Reference no: EM132465577

ENCH 687 - Petroleum Process Economics university of calgary

Question 1: Calculate the after tax cash flow, contractor take and government take for years 1 through 10 for the following scenario:

• Capital Expenses were $50 million in year 1, Operating Expenses are $5 million
• Annual production is 500,000 BBL starting in year 2 and the price of oil is fixed at $50 / BBL
• The production sharing agreement has the following specifications:

i. Cost Recovery is 30%

ii. Contractor share of Profit Oil and Excess Cost Recovery Oil is 25%

iii. Income tax is 20%

1. Capital Expenses are amortized over 10 years
2. There is no depreciation or depletion, and losses cannot be carried forward