Petrolera Zuata, Petrozuata C.A.

: Analysis of Sponsor Returns and Debt Coverage Ratios

Assumptions (Change these six RED variables)

Initial Oil Price in 1996 $12.25
Annual Change in Oil Price (1996-2012) 2.5%
Royalty Rate (2001-2008) 1.0%
Royalty Rate (2009-2034) 16.7%
Total Debt Financing $1,450,000
Leverage: Debt/Total Project Cost 60%
Project's Total Cost $2,416,667
Tax Rate 34%

Asset Beta 0.60

Risk-free Rate (Yield on the 30-year Treasury Bond as of January 1997) 6.81%
Market Risk Premium 7.50%
Country Risk Premium 0.00%

Cash
Available Debt
Forecasted Change for Debt Total Total Equity Service
Maya in Maya Total Service Debt Debt Cash Coverage
Year Price Price Revenue (CADS) Outstanding Service Flows Ratio
1996 $12.25 2.5% $0 ($80,007) $0 $0 ($79,035)
1997 $12.56 2.5% $0 ($610,492) $1,000,000 $935,950 ($1,986)
1998 $12.87 2.5% $78,524 ($820,154) $1,024,299 ($63,079) ($550,148)
1999 $13.19 2.5% $429,059 ($139,352) $1,242,981 $113,580 $1,576
2000 $13.52 2.5% $803,290 $243,952 $1,450,000 $85,113 $185,047
2001 $13.86 2.5% $560,499 $383,869 $1,411,120 ($157,629) $227,819 2.44
2002 $14.21 2.5% $580,141 $374,482 $1,372,240 ($154,472) $221,589 2.42
2003 $14.56 2.5% $594,310 $351,470 $1,333,360 ($151,315) $190,031 2.32
2004 $14.93 2.5% $608,833 $383,135 $1,268,892 ($171,563) $214,719 2.23
2005 $15.30 2.5% $623,720 $379,409 $1,205,447 ($165,270) $199,063 2.30
2006 $15.68 2.5% $638,978 $415,819 $1,103,295 ($195,423) $220,578 2.13
2007 $16.07 2.5% $654,618 $416,376 $992,187 ($195,059) $218,294 2.13
2008 $16.47 2.5% $670,649 $417,733 $864,195 ($201,103) $236,588 2.08
2009 $16.89 2.5% $687,081 $364,040 $768,166 ($161,187) $210,755 2.26
2010 $17.31 2.5% $703,924 $353,700 $680,692 ($145,382) $204,461 2.43
2011 $17.74 2.5% $721,187 $359,505 $576,861 ($153,095) $203,439 2.35
2012 $18.19 2.5% $738,882 $367,531 $456,838 ($159,037) $246,435 2.31
2013 $18.64 0.0% $757,020 $309,595 $408,576 ($83,154) $225,711 3.72
2014 $18.64 0.0% $758,224 $341,704 $354,212 ($84,614) $239,522 4.04
2015 $18.64 0.0% $759,457 $373,643 $256,355 ($119,749) $248,128 3.12
2016 $18.64 0.0% $760,722 $365,851 $136,753 ($131,281) $266,131 2.79
2017 $18.64 0.0% $762,018 $366,964 $75,000 ($68,159) $329,682 5.38
2018 $18.64 0.0% $763,347 $312,682 $75,000 ($6,405) $306,277 48.82
2019 $18.64 0.0% $764,708 $293,660 $75,000 ($6,405) $287,255 45.85
2020 $18.64 0.0% $766,104 $264,839 $75,000 ($6,405) $258,434 41.35
2021 $18.64 0.0% $767,535 $281,934 $75,000 ($6,405) $241,232 44.02
2022 $18.64 0.0% $769,001 $276,305 $0 ($75,000) $201,306 3.68
2023 $18.64 0.0% $770,504 $278,150 $0 $278,150
2024 $18.64 0.0% $772,045 $273,514 $0 $273,514
2025 $18.64 0.0% $773,624 $274,138 $0 $274,138
2026 $18.64 0.0% $775,243 $263,068 $0 $263,068
2027 $18.64 0.0% $776,902 $262,329 $0 $262,329
2028 $18.64 0.0% $778,603 $260,484 $0 $260,484
2029 $18.64 0.0% $780,346 $250,113 $0 $250,113
2030 $18.64 0.0% $782,133 $234,648 $0 $234,648
2031 $18.64 0.0% $783,964 $238,181 $0 $238,181
2032 $18.64 0.0% $785,842 $231,118 $0 $231,118
2033 $18.64 0.0% $787,766 $229,576 $0 $229,576
2034 $18.64 0.0% $789,738 $215,770 $0 $215,770

Note: This simplified version of the Petrozuata project's economics is designed to accompany Petrolera Zuata, Petrozuata C.A. , HBS No. 299-012. Although the have been made to
model is based on the actual model used, a number of changes have been made to facilitate the analysis.

Model Output

Minimum Debt Service Coverage Ratio (DSCR) 2.08

Year of Minimum DSCR 2008
Average DSCR 10.46
Internal Rate of Return 25.1%
Net Present Value $267,607
 IRR as a Function of the Number
IRR and Minimum DSCR Output Table of Years of Cash Flow

Leverage IRR Min. DSCR Number of Years

25.1% 2.08 With Cash Flow IRR
40% 18.4% 3.05
45% 19.5% 2.73 5 15.9%
50% 21.0% 2.47 10 22.7%
55% 22.8% 2.25 15 24.3%
60% 25.1% 2.08 20 24.9%
65% 28.2% 1.93 25 25.0%
70% 32.5% 1.80 30 25.0%
75% 39.0% 1.69 34 25.1%
80% 49.0% 1.59
 Petrolera Zuata, Petrozuata C.A.: Analysis of Sponsor Returns and Debt Coverage Ratios
Cash
Available Debt
Forecasted Change for Debt Total Total Equity Cash Service Equity/Total
Maya in Maya Total Service Debt Debt Cash Return on Coverage Capital at Equity Cost of Discount PV
Year Price Price Revenue (CADS) Outstanding Service Flows Investment Ratio BOOK VALUES Beta Equity Factor ECF

1996 $12.25 2.5% $0 ($80,007) $0 $0 ($79,035) 100% 0.60 11.31% 1.000 ($79,035)
1997 $12.56 2.5% $0 ($610,492) $1,000,000 $935,950 ($1,986) 10% 6.00 51.81% 0.659 ($1,308)
1998 $12.87 2.5% $78,524 ($820,154) $1,024,299 ($63,079) ($550,148) 40% 1.52 18.18% 0.557 ($306,647)
1999 $13.19 2.5% $429,059 ($139,352) $1,242,981 $113,580 $1,576 41% 1.46 17.74% 0.473 $746
2000 $13.52 2.5% $803,290 $243,952 $1,450,000 $85,113 $185,047 42% 1.44 17.57% 0.403 $74,511
2001 $13.86 2.5% $560,499 $383,869 $1,411,120 ($157,629) $227,819 68.5% 2.44 42% 1.41 17.41% 0.343 $78,133
2002 $14.21 2.5% $580,141 $374,482 $1,372,240 ($154,472) $221,589 64.6% 2.42 43% 1.39 17.24% 0.293 $64,822
2003 $14.56 2.5% $594,310 $351,470 $1,333,360 ($151,315) $190,031 59.1% 2.32 44% 1.37 17.07% 0.250 $47,484
2004 $14.93 2.5% $608,833 $383,135 $1,268,892 ($171,563) $214,719 62.9% 2.23 45% 1.33 16.79% 0.214 $45,939
2005 $15.30 2.5% $623,720 $379,409 $1,205,447 ($165,270) $199,063 60.8% 2.30 46% 1.29 16.52% 0.184 $36,551
2006 $15.68 2.5% $638,978 $415,819 $1,103,295 ($195,423) $220,578 65.1% 2.13 49% 1.24 16.08% 0.158 $34,892
2007 $16.07 2.5% $654,618 $416,376 $992,187 ($195,059) $218,294 63.6% 2.13 51% 1.17 15.60% 0.137 $29,872
2008 $16.47 2.5% $670,649 $417,733 $864,195 ($201,103) $236,588 62.3% 2.08 55% 1.10 15.04% 0.119 $28,142
2009 $16.89 2.5% $687,081 $364,040 $768,166 ($161,187) $210,755 53.0% 2.26 58% 1.04 14.63% 0.104 $21,870
2010 $17.31 2.5% $703,924 $353,700 $680,692 ($145,382) $204,461 50.2% 2.43 60% 0.99 14.25% 0.091 $18,570
2011 $17.74 2.5% $721,187 $359,505 $576,861 ($153,095) $203,439 49.8% 2.35 64% 0.93 13.80% 0.080 $16,236
2012 $18.19 2.5% $738,882 $367,531 $456,838 ($159,037) $246,435 49.7% 2.31 70% 0.86 13.28% 0.070 $17,362
2013 $18.64 0.0% $757,020 $309,595 $408,576 ($83,154) $225,711 40.9% 3.72 72% 0.84 13.08% 0.062 $14,063
2014 $18.64 0.0% $758,224 $341,704 $354,212 ($84,614) $239,522 45.1% 4.04 75% 0.80 12.84% 0.055 $13,225
2015 $18.64 0.0% $759,457 $373,643 $256,355 ($119,749) $248,128 49.2% 3.12 80% 0.75 12.42% 0.049 $12,187
2016 $18.64 0.0% $760,722 $365,851 $136,753 ($131,281) $266,131 48.1% 2.79 88% 0.68 11.90% 0.044 $11,681
2017 $18.64 0.0% $762,018 $366,964 $75,000 ($68,159) $329,682 48.2% 5.38 93% 0.64 11.63% 0.039 $12,962
2018 $18.64 0.0% $763,347 $312,682 $75,000 ($6,405) $306,277 41.0% 48.82 93% 0.64 11.63% 0.035 $10,787
2019 $18.64 0.0% $764,708 $293,660 $75,000 ($6,405) $287,255 38.4% 45.85 93% 0.64 11.63% 0.032 $9,063
2020 $18.64 0.0% $766,104 $264,839 $75,000 ($6,405) $258,434 34.6% 41.35 93% 0.64 11.63% 0.028 $7,304
2021 $18.64 0.0% $767,535 $281,934 $75,000 ($6,405) $241,232 36.7% 44.02 93% 0.64 11.63% 0.025 $6,107
2022 $18.64 0.0% $769,001 $276,305 $0 ($75,000) $201,306 35.9% 3.68 100% 0.60 11.31% 0.023 $4,579
2023 $18.64 0.0% $770,504 $278,150 $0 $278,150 36.1% 100% 0.60 11.31% 0.020 $5,683
2024 $18.64 0.0% $772,045 $273,514 $0 $273,514 35.4% 100% 0.60 11.31% 0.018 $5,021
2025 $18.64 0.0% $773,624 $274,138 $0 $274,138 35.4% 100% 0.60 11.31% 0.016 $4,521
2026 $18.64 0.0% $775,243 $263,068 $0 $263,068 33.9% 100% 0.60 11.31% 0.015 $3,898
2027 $18.64 0.0% $776,902 $262,329 $0 $262,329 33.8% 100% 0.60 11.31% 0.013 $3,492
2028 $18.64 0.0% $778,603 $260,484 $0 $260,484 33.5% 100% 0.60 11.31% 0.012 $3,115
2029 $18.64 0.0% $780,346 $250,113 $0 $250,113 32.1% 100% 0.60 11.31% 0.011 $2,687
2030 $18.64 0.0% $782,133 $234,648 $0 $234,648 30.0% 100% 0.60 11.31% 0.010 $2,265
2031 $18.64 0.0% $783,964 $238,181 $0 $238,181 30.4% 100% 0.60 11.31% 0.009 $2,065
2032 $18.64 0.0% $785,842 $231,118 $0 $231,118 29.4% 100% 0.60 11.31% 0.008 $1,800
2033 $18.64 0.0% $787,766 $229,576 $0 $229,576 29.1% 100% 0.60 11.31% 0.007 $1,607
2034 $18.64 $789,738 $215,770 $0 $215,770 27.3% 100% 0.60 11.31% 0.006 $1,357

Assumptions

Initial Oil Price in 1996 $12.25 IRR and Minimum DSCR Output Table IRR as a Function of the Number
Annual Change in Oil Price (1996-2012) 2.5% of Years of Cash Flow
Royalty Rate (2001-2008) 1.0% Leverage IRR Min. DSCR
Royalty Rate (2009-2034) 16.7% 25.1% 2.08 Number of Years
Total Debt Financing $1,450,000 40% 25.1% 2.08 With Cash Flow IRR
Leverage: Debt/Total Project Cost 60% 45% 25.1% 2.08
Project's Total Cost $2,416,667 50% 25.1% 2.08 5 15.9%
Tax Rate 34% 55% 25.1% 2.08 10 22.7%
0% 60% 25.1% 2.08 15 24.3%
Asset Beta 0.60 65% 25.1% 2.08 20 24.9%
Risk-free Rate (Yield on the 30-year Treasury Bond as of January 1997) 6.81% 70% 25.1% 2.08 25 25.0%
Market Risk Premium 7.50% 75% 25.1% 2.08 30 25.0%
Country Risk Premium 0.00% 80% 25.1% 2.08 34 25.1%

Model Output

Minimum Debt Service Coverage Ratio (DSCR) 2.08

Year of Minimum DSCR 2008
Average DSCR 10.46
Internal Rate of Return 25.1%
Net Present Value $267,607