Terms Units Yr 1 Yr 2 Yr 3 Yr 4

Gas Production MMCFD 18.00 18.00 14.00 12.00

Price 6 $/MCF 6 6 6 6
Gross Value Pool, GVP ( = Gas x Price) $ M/yr 39.4 39.4 30.7 26.3
Cost Gas, CG ( = Cost Gas % x GVP) 30% $ M/yr 11.8 11.8 9.2 7.9
Profit Gas, PG ( = (1 - Cost Gas %) x GVP) 70% $ M/yr 27.6 27.6 21.5 18.4

Expenses
Capital Cost, CAPEX $ M/yr 20
Operating Expenses, OPEX $ M/yr 4 4 4 4

Profit Gas Splits

Profit Split ( = Profit Split % x PG) 22.0% $ M/yr 6.07 6.07 4.72 4.05
EGAS Profit Split ( = (1 - Profit Split %) x PG) $ M/yr 21.52 21.52 16.74 14.35

Cost Recovery Calculation

Capital Cost Amortization 8 $ M/yr 2.5 2.5 2.5 2.5
Cost Recovery, CR (Amort. + Opex) $ M/yr 6.5 6.5 6.5 6.5
Cost Carry Forward, CCF $ M/yr 0.0 0.0 0.0 0.0
Cum Cost Carry Forward, CCF $ M/yr 0.0 0.0 0.0 0.0

Actual Cost Recovered, ACR (Min. of CG & CCF + CR) $ M/yr 6.5 6.5 6.5 6.5
Net Profit Payment, NPP ( = CG - ACR) $ M/yr 5.3 5.3 2.7 1.4

Contractor Cash Flow Calculation

Cash Inflows ( = Profit Split + CG) $ M/yr 17.90 17.90 13.92 11.93
Cash Outflows ( = NPP + OPEX + CAPEX) $ M/yr 29.33 9.33 6.70 5.38
Net Cash Flow, NCF ( = Inflows - Outflows) $ M/yr -11.4 8.6 7.2 6.5
NCF to Economic Limit, NCF ( +ve NCF) $ M/yr -11.4 8.6 7.2 6.5

EGAS Cash Flow Calculation

EGAS Cash Flow ( = EGAS Profit Split + NPP) $ M/yr 26.8 26.8 19.4 15.7

Contractor Economics Targets

NPV15 7.42 8.532546
IRR 0.524338 0.629205

EGAS Economics
NPV15 75.53 86.86188 90.63849
Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
8.00 5.00 3.00 2.00 1.00 1.00
6 6 6 6 6 6
17.5 11.0 6.6 4.4 2.2 2.2
5.3 3.3 2.0 1.3 0.7 0.7
12.3 7.7 4.6 3.1 1.5 1.5

4 4 4 4 4 4

2.70 1.69 1.01 0.67 0.34 0.34

9.57 5.98 3.59 2.39 1.20 1.20

2.5 2.5 2.5 2.5

7.7 11.0 15.5 20.7 21.5 24.9
1.2 3.2 4.5 5.2 3.3 3.3
1.2 4.5 9.0 14.2 17.5 20.9

5.3 3.3 2.0 1.3 0.7 0.7

0.0 0.0 0.0 0.0 0.0 0.0

7.95 4.97 2.98 1.99 0.99 0.99

4.00 4.00 4.00 4.00 4.00 4.00
4.0 1.0 -1.0 -2.0 -3.0 -3.0
4.0 1.0 0.0 0.0 0.0 0.0

9.6 6.0 3.6 2.4 1.2 1.2

a- When will be the first year for contractor to reach cost carry forward?
b- When will the contractor reach his economic limit?
c- What gas price that will increase Contractor's NPV15 by 15%?
d- What gas price that will increase EGAS NPV15 by 15%?
e- What will be the Capex savings that can generate 20% increase to Contractor's
IRR?
f- What will be the Capex savings that can generate 20% increase to EGAS NPV15?

By: REDA Rashwan

 Value Units Note
5th year
By the end of the 6th year
6.31216512058505 $/MCF
6.72249209736058 $/MCF
1.7827 $ M/yr
36.1789991671671 $ M/yr Not Applicable (> CAPEX)