PowerPoint Presentation

Economic

Background of StudyEconomic analysis involves identification, classification, measurement and valuation an comparison between cost to be expended and benefits shall be gained of two or more choices and alternatives.

Problem StatementIn economic evaluation, many aspects should be considered in order to come out with the best choices.

Objective and scope of studyTo come out with the best economical and functional solutionScope of study would beComparison between the available choicesCalculation and evaluation on the best choice for its net present value, internal rate of return, cumulative cash flow and payback period.

ObjectiveTo analyse the economic feasibilities and carry out economic evaluation for proposed condition by geology team, reservoir engineering team, and production technologist based on NPV and IRR.

Fiscal Term

Fiscal Term (PSC)Royalty rate 10%Ceiling rate 50%Profit sharing 60:40Oil base price $US 40Tax rate 38%

Economic AssumptionsBase CaseThe proposed based case from the reservoir development are 17 wells through zone M2/3, M7/8, M9/14, and M15 with water injection.Reference YearThe reference year for Berlian Field is the year of evaluation.Production PeriodA production period of 15 years.Decommissioning YearDecommissioning period will be after 20 years of production period.Cash Flow ModelThe cash flow model is assumed to be in Money of the Day term.Base Oil PriceThe oil price is to be assumed as USD 40/bbl, and escalation of 5.0% per year. The increment of oil price also to be assumed with escalation up to USD 120/bbl.Operating CostThe fixed OPEX is obtained to approximately USD 25 million per year which consist of tender assisted rig, CPP, pipeline for transporting oil.Hurdle Rate for IRRHurdle rate for Petronas at 15% is chosen which consisted to weighted average cost of capital 8.5% and associated risk of 1.5%.Discount RateThe discount rate assumed to be 10% during the evaluation according to the opportunity cost of capital, acquisition cost of capital and risk management.

Economic AssumptionsBase case involves 17 wells through zone of M2/3, M7/8, M9/14 and M15Production period would be 10 yearsAbandoned after production depletedDiscount rate is assumed to be 15%

Development OptionsOptionRigPlatformProcessingExportingCAPEX ($MM)OPEX ($MM)1Tender Assisted RigWellhead PlatformCustomPipeline367.915.962Tender Assisted RigFPSOCompletePipeline507.820.313Tender Assisted RigCPPCompletePipeline424.6516.994Tender Assisted RigMOPUCompletePipeline434.817.39

ResultYearRevenue of Oil with Natural Depletion (US$ MM)Revenue of Oil with Water Injection after 5 Years( US$ MM)1700.8700.82582.54582.543398.434398.4344272.436272.4365186.442186.4426127.458200.652787.162190.255859.714101.254956.19880.544

Total revenue for each year

CapexTender assisted rig Wellhead PlatformSubsea systemPipeline systemTotal capex $US 367.9 MM

OpexFixed Opex 4 % of Capex $US 15.96 MM annuallySubsea Development Opex $US 3.5/bbl

Net Cash Flow ProfileDevelopment phaseProduction phaseAbandonment phase

Net Cash Flow with Water Injection after 5 yearsDevelopment phaseProduction phaseAbandonment phase

Net Present ValueIRR=48%

NPV with Water Injection After 5 YearsIRR=62%

Revenue SplitContractorOne barrel of oilPetronas40 USD/bblRoyalty (10%)USD 4USD 36 (Net Revenue)USD 11.94Cost recovery limit(4%)+Variable OpexUSD 24.06USD 9.62Profit SplitUSD 14.4440:60(USD 3.68)Tax (38%)USD 3.68USD 5.98 (24.8%)Total ProfitUSD 18.09 (75.2%)

Sensitivity Analysis

Sensitivity Analysis with Water Injection after 5 Years

ConclusionBest OptionOption 1Option 1 with Water Injection after 5 YearsDrillingTender Assisted Rig Tender Assisted Rig PlatformWellhead PlatformWellhead PlatformProcessingCustomCustom with water injection facilitiesTransporting Oil from Berlian East to Berlian2 Pipelines 6 (20 km)2 Pipelines 6 (20 km)

NPV at 15%$ 516 Million$ 604 MillionCapital Expediture$ 367.9 Million$ 433.9 MillionPayback Period1 years1 yearsEconomic Life10 years10 yearsIRR48%63%Ultimate Cash Surplus$1491 Million$1674 MillionMaximum Cash Sink$ 395 Million$ 403 MillionProfitability Index3.774.15

RecommendationShorter development timeIncrease NPV