Euler: Technical & Economic Evaluation

1 Introduction

The following document shows the preliminary results of a technical economic analysis of Block Euler, located in the Department of Casanare in Colombia.

The objective of the analysis is initially to make a forecast of oil production from the field and then to make an economic valuation of the forecast oil volumes.

To estimate hydrocarbon resources, the production forecast system will be used. This system allows determining the volume of remaining proven reserves through the use of the production history of the field.

Finally, an economic evaluation (Net Cash-Flow Evaluation) of the estimated oil volumes is carried out to determine the economic value of the block.

2 Remaining volume estimation

2.1 Daily production & Production

• q: Daily production in barrels per days (stb/d)
  
• Q: Cumulated production in thousand barrels (Mstb)

2.2 Daily production oil & water

• q: Daily oil production in barrels per days (stb/d)
  
• w: Daily water production in barrels per days (stb/d)

2.3 Daily & Forecast daily oil production

• q: Daily production in barrels per days (stb/d)
  
• qf: Forecast daily production in barrels per days (stb/d)

2.4 Production & Forecast oil production

• Q: Cumulated production in thousand barrels (Mstb)
• Qf: Forecast cumulated production in thousand barrels (Mstb)

3 Economic evaluation

The economic evaluation of the block includes:

• Analytically estimated remaining volumes, for an identified period of time
  
• Estimated costs of fixed and variable operating expenses
  
• Estimate of the income of the quantities produced based on the analytical estimate
  
• Estimated income related to the remaining volumes and the expenses associated with taxes and royalties
  
• The period of time associated with the economic limit of the field

3.1 Production Forecast Model Results

• Net present value after tax: 1,639,267 usd

The following table shows the data used; the parameters and results of the economic evaluation.

The economic limit is defined as the production rate at the time when the maximum cumulative net cash flow occurs for a project.

Field: Euler Production Forecast Model Results

items	Parameters	Value	Units
1	Field daily production @ 2020-06-01	226.92	stb/d
2	Forecast production time	76	months
3	Field production rate at forecast production time @ 2026-10-01	15.56	stb/d
4	Production @ 2020-06-01	189,961.7	stb
5	Forecast Production @ 2026-10-01	335,909.1	stb
6	Remaining volume @ 2026-10-01	145,947.4	stb
7	Oil Price	75	USD/stb
8	Royalty	8	%
9	Tax rate	39.5	%
10	Annual discount rate	15	%
11	fixed operating expenses	3500	USD/days
12	Variable operating expenses	12	USD/stb
13	NPV before tax & after royalty & opex	2,709,532	USD
14	NPV after tax & after royalty & opex	1,639,267	USD
15	Time to economic limit	27	months
16	Production at economic limit	61.71	stb/d

3.2 Remaining volume & Discounted cash flow after tax

RV: Remaining volume in barrels (stb)
dcf_at: Net present value after tax (USD)

3.3 Forecast daily production & Net present value after tax

qf: Forecast daily production in barrels per days (stb/d)
npv_at: Net present value after tax (USD)

4 Forecast production results

q: Daily production in barrels per days (stb/d)
Q: Cumulated production in thousand barrels (kstb)
qf: Forecast daily production in barrels per days (stb/d)
RV: Remaining volume in thousand barrels (kstb)

5 Economic evaluation results

qf: Forecast daily production in barrels per days (stb/d)
npv_at: Net present value after tax in USD
RV: Remaining volume in barrels (stb)
dcf_at: Discounted cash flow after tax in USD
t: time in months

5.1 Summary

• Oil price: 75 USD/stb
• Fixed operating expenses: 3500 USD/days
  
• Net present value after tax: 1,639,267 usd
• Time to economic limit: 27 months
• Production at economic limit: 61.71 stb/days

6 Sensitivity analysis - Economic evaluation

The following variables will be modified in order to perform the sensitivity analysis.

• Oil price: 75 USD/stb
• Fixed operating expenses: 3500 USD/days

The following table shows the data used; the parameters and results of the economic evaluation.

6.1 Production Forecast Model Results

• Net present value after tax: 1,906,566 usd

The economic limit is defined as the production rate at the time when the maximum cumulative net cash flow occurs for a project.

Field: Euler Production Forecast Model Results

items	Parameters	Value	Units
1	Field daily production @ 2020-06-01	226.92	stb/d
2	Forecast production time	76	months
3	Field production rate at forecast production time @ 2026-10-01	15.56	stb/d
4	Production @ 2020-06-01	189,961.7	stb
5	Forecast Production @ 2026-10-01	335,909.1	stb
6	Remaining volume @ 2026-10-01	145,947.4	stb
7	Oil Price	75	USD/stb
8	Royalty	8	%
9	Tax rate	39.5	%
10	Annual discount rate	15	%
11	fixed operating expenses	3000	USD/days
12	Variable operating expenses	12	USD/stb
13	NPV before tax & after royalty & opex	3,151,349	USD
14	NPV after tax & after royalty & opex	1,906,566	USD
15	Time to economic limit	31	months
16	Production at economic limit	53.29	stb/d

7 Economic evaluation results

qf: Forecast daily production in barrels per days (stb/d)
npv_at: Net present value after tax in USD
RV: Remaining volume in barrels (stb)
dcf_at: Discounted cash flow after tax in USD
t: time in months

7.1 Summary

• Oil price: 75 USD/stb
• Fixed operating expenses: 3000 USD/days
  
• Net present value after tax: 1,906,566 usd
• Time to economic limit: 31 months
• Production at economic limit: 53.29 stb/d