Unit cost of Songkhla and Buaban field in block

G5/43

ST 109700

Asian Institute of Technology

P.O. Box 4, Klong Luang
AIT logo Pathumthani 12120, Thailand
August
1  2009
 
 ACKNOWLEDGEMENT

Many persons have contributed either directly or indirectly to my project. I wish to express my
thanks to them sincerely.
Firstly and foremost, I would like to thank NuCoastal (Thailand) Limited for giving an
opportunity to participate and learn about how to administrate and constituent for E&P business.
I feel deeply be grateful to the NuCoastal Production Department; Mr. Dan Haines, Mr.
Sakharin Suwannathatsa and Ms. Somkamol Ekpattarakulchai for providing invaluable
information and insightful comments and recommendations that make the project formally
complete. I am indebted to Mr. Suvit Putcharaporn and Ms. Bhornrat Bubphavanich for giving
some safety and accounting data respectively as the guidance in this work.
Secondly, I would like to express my gratitude to Dr. Gregory L. F. Chiu for his supporting and
cooperating at AIT. An honorable mention also goes to Dr. Poovadol Sirirangsi, who taught me
the basic Cost Management for E&P Project.

Appreciation is also extended to all those who supported me in any respect during the
completion of the project.
Finally, I would like to express my heartily gratitude and thank to my parents who always
encourage and believe in me to overcome many difficulties while doing this project.

Montian Luangsakultong
 

i 
 
 EXECUTIVE SUMMARY

This paper investigates unit cost of Songkhla and Buaban field in block G5/43. The fundamental
knowledge used for this project is the understanding of the process of E&P business and the
basic of oil and gas accounting. The information of cost and activities in the paper referred to
data from NuCoastal (Thailand) Limited.
The unit cost of two oil fields is calculated by divide project life cycle cost with the accumulate
oil production for the life cycle of the project. The unit cost of Songkhla and Buaban field is $34
per barrel of oil. This value can be used to compare with the value of unit cost of the next
project for effective cost management.

ii 
 
 TABLE OF CONTENTS
Page

ACKNOWLEDGEMENT .............................................................................................................. i
EXECUTIVE SUMMARY ............................................................................................................ ii
TABLE OF CONTENTS .............................................................................................................. iii
LIST OF FIGURES....................................................................................................................... iv
LIST OF TABLES ........................................................................................................................ iv
1. INTRODUCTION .................................................................................................................. 1
1.1 BACKGROUND OF THE STUDY ................................................................................ 1
1.2 BACKGROUND OF COMPANY .................................................................................. 1
1.2.1 Block G5/43 ............................................................................................................. 1
1.2.2 Sonkhla Field Performance ...................................................................................... 2
1.2.3 Bua Ban Field Performance ..................................................................................... 4
2. DETAILED PROJECT WORKS ........................................................................................... 6
2.1 Objective .......................................................................................................................... 6
2.2 Methodology .................................................................................................................... 6
2.2.1 Project planning and scheduling............................................................................... 6
2.2.2 Production profile ..................................................................................................... 7
2.2.3 Financial model assumption ..................................................................................... 8
2.2.4 Product pricing ......................................................................................................... 9
2.3 Results of the project ..................................................................................................... 10
2.4 Summary and conclusions ............................................................................................. 11
REFERENCES ............................................................................................................................. 12
APPENDICES.............................................................................................................................. 13
APPENDIX A .............................................................................................................................. 14
APPENDIX B .............................................................................................................................. 15
 

iii 
 
 LIST OF FIGURES
Page

Figure 1.1: G5/43 Field .................................................................................................................. 1

Figure 1.2: Songkhla field constructions ........................................................................................ 2
Figure 1.3: Soraya platform............................................................................................................ 2
Figure 1.4: Songkhla Allocated Production Data ........................................................................... 3
Figure 1.5: Buaban field constructions........................................................................................... 4
Figure 1.6: Songkhla-C WHP, CPP and Jack-up rig Vicksburg .................................................... 4
Figure 2.1: Production profile of Songkhla and Buaban field ....................................................... 7
Figure 2.2: Fiscal regime: Thailand III .......................................................................................... 8
Figure 2.3: Cost allocation by year .............................................................................................. 10

LIST OF TABLES
Page

Table 1.1: Construction on field and location ................................................................................ 2

Table 1.2: The fluid properties of the Songkhla reservoir ............................................................. 3
Table 1.3: The fluid properties of the Buaban reservoir ................................................................ 5
Table 2.1: Songkhla & Buaban Project schedule ........................................................................... 6
Table 2.2: Production profile for Songkhla and Buaban field ....................................................... 7
Table 2.3: Typical investment for development project................................................................. 8
Table 2.4: Nominal crude oil price used in the financial model .................................................... 9
Table 2.5: Unit cost of oil for Songkhla and Buaban field........................................................... 10

iv 
 
 1. INTRODUCTION

1.1 BACKGROUND OF THE STUDY

According to the realization of the Offshore Technology and Management (OTM) that all
students should have experiences in working in the real situation of the oil and gas industry, The
department provides the internship course to the students. NuCoastal (Thailand) Limited sees
the benefit of this course can promote the effectiveness of the new generation of oil and gas
business. Therefore, they give a valuable opportunity for OTM students to get working
experiences, practical knowledge, how to deal with the people and other skills to be professional
in E&P business in the future.

After finishing the training period, the “Unit cost of Songkhla and Buaban field in block G5/43”
project was created to understand how to plan and run the E&P business and also to find out the
unit cost of oil in these two fields.

1.2 BACKGROUND OF COMPANY

NuCoastal (Thailand) Limited is a wholly owned subsidiary of Coastal Energy Company.

Coastal Energy is headquartered in London and is traded on the London AIM and Toronto TSX-
V stock markets under the symbol CEO. Coastal Energy has offices in London and Houston.
NuCoastal (Thailand) Limited was established in 2003 and is the licensed operator of offshore
concession Block G5/43. NuCoastal (Thailand) Limited’s registered office is in Bangkok. The
company has warehouse and office facilities in Songkhla from which its offshore operations are
based.

1.2.1 Block G5/43

The Songkhla and Bua Ban Production Areas are located in Block G5/43 in the Gulf of Thailand. The
Production Areas cover 75.6 sq km and 280 sq km respectively.

Figure 1.1: G5/43 Field

1 
 
 Table 1.1: Construction on field and location

Distance from shore

Field Construction
km. Nautical mile
Songkhla Jack-up rig Soraya 30 16.2
Tanker 30 16.2
Buaban Songkhla-C WHP 17.4 9.3
Songkhla-C CPP 17.4 9.3
Tanker 18.1 10
Jack-up rig Vicksburg 17.4 9.3

1.2.2 Sonkhla Field Performance

Songkhla A production started up in November 2008 concurrent with drilling operations from
the Deep Driller 7 Jack-up rig. In the first phase of development drilling, three production
wells (SA-01, SA-03 and SA-07) were drilled and completed with electrical submersible pumps.

Main production started in February 2009 from the Soraya three legs jack-up platform after it
was on location and hooked up to the Trust Navigator FSO.

Trust Navigator FSO

Soraya 3 legs jack-up

platform 

Figure 1.2: Songkhla field constructions

Figure 1.3: Soraya platform

2 
 
In September 2009, the second development phase of drilling began using the Vicksburg Jack-
up rig and a further three production wells (SA-02, SA-04 and SA-08) and two water injection
wells (SA-05 and SA-06) were drilled. The second phase of development drilling was
completed in December 2009.

In 2008 early production from the Deep Driller 7 totaled 143,142 stb. The 2009 Songkhla Field
production was 1,597,244 stb. The cumulative production at 31 December 2009 is 1,740,386
stb. Figure 1.2 shows the monthly allocated production data by well in stb per calendar day.

SONGKHLA FIELD PRODUCTION BY WELL (STB /D)

10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0

SA01 SA02 SA03 SA04 SA07 SA08

Figure 1.4: Songkhla Allocated Production Data

Down hole fluid samples were collected from the Songkhla 1 discovery well. A standard set of
PVT experiments were run by Core Laboratories. The Songkhla crude is medium sweet oil with
high wax content.

The fluid properties of the Songkhla reservoir are detailed below.

Properties of the Songkhla reservoir

Oil gravity 31 degrees API
GOR 130 scf/stb
Gas specific gravity 1
Bubble Point Pressure 670 psig
Initial Reservoir Pressure 3140 psig (@ 7400 ft TVDss)
Reservoir Temperature 259 deg F
FVF (at initial Pr and Tr) 1.15 rb/stb
Oil Viscosity (at initial Pr and Tr) 3.5 cp

Table 1.2: The fluid properties of the Songkhla reservoir

3 
 
1.2.3 Bua Ban Field Performance
The Bua Ban field was discovered in 1990 by Premier Oil Pacific Limited. The main reservoir is
of Oligocene age and comprises fluvial lacustrine reservoir sands. NuCoastal Thailand drilled
two appraisal wells in 2005, one of which was sidetracked.

Subsequent to drilling the appraisal wells NuCoastal acquired 3D seismic data over the Bua Ban
area. In 2008 the seismic data was re-processed and new maps were interpreted.

The well, log, core and test data were interpreted and incorporated into a geological model
which was used to generate the grid data for a reservoir simulation model. The simulation
model has been used for development planning purposes. In the base case plan Bua Ban will be
developed with a Songkhla-C WHP, CPP and Coastal Energy Resolution FSO. Bua Ban will be
developed with 11 production wells and 2 water disposal wells.

Coastal Energy
Songkhla-C WHP & CPP Resolution FSO

Figure 1.5: Buaban field constructions

Figure 1.6: Songkhla-C WHP, CPP and Jack-up rig Vicksburg

4 
 
The fluid properties of the Buaban reservoir are detailed below.

Properties of the Songkhla reservoir

Oil Gravity 28 API
GOR 230 scf/stb
Bubble point pressure 1210 psig (at Tres of 259 deg F)
FVF (at Tres and Pb) 1.33 rb/stb
FVF (at Tres and 3225 psig) 1.28 rb/stb
Oil viscosity (at Tres and Pb) 2.34 cp
Oil viscosity (at Tres and 3225 psig) 3.2 cp

Table 1.3: The fluid properties of the Buaban reservoir

5 
 
 2. DETAILED PROJECT WORKS

2.1 Objective
This project reviews the mechanism in oil and gas business for exploration and
production company. The detail and data used in the paper base on the real information from
NuCoastal (Thailand) Limited. The objective of this project is to show the concession and
commitment in Thailand, how to indicate and account cost of exploration development and
production and also, to apply the oil and gas cost management knowledge practically.

Importantly, the main body of this subject is to show how to calculate the unit cost of the
Songkhla and Buaban field in block G5/43 for project basis systematically and the solution to
put the data in the right way that affect the correction of the final result used to make appropriate
decision to achieve in oil and gas business.

2.2 Methodology
In this chapter, the methodology proposed to find out the unit cost of Songkhla and Buaban
field is presented. It will be described step to step in details including the data for the
investigation.

1) Get the data of project planning and scheduling of Songkhla and Buaban field.

2) Collect Production profiles of two oil fields.

3) Select the fiscal regimes of this project.

4) Allocate cost for each activity by year.

5) Calculate the unit cost of these oil fields

2.2.1 Project planning and scheduling

Songkhla & Buaban Project schedule is illustrated in Table 2.1. This schedule shows the
important activities for each year until the end of the project. The complete Songkhla & Buaban
Project schedule can be referred in Appendix A

Table 2.1: Songkhla & Buaban Project schedule 

Time 2011-
2003 2004 2005 2006 2007 2008 2009 2010 2029
Phase 2028
1
2
3
4
5

Phase 1 = Acquisition phase

Phase 2 = Exploration phase
Phase 3 = Development phase
Phase 4 = Production phase
Phase 5 = Decommissioning phase

6 
 
2.2.2 Production profile
By year end 2009 the Songkhla Field had produced 1.9 mmstb. Detailed reservoir simulations
studies have been performed to generate production profiles and determine the remaining
reserves. The results of the simulation work show that the remaining “Best Technical Case”
reserves are 12.8 mmstb at 1/1/2010. The production forecast for the Bua Ban field recovers
12.9 mmstb from 11 production wells. Then, the production profile was generated and based
on the pressure depletion on each field. Figure 2.1 and Table 2.2 show production profile of
Songkhla and Buaban field.

Production Profile
14000

Production Rate (stb/d)

12000

10000

8000

6000 Buaban
4000 Songkhla

2000

0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Year

Figure 2.1: Production profile of Songkhla and Buaban field

Songkhla Buaban
Year
stb/d stb/d
2010 7900 3550
2011 6241 5000
2012 4930 3250
2013 3895 3000
2014 3077 2500
2015 2431 2200
2016 1920 1950
2017 1517 1700 Table 2.2: Production profile for Songkhla and
2018 1199 1500
Buaban field
2019 947 1350
2020 - 1255.5
2021 - 1150
2022 - 1085
2023 - 1000
2024 - 940
2025 - 875
2026 - 810
2027 - 755
2028 - 700
2029 - 650
Cum Oil 12.4 12.9

7 
 
2.2.3 Financial model assumption
For this project, the basis of cost assumption for the main facilities and activities are defined as
detailed in Table 3.11. These costs will be used in cost allocation.

Table 2.3: Typical investment for development project

Typical investment Detail
Capital Expenditure (CAPEX) Drilling cost
Drilling rig rent
Production & injection well
Flow line & Riser
ESP
Operation Expenditure (OPEX) Operating cost: production & injection
Electrical & Utilities system

According to the petroleum contact system in Thailand, the petroleum fiscal regime used for the
project is the concessionary system of Thailand III (DMF, 2009). In general, there are two basic
types of petroleum fiscal systems in the world economics. These are concessionary system,
referred to tax/royalty system and contractual system (Mian M.A., 2002). The concessionary
system allows private ownership to manage the mineral resources under an agreement. For the
contractual system, the government acts as the owner of that mineral. Thailand III is a fiscal
regime in Thailand which oil and gas investment companies need to follow. This contract allows
the government to take royalty in scale rates from 5-15% of gross revenue, based on production.
Besides the expenditure taken by the owner, special remuneration benefit (SRB) is also deduced
as progressive rates from 0-75% on windfall profit. Moreover, the owners have an obligation to
pay petroleum income take at 50% of the net revenue. The summary of Thailand III system is
shown in Figure 3.8.

Figure 2.2: Fiscal regime: Thailand III

Source: DMF (2009)

8 
 
2.2.4 Product pricing
For the unit cost calculation, we refer nominal crude oil prices forecasted by EIA (2010) for price
estimation. 10% reduction is also applied to the nominal price due to the fluctuation of crude oil
price and different properties. These prices are tabulated and shown in Table 4.14.

Table 2.4: Nominal crude oil price used in the financial model

Nominal crude oil Nominal crude oil

Year price by EIA* price used for the
project
2010 70.3 63.27
2011 73.06 65.754
2012 79.41 71.469
2013 85.74 77.166
2014 90.91 81.819
2015 94.52 85.068
2016 98.23 88.407
2017 101.23 91.107
2018 104.41 93.969
2019 106.47 95.823
2020 108.28 97.452
2021 109.52 98.568
2022 110.92 99.828
2023 112.32 101.088
2024 113.63 102.267
2025 115.09 103.581
2026 116.61 104.949
2027 118.32 106.488
2028 120.13 108.117
2029 122.04 109.836
2010 70.3 63.27
2011 73.06 65.754

9 
 
2.3 Results of the project
After cost collection and allocation, cost of project by year is created and shown in Figure 2.3
for the complete cost calculation can be referred in Appendix B.

Figure 2.3: Cost allocation by year

250,000,000

200,000,000

150,000,000
$US

100,000,000

50,000,000

0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Year

The Project life cycle cost is determined by discounting all of cost to the year of 2008 (starting
production). The used discounted rate is 10.34% yearly, referred to Weighted Average Cost of
Capital (WACC) estimated as the calculation in Appendix B. Then, The unit cost of Songkhla
and Buaban are calculated by divide Project life cycle cost with cumulative production
27,026,736 bbl

Table 2.5: Unit cost of oil for Songkhla and Buaban field

The Project life cycle cost (10.34% WACC) $918,810,104

Cumulative oil production 27,026,736 bbl
Unit cost of oil $34.00/bbl

10 
 
2.4 Summary and conclusions
The unit cost of oil for Songkhla and Buaban field is $34.00/bbl. However, this value can be
changed according to the following factors

1) WACC due to company

2) Oil price
3) Data of prove reserve
4) Fiscal regime

The value of unit cost is valuable to easily evaluate the cost of oil and the profit of selling oil per
barrel. As the result, this is the base line for making correct decision of selling oil or storage for
waiting for oil price increasing and getting more profit per barrel of oil.

11 
 
 REFERENCES
 

EIA (2010). Annual Energy Outlook 2010 with Projections to 2035. Retrieved August 15,
2010, from http://ftp.eia.doe.gov/oiaf/aeo/woprices.html

Mian M.A. (2002). Project Economics and Decision Analysis Volume I:Deterministic models.
Oklahoma, The United State of America: Pennwell.

New York University (2008). EVM Calculation. Retrieved August 31, 2010, from
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/data.html

NuCoastal (Thailand) Limited. (2010). Buaban and Songkhla field Project. Bangkok.

Rene-Philippe DUBOUT (2010). Exchange Rates: EURO, USD, GBP vs THB from 2006 to 2009.
Retrieved August 25, 2010, from http://www.doingbusinessthailand.com/thailand-
banking/exchange-rates-euro-usd-gbp-vs-thb-from-2006-to-2009.html

12 
 
 APPENDICES

13 
 
 
APPENDIX A: SONGKHLA & BUABAN PROJECT SCHEDULE

14 
 APPENDIX B: FINANCIAL MODEL
B-1) Development Expenditure

15 
 
B-1) Development Expenditure (con’t)

16 
 
B-2) Exploration Expenditure

17 
 
B-2) Exploration Expenditure (con’t)

B-3) General Administrative Expenditure

Code Description 2004 2005 2006 2007 2008 2009 2010-2029

500 Total General Administrative Expenses 73,136.95 134,150.98 906,907.63 1,657,877.73 4,387,423.04 12,058,158.21 4,150,000.00

501 Personnel Expenses 9,108.35 35,909.78 258,537.47 862,599.29 1,269,059.10 1,096,004.02 1,200,000.00
-
502 Running Office costs 21,488.66 22,327.77 202,793.53 294,418.56 331,456.50 250,000.00
3,618.89
503 Legal/Professional/Consulting 13,821.71 8,584.14 214,745.73 228,680.32 383,577.66 449,898.86 340,000.00

504 Communication 6,522.39 8,675.37 97,308.43 33,497.68 66,558.73 92,695.90 60,000.00

-
505 Insurance - - 392.77 69,210.76 60,000.00
39,318.29
506 Allocation of Head Office charges - - - 1,463,801.80 8,121,322.85 1,400,000.00

507 Miscellaneous 22,195.83 58,653.92 339,934.89 329,914.14 840,796.43 2,006,098.36 840,000.00

18 
 
 B-4) Operating Expenditure

Code Description 2008 2009 2010-2029

400 Total Operating Expenses 1,997,667.09 35,680,358.89 25,070,000.00
401 Personnel Expenses 260,604.00 3,670,269.02 3,600,000.00
402 Field Operating Expenses 1,055,463.31 26,740,971.58 12,000,000.00
403 Liquid Loading & Transportation 614,762.59 579,008.23 422,000.00
404 Well Work Over - - -
405 Maintenance - 2,473,507.94 2,200,000.00
406 Inspection - 18,753.06 20,000.00
407 Well Abandonment - - -
408 Logistics 2,494.43 3,851.58 4,000.00
409 Studies & Other 64,342.76 540,651.31 500,000.00
410 Insurance - 1,104,646.21 1,200,000.00
411 Technical Support - - -
412 Allocations of Head Office Charges - - -
413 Others - 548,699.94 5,124,000.00

B-4) Royalty Calculation

ITEM 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Production rate / day 392.17 4,376.01 11,450.00 11,241 8,180 6,895 5,577 4,631 3,870 3,217 2,699
Royalty tax 1st (0-
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
2000bbl/D) @5.0%
rest after (-2000) 9,450.00 9,241.00 6,180.39 4,895.01 3,577.06 2,630.87 1,870.39 1,217.11 698.52
Royalty tax 2nd (2000-
187.50 187.50 187.50 187.50 187.50 164.43 116.90 76.07 43.66
5000bbl/D) @6.25%
rest after (-3000) 6,450.00 6,241.00 3,180.39 1,895.01 577.06 0.00 0.00 0.00 0.00
Royalty tax 3rd (5000-
500.00 500.00 318.04 189.50 57.71 0.00 0.00 0.00 0.00
10000bbl/D) @10.0%
rest after (-5000) 1,450.00 1,241.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Royalty tax 3rd (10000-
1,250.00 500.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
20000bbl/D) @12.5%
Crude Royalty tax by day 2,037.50 1,287.50 605.54 477.00 345.21 264.43 216.90 176.07 143.66
Oil price 63.3 65.8 71.5 77.2 81.8 85.1 88.4 91.1 94.0
Royalty tax each year 231,526.87 5,826,836.36 128,912.63 84,658 43,277 36,808 28,244 22,495 19,175 16,041 13,499

B-4) Royalty Calculation (con’t)

ITEM 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Production rate / day 2,297 1,256 1,150 1,085 1,000 940 875 810 755 700 650
Royalty tax 1st (0-
100.00 62.78 57.50 54.25 50.00 47.00 43.75 40.50 37.75 35.00 32.50
2000bbl/D) @5.0%
rest after (-2000) 296.83 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Royalty tax 2nd (2000-
18.55 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
5000bbl/D) @6.25%
rest after (-3000) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Royalty tax 3rd (5000-
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
10000bbl/D) @10.0%
rest after (-5000) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Royalty tax 3rd (10000-
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
20000bbl/D) @12.5%
Crude Royalty tax by day 118.55 62.78 57.50 54.25 50.00 47.00 43.75 40.50 37.75 35.00 32.50
Oil price 95.8 97.5 98.6 99.8 101.1 102.3 103.6 104.9 106.5 108.1 109.8
Royalty tax each year 11,360 6,118 5,668 5,416 5,054 4,807 4,532 4,250 4,020 3,784 3,570

19 
 
B-4) Tax Calculation (con’t)

ITEM 2008 2009 2010 2011 2012 2013 2014 2015

Production rate / day 392.17 4,376.01 11,450.00 11,241 8,180 6,895 5,577 4,631

Oil price - - 63.3 65.8 71.5 77.2 81.8 85.1

Gross Revenue 4,447,483 86,268,954 264,421,148 269,786,361 213,395,167 194,201,971 166,552,850 143,787,821

Royalty tax each year 231,527 5,826,836 128,913 84,658 43,277 36,808 28,244 22,495

Net revenue 4,215,956 80,442,118 264,292,235 269,701,702 213,351,890 194,165,163 166,524,605 143,765,327
DD&A:
- - 400,000 400,000 400,000 400,000 400,000 400,000
Decommissioning
DD&A: Tangible 7,059,110 7,059,110 16,878,432 16,878,432 16,878,432 9,819,322 9,819,322 -

DD&A: Intangible 6,863,274 6,863,274 14,737,945 14,737,945 14,737,945 14,737,945 14,737,945 14,737,945

Opex 1,997,667 35,680,359 25,070,000 25,070,000 25,070,000 25,070,000 25,070,000 25,070,000

Loss carry forward - -11,704,095 - - - - - -

-
Taxable income 19,135,280 207,205,858 212,615,326 156,265,513 144,137,896 116,497,339 103,557,382
11,704,095
Tax rate 50% - 9,567,640 103,602,929 106,307,663 78,132,756 72,068,948 58,248,669 51,778,691

B-4) Tax Calculation (con’t)

ITEM 2015 2016 2017 2018 2019 2020 2021 2022

Production rate / day 4,631 3,870 3,217 2,699 2,297 1,256 1,150 1,085

Oil price 85.1 88.4 91.1 94.0 95.8 97.5 98.6 99.8

Gross Revenue 143,787,821 124,891,922 106,981,913 92,555,549 80,332,453 44,658,110 41,373,918 39,534,384

Royalty tax each year 22,495 19,175 16,041 13,499 11,360 6,118 5,668 5,416

Net revenue 143,765,327 124,872,746 106,965,872 92,542,050 80,321,093 44,651,992 41,368,250 39,528,968
DD&A:
400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000
Decommissioning
DD&A: Tangible - - - - - - - -

DD&A: Intangible 14,737,945 14,737,945 14,737,945 7,874,671 7,874,671 - - -

Opex 25,070,000 25,070,000 25,070,000 25,070,000 25,070,000 25,070,000 25,070,000 25,070,000

Loss carry forward - - - - - - - -

Taxable income 103,557,382 84,664,802 66,757,928 59,197,379 46,976,422 19,181,992 15,898,250 14,058,968

Tax rate 50% 51,778,691 42,332,401 33,378,964 29,598,689 23,488,211 9,590,996 7,949,125 7,029,484

20 
 
 B-4) Tax Calculation (con’t)

ITEM 2023 2024 2025 2026 2027 2028 2029

Production rate / day 1,000 940 875 810 755 700 650

Oil price 101.1 102.3 103.6 104.9 106.5 108.1 109.8

Gross Revenue 36,897,120 35,087,808 33,081,182 31,028,172 29,345,431 27,623,894 26,058,591

Royalty tax each year 5,054 4,807 4,532 4,250 4,020 3,784 3,570

Net revenue - - - - - - -
DD&A:
400,000 400,000 400,000 400,000 400,000 400,000 400,000
Decommissioning
DD&A: Tangible - - - - - - -

DD&A: Intangible - - - - - - -

Opex 25,070,000 25,070,000 25,070,000 25,070,000 25,070,000 25,070,000 25,070,000

Loss carry forward - -25,470,000.00 -50,940,000.00 -76,410,000.00 -101,880,000.00 -127,350,000.00 -152,820,000.00

-
Taxable income -50,940,000 -76,410,000 -101,880,000 -127,350,000 -152,820,000 -178,290,000
25,470,000
Tax rate 50% - - - - - - -

B-5) Weight Average Cost of Capital (WACC)

WACC = (% Debt * Cost of debt) + ( % Equity * Cost of equity)
where: Debt/Equity ratio = 0.4:0.6
Cost of debt = Bond rate at 3.71%
Cost of equity = Risk free rate +
(β * Market Risk Premium)
Market risk premium = 6.9%
β = 1.28
Government bond@20yr = 6.15

Solution: Cost of equity = 6.15+(1.28 *6.9)

= 14.98%
WACC (Yearly) = (0.4*3.71)+(0.6*14.98)
= 10.34%

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