Cashflow) 0 57 28 18 13 12 11 9 8 8 7 6 5 5 4 4 3 3 2 2 2 2 1 1 Depreciation 0 -23 -11 -7 -6 -5 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 -1 -1 -1 -1 Straight Line (0) or Unit of Prod (1) 1 EBIT (Pre-tax profit) 0 34 17 11 8 7 6 5 5 4 4 3 3 2 2 2 2 1 1 1 1 1 0 0 Tax on EBIT 0 -7 -3 -2 -2 -1 -1 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 0 0 0 0 0 Corporate Tax Rate 20% Post tax cashflow 0 50 25 16 12 11 9 8 7 7 6 5 5 4 4 3 3 2 2 2 2 1 1 1 CAPEX -28 -40 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 Free Cashflow (FCF) -28 10 24 15 11 9 8 7 6 6 5 4 4 3 3 2 2 1 1 1 1 0 0 0 Cumulative FCF -28 -18 6 21 32 41 49 57 63 69 74 78 82 85 87 89 91 93 94 95 95 96 96 96 Discount Rate 9.4% Discount Factor 1.00 1.09 1.20 1.31 1.43 1.57 1.71 1.88 2.05 2.25 2.46 2.69 2.94 3.22 3.52 3.85 4.21 4.61 5.04 5.52 6.03 6.60 7.22 7.90 Discounted Cashflow (DCF) -28 9 20 11 7 6 5 4 3 3 2 2 1 1 1 1 0 0 0 0 0 0 0 0 NPV ($mm) 49 IRR (%) 47.8% Payback (years) 2 When does cumulative cashflow turn positive Excel Calculation Breakeven Gas Price $2.53 After Goal Seek Function in Data:What If Alternative NPV (terminal value) FCF for 10 years -28 10 24 15 11 9 8 7 6 6 5 Terminal Value 118 Implied FCF -28 10 24 15 11 9 8 7 6 6 5 118 Implied DCF -28 9 20 11 7 6 5 4 3 3 2 44 NPV 87 Plus Cash 0 Less Debt 0 Total NPV 87 IRR 50% 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 88 44 28 21 19 17 16 14 13 11 10 9 8 7 7 6 5 5 4 4 4 3 3 Lifting Costs 0 -20 -11 -7 -6 -5 -5 -4 -4 -4 -3 -3 -3 -3 -2 -2 -2 -2 -2 -2 -2 -2 -2 -1 Transport 0 -5 -3 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 0 0 0 0 0 Operating Taxes 0 -5 -3 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 0 0 0 0 0 Corporate Tax 0 -7 -3 -2 -2 -1 -1 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 0 0 0 0 0 Capex -28 -40 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 Free Cashflow -28 10 24 15 11 9 8 7 6 6 5 4 4 3 3 2 2 1 1 1 1 0 0 0 ##### Sheet/List 6 ##### Production Oil Gas Total mmbbls kbpd Bcf mmcfd Resources 0 1000 Recovery Factor 0% 10% Reserves 0 100 17 Start date Peak as % Reserves 1 year after first capex Peak as % Reserves Peak Production (mmbbls) 0 0 0% 25 68 25% Time to Peak (yrs) 0 0 Length of Peak (yrs) 0 1 "Decline rate (%) Yrs 2,3,4,5+" 0% Year 2 Year 3 Year 4 Year 5+ 50% 35% 25% 10% First capex 1st year 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Oil production 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 0.00 Total oil produced to 2040 0.0 Barrels per day 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Gas Production 0.00 25.00 12.50 8.13 6.09 5.48 4.94 4.44 4.00 3.60 3.24 2.91 2.62 2.36 2.12 1.91 1.72 1.55 1.39 1.25 1.13 1.02 0.91 0.82 Total gas produced to 2040 99.2 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Oil Production (mmbbls) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 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 Production (mmboe) 0.0 4.2 2.1 1.4 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 0.1 Total (mmboe) 0.0 4.2 2.1 1.4 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 0.1 Production Scenarios Total Produced Oil Production Scenarios 1 0.00 2 0.00 3 0.00 4 0.00 5 0.00 Gas Production Scenarios 1 99.15 2 114.03 3 128.90 4 84.28 5 69.41 ##### Sheet/List 7 ##### Revenue Calculation Export % Oil 0% Gas 0% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Oil Production 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Domestic Sales 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 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 Sales 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 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 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 Export Oil Price 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 Domestic Revenue 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 Revenue 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 Oil Revenue 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 Production 0.0 25.0 12.5 8.1 6.1 5.5 4.9 4.4 4.0 3.6 3.2 2.9 2.6 2.4 2.1 1.9 1.7 1.5 1.4 1.3 1.1 1.0 0.9 0.8 Domestic Gas Price 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 Export Gas Price 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 Domestic Sales 0 25 13 8 6 5 5 4 4 4 3 3 3 2 2 2 2 2 1 1 1 1 1 1 Export Sales 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Domestic Revenue 0 88 44 28 21 19 17 16 14 13 11 10 9 8 7 7 6 5 5 4 4 4 3 3 Export Revenue 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 Gas Revenue 0 88 44 28 21 19 17 16 14 13 11 10 9 8 7 7 6 5 5 4 4 4 3 3 Total Revenues 0 88 44 28 21 19 17 16 14 13 11 10 9 8 7 7 6 5 5 4 4 4 3 3 Oil Production Scenarios 1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15% 3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 30% 4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -15% 5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -30% Gas Production Scenarios 1 0.0 25.0 12.5 8.1 6.1 5.5 4.9 4.4 4.0 3.6 3.2 2.9 2.6 2.4 2.1 1.9 1.7 1.5 1.4 1.3 1.1 1.0 0.9 0.8 2 0.0 28.8 14.4 9.3 7.0 6.3 5.7 5.1 4.6 4.1 3.7 3.4 3.0 2.7 2.4 2.2 2.0 1.8 1.6 1.4 1.3 1.2 1.1 0.9 15% 3 0.0 32.5 16.3 10.6 7.9 7.1 6.4 5.8 5.2 4.7 4.2 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 30% 4 0.0 21.3 10.6 6.9 5.2 4.7 4.2 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 -15% 5 0.0 17.5 8.8 5.7 4.3 3.8 3.5 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 -30% Export Oil Price 49 Base Case 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 Scenario 2 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 51.8 Scenario 3 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 58.5 Scenario 4 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 Scenario 5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 31.5 Domestic Oil Price Base Case 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 Scenario 2 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 25.9 Scenario 3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 29.3 Scenario 4 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 19.1 Scenario 5 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 15.8 Domestic Gas Price Base Case 3.50 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 Scenario 2 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 Scenario 3 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 Scenario 4 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 5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Export Gas Price Base Case 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 2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 Scenario 3 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 Scenario 4 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 5 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 3.2 Slope 10% ##### Sheet/List 8 ##### Capital Expenditure Total Oil Gas mmboe mmbls bcf billion cubic feet millions of barrels of oil equivalent Reserves 17 0 100 Bcf per well Wells Wells 13 8 12.5 Capex per well 7.0 Capex per bbl 5.46 0.91 Total capex 91 % before first oil 75% 68 % first oil to peak 0% 0 Maintenance capex 25% 23 First Capex 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 US$mm 28 40 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 Before first oil 68 Maintenance 23 Total 91 Sensitivities 2 32 46 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 36 52 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 4 24 34 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 5 20 28 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 $7mm per well Ultimate recovery per well 8.0 bcf per well Global Comparisons Capex US$/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 5.85 US$/boe real 0 US$/bbl Total for model 97 US$mm 0 US$/mcf Variable 4.68 US$/bbl 80% Fixed 19 US$mm 20% Years production 23 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 US$mm 0.0 20.3 10.6 7.2 5.6 5.1 4.7 4.3 4.0 3.6 3.4 3.1 2.9 2.7 2.5 2.3 2.2 2.0 1.9 1.8 1.7 1.6 1.6 1.5 Total 97 Base Case and Sensitivities 1 0 2 15% 3 30% 4 -15% 5 -30% Global Comparisons Lifting Costs Transport Lifting Transport US$/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 0.20 US$/mcf 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Oil (US$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$mm) 0.0 5.0 2.5 1.6 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 Total (US$mm) 0.0 5.0 2.5 1.6 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 0.3 0.3 0.2 0.2 0.2 0.2 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 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 45 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 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 0.2 US$/mcf 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Export Tax 0 0 0 0 0 0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Royalty 0 5.0 2.5 1.6 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 Total 0 5.0 2.5 1.6 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 Total Operating Taxes 0 5.0 2.5 1.6 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 Total US$/boe 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 Gross Taxes US$/bbl Saudi Arabia 0 Iran 0 Iraq 0.91 Russia 8.44 Indonesia 1.55 US conv 5.03 Norway 0.19 US shale 6.42 1.07 Canada 2.48 Venezuela 10.48 Nigeria 4.11 Brazil 6.66 UK 0 ##### Sheet/List 11 ##### Depreciation Straight Line Total Capex 91 Years of Production 23 Annual Depreciation (US$mm) 4.0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Depreciation 0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 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 91 Unit of Production Total Reserves 17 Total Produced 17 Total Capex 91 Depreciation per barrel 5.51 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Depreciation 0 22.9 11.5 7.5 5.6 5.0 4.5 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 Total 91 ##### 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$mm NPV of Success 49 Dry Hole 0.0 Successful Well 0 EMV 0 ##### Sheet/List 14 ##### PSA Regime 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Company Revenues 0 43 22 14 11 10 9 8 7 6 6 5 5 4 4 3 3 3 2 2 2 2 2 1 Operating Costs 0 -20 -11 -7 -6 -5 -5 -4 -4 -4 -3 -3 -3 -3 -2 -2 -2 -2 -2 -2 -2 -2 -2 -1 Transport Costs 0 -5 -3 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 0 0 0 0 0 Operating Taxes 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 EBITDA 0 18 9 5 4 3 3 3 2 2 2 1 1 1 1 1 0 0 0 0 0 0 0 0 Depreciation 0 -22.94412505 -11.47206253 -7.456840643 -5.592630482 -5.033367434 -5 -4 -4 -3 -3 -3 -2 -2 -2 -2 -2 -1 -1 -1 -1 -1 -1 -1 EBIT 0 -5 -3 -2 -2 -2 -2 -2 -2 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 Tax on EBIT 0 0.994455575 0.58129307 0.436686193 0.369547286 0.349405614 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Corporate Tax Rate 20% Post tax cashflow 0 19 9 6 4 4 3 3 2 2 2 2 1 1 1 1 1 1 0 0 0 0 0 0 CAPEX -28 -40 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 -1.05 Free Cashflow (FCF) -28 -21 8 5 3 3 2 2 1 1 1 1 0 0 0 0 0 -1 -1 -1 -1 -1 -1 -1 Cumulative FCF -28 -49 -41 -36 -33 -31 -28 -27 -25 -24 -23 -23 -22 -22 -22 -23 -23 -23 -24 -25 -26 -27 -28 -29 Discount Rate 10% Discount Factor 1.10 1.21 1.33 1.46 1.61 1.77 1.95 2.14 2.36 2.59 2.85 3.14 3.45 3.80 4.18 4.59 5.05 5.56 6.12 6.73 7.40 8.14 8.95 9.85 Discounted Cashflow (DCF) -25 -17 6 3 2 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 NPV ($mm) -28 IRR (%) #NUM! 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 88 44 28 21 19 17 16 14 13 11 10 9 8 7 7 6 5 5 4 4 4 3 3 Govt Royalty 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1% Taxable Revenues 0 87 43 28 21 19 17 15 14 12 11 10 9 8 7 7 6 5 5 4 4 4 3 3 Cost Oil 80% of Revenues 0 69 35 23 17 15 14 12 11 10 9 8 7 7 6 5 5 4 4 3 3 3 3 2 Accumulated Cost Oil 69 104 126 143 159 172 185 196 206 215 223 230 236 242 248 252 257 261 264 267 270 273 275 Annual Costs -65 -14 -10 -8 -7 -7 -6 -6 -5 -5 -5 -4 -4 -4 -4 -4 -3 -3 -3 -3 -3 -3 -3 Accumulated Costs -65 -79 -89 -97 -104 -111 -117 -123 -129 -134 -138 -143 -147 -151 -155 -158 -162 -165 -168 -171 -174 -177 -180 4 24 37 46 54 61 67 72 77 81 84 87 89 91 93 94 95 95 96 96 96 96 95 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 87 43 28 21 19 17 15 14 12 11 10 9 8 7 7 6 5 5 4 4 4 3 3 Profit Oil Company 0 43 22 14 11 10 9 8 7 6 6 5 5 4 4 3 3 3 2 2 2 2 2 1 Govt 0 43 22 14 11 10 9 8 7 6 6 5 5 4 4 3 3 3 2 2 2 2 2 1 Total Company Revenues 0 43 22 14 11 10 9 8 7 6 6 5 5 4 4 3 3 3 2 2 2 2 2 1 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 43 22 14 11 10 9 8 7 6 6 5 5 4 4 3 3 3 2 2 2 2 2 1 Govt. Revenues 0 44 22 14 11 10 9 8 7 6 6 5 5 4 4 3 3 3 2 2 2 2 2 1 ##### 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