Indicative Viability Calculator for Facilitation of Prospective Bidders

Transcription

1 Indicative Viability Calculator for Facilitation of Prospective Bidders Discovered Small Fields Bid Round 2016 September 9, 2016 Singapore

2 Agenda 1 Contract Areas 2 Objective 3 Factors that determine the Viability of E&P projects 4 Indicative Viability Calculator Key Features 5 Illustrative Calculations 2

3 Contract Areas Rajasthan fields 2 Reserves 0.1 Mmtoe Area 24 SKM Assam fields 13 Reserves 21.8 Mmtoe Area 119 SKM Gujarat fields 7 (2 offshore) Reserves 4.1 Mmtoe Area 109 SKM Madhya Pradesh 1 Reserves 0.5 Mmtoe Area 15 SKM Mumbai fields 27 (all offshore) Reserves 55 Mmtoe Area 1001 SKM Andhra Pradesh fields 15 (7 Offshore) Reserves 4.4 Mmtoe Area 263 SKM Tamil Nadu fields 2 Reserves 0.4 Mmtoe Area 20 SKM 3

4 Objective The key objective of indicative viability calculator is to familiarize the potential bidders/ investors (particularly, the entities venturing into Oil & Gas sector for the first time) with the key factors that influence the viability of E&P projects 4

5 Factor that Determine the Viability of E&P Projects Cost Determinants Capital Expenditure Appraisal, Well Development, Surface/ Process Facilities, etc. Operating Expenditure Manpower, Work over operations, Repair and Maintenance, Utilities and others Taxes & Levies Royalty, other taxes, etc. Financing Debt/Equity Ratio, Interest Rates, Repayment period etc. Revenue Share of Govt. Revenue Determinants Production Volumes In-place volumes of oil & gas, recoverable reserves, life of reservoir, etc. Market Factors Crude oil & natural gas prices, exchange rate, etc. Project Implementation schedule Completion time for appraisal & development activities, commencement of production 5

6 Indicative Viability Calculator Key Features User Dashboard User-friendly dashboard where user can inputs all the assumptions and understand the broad viability of the project Indicative output parameters - NPV and IRR Enter key input data The output data will appear on the dashboard 6

7 Indicative Viability Calculator Key Features Inputs Enter field details In-place reserves, field type, no. of wells, recovery factor Enter Market Parameters Exchange rates, Oil and Gas prices Enter Project Timelines Appraisal, Well, Facilities development, operations and commercial production Enter Internal Consumption Enter Production Profile details by Either Select model predefined or customized Y-o-Y profile Enter Govt. Revenue share (%) parameters LRP, HRP Calculator select Royalty Rates as per Field Type Enter Debt Financing details Debt %, Interest rates, Repayment period Enter Cost Parameters Capex and Opex 7

8 Indicative Viability Calculator Key Features Outputs User can view indicative NPV and IRR values along with total investment requirement User can also view the year-wise cash flows over the project lifecycle 8

9 Illustrative Calculations- Onland Field Key Assumptions General Assumption Assumptions Units Value Crude Oil US$/ Bbl 50 Gas Price US$/ MMBTU 6.75 Exchange Rate INR/ US$ 67 Debt % 20% Interest rate % 5% Repayment period Royalty rate % Years 10 Oil % Gas -10% Field Specific Assumption Assumptions Units Value Internal Consumption % Capex (including surface facility & appraisal) USD Mn. per well Oil 2% Gas 3% 2.87 Opex (Crude oil) US$/ bbl 5 Opex (Gas) US$/ MMBTU 0.5 No. of Wells # 2 In-place reserve MMT/ BCM Oil 1 Gas 0.5 Govt. Share % LRP 20% HRP 30% Expected Recovery % 25% Commercial life of production Months 144 Note the above assumptions are illustrative and can be changed as per user requirement 9

10 Illustrative Calculations- Onland Field Output 10

11 Illustrative Calculations- Offshore Field Key Assumptions General Assumption Assumptions Units Value Crude Oil US$/ Bbl 50 Gas Price US$/ MMBTU 6.75 Exchange Rate INR/ US$ 67 Debt % 20% Interest rate % 5% Repayment period Royalty rate % Years 10 Oil - 10% Gas -10% Field Specific Assumption Assumptions Units Value Internal Consumption % Capex (including surface facility & appraisal) USD Mn. per well Oil 2% Gas 3% 25.5 Opex (Crude oil) US$/ bbl 5 Opex (Gas) US$/ MMBTU 0.5 No. of Wells # 2 In-place reserve MMT/ BCM Oil 4.5 Gas 2 Govt. Share % LRP 10% HRP 20% Expected Recovery % 25% Commercial life of production Months 144 Note the above assumptions are illustrative and can be changed as per user requirement 11

12 Illustrative Calculations- Offshore Field Output 12

13 Illustrative Calculations- Deepwater Field Key Assumptions General Assumption Assumptions Units Value Crude Oil US$/ Bbl 50 Gas Price US$/ MMBTU 6.75 Exchange Rate INR/ US$ 67 Debt % 20% Interest rate % 5% Repayment period Royalty rate % Govt. Share % Years 10 Oil - 5% (10% post 7 yrs) Gas -5% (10% post 7 yrs) LRP 10% HRP 20% Field Specific Assumption Assumptions Units Value Internal Consumption % Capex (including surface facility & appraisal) USD Mn. per well Oil 2% Gas 3% 61.5 Opex (Crude oil) US$/ bbl 5 Opex (Gas) US$/ MMBTU 0.5 No. of Wells # 2 In-place reserve MMT/ BCM Oil 10 Gas 2 Expected Recovery % 25% Commercial life of production Months 144 Note the above assumptions are illustrative and can be changed as per user requirement 13

14 Illustrative Calculations- Deepwater Field Output 14

15 Possible Innovations 1 Geological assessments/ data interpretation 2 Cost optimization 3 Effective production planning sequencing of appraisal, well developments & production 4 Marketing strategy for higher realization of oil & gas produced 5 Efficient financing Infusion of technology, effective project implementation and cost optimization may lead to further improvements in the project returns/ profitability 15

16 Thank you 16

17 Disclaimer 1. Results received from this calculator are designed for general use and indicative purpose only. DGH does not guarantee the accuracy of any information available on this calculator, and is not responsible for any errors, omissions, or misrepresentations. 2. The calculator has not been prepared considering individual's investment objectives, financial situations or particular needs. 3. All prospective bidders considering potential investment should carry out appropriate technical and financial due diligence in respect of such opportunity and make their own commercial assessment of the investment is due consideration of all possible risk 4. The developer of this calculator, under no circumstances whatsoever, should be held liable for any loss of investment or profit resulted from investment 5. The 'Indicative Viability Calculator' does not purport to be all-inclusive or necessarily to contain all the information and may be subject to updating, revision or amendment. 6. Any user of this calculator will be responsible for determining whether to use or refrain from using any output of the calculator 17

18 Illustrations for Bid Evaluation 18

19 Notional Revenue profiles for Bid Evaluation 19

20 Calculation of Government Share (%) Lower Revenue Point (LRP) US$ million/day Higher Revenue Point (HRP) US$ million/day Share of revenue payable to Govt. (Z) Biddable Y Actual Average Monthly Revenue (A) Biddable X 11

21 Calculation of Government Share (%) For Illustration: Let s assume that for a contract area, the successful bidder has bid X% of Government s share at LRP and Y% Government s share at HRP Let s say that the daily average revenue for the month of January is Rs. A million per day Case 1: if Actual average daily revenue for January i.e. A is either equal to or less than Rs million per day, then the bidder would share X% (LRP) of revenue (net of royalty and taxes on sale) with government in the month of January Case 2: if Actual average daily revenue for January i.e. A is either equal to or greater than Rs. 1 million per day, then the bidder share would share Y% (HRP) of revenue (net of royalty and taxes on sale) with government in the month of January Case 3: if Actual average daily revenue for January i.e. A is greater than Rs million per day and less than Rs. 1 million per day, then the bidder would share a % (say Z ) determined by the formula as follows Z= X + [(Y-X) x (A-0.01)/0.99] ( i.e. Z is some percentage between X and Y) 11