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02.09.2019-658 views -Delta Petroleum

 Delta Petroleum Essay

M13 GED – GROUP EXERCISE

GROUP 2 STOCK PORTFOLIO

MEMBERS| SCHOLAR I. Deb Number

1) Kemeitupamoere Eradiri| 4585381

2) Iranilma Dos Santos| 4693000

3) Paul Uchenna Gabriel| 4944924

4) Amma Addai-Donkor| 4774941

5) Tari Youkedebah| 4534895

6) Karen Elom Adiamah| 4761446

7) Seidu Babilo| 4816285

8) Obinna Vincent Unaegbunam| 4901536

9) Henry Ajieh| 4517245

ADVANTAGES

At the moment, Delta Petroleum is suffering from swift decline in the in the current essential oil production. Consequently growth and replacements is definitely its main priority, with a give attention to the rationalization of 5 upstream assets in different countries, namely: Algeria, Canada, Kazakhstan, Mozambique and UK North Sea. The several assets happen to be economically analysed and a portfolio designed with a great aim to uncover the best and many profitable asset(s) affordable with the limited finances of $900M/year for five years. Possessions are analysed and Portfolio drawn based on the following elements: * VALUE (Net Cashflow, Profit-to-Investment Ratio)

* ONGOING PRODUCTION

* PRODUCT BLEND (Oil & Gas)

* DIVERSITY OF SUPPLY

* POLITICAL BALANCE

DATA

Prices (as snabel-a 8/02/13): BRENT = $114. 5/bbl, WTI = $92. 08/bbl and Nat. Gas = $3. 46/MMbtu Tax rates: Algeria = 20%, UK sama dengan 30%, Canada = 15%, Kazahkstan sama dengan 20%, Mozambique = 32% Conversion Rates: 1BOE = 5658. 5Cuft and 1Cuft sama dengan 1020Btu

1) PRODUCT MIX AND BENEFIT:

Product mix can be defined as the overall number of catalog a company offers to their customers. * Algeria has 2 item mix (Oil and Gas). Has 3 oilfields and a net reserve of 280 , 000, 000 bbls. Has an API benefit of thirty four. But , the purchase price cap of $35/bbl which can be below the current market price of $92. 08 makes it less desirable for our company. Also offers a gas field with net hold of 1. 5Tcf with top quality gas but a price cover of 2. 95/mmbtu instead of the current $3. 46/mmbtu is also harmful to our company. 5. UK North Sea has 5 fully developed oil resources and three or more gas areas with a net reserve of 60mmbbls and 300bcf respectively. The essential oil quality is definitely light and sweet primitive while the quality of gas is also good making it great to invest. * Western Canada has just the oil asset with a net reserve of 200mmbbls and a possibility of upgrading to synthetic elementary which provides all of us with a high profit margin as the necessity for synthetic crude is very high. * Kazakhstan has just the petrol asset with a net arrange of $720mmbbls for some licenses, however a sulphur content of 3% decreases the quality of the oil and hence the demand also making it somewhat difficult to spend. * Macia, mozambique has two licenses with $3Tcf net reserve, however the government remains to be working out legislation to determine the monetary regime.

2) CALCULATIONS OF PROSPECT FOR ONGOING PRODUCTION:

ALGERIA

3 Oil Fields (net reserve = 280Mbbl): 1 Gas Discipline (net book = 1 . 5Tr Cuft) Crude API = 340 (medium Crude)

Product limit = $35/bbl and $2. 95/mmbtu ($0. 003/Cuft).

Operating cost ($9 x a hundred and fifty, 000 back button 365) -- $492, 750, 000 Transfer & Contract price cost ($1. 5x a hundred and fifty, 000 x 365) -- $82, a hundred and twenty-five, 000

EXPENDITURE = $80M + ($7X 150, 500 X 365)| $436, two hundred fifty, 000

EARNINGS = $35 X 150, 000 Times 365| $1, 916, 250, 000

TAXES (20% of Revenue)| $383, 250, 1000

OPEX (Operating + Transport)| $574, 875, 000

Desk 1: NET CASH FLOW PERTAINING TO OIL WELL

| Statistics are displayed in Million USD (1000 000)

YEAR| INVESTMENT| REVENUE| TAXES| TOTAL EXPENSES| NET CASH FLOW (NCF)| ∑ NCF| 0| 463. 25| | | | -463. 25| -463. twenty-five

1| | one particular, 916. 25| 383. 25| 574. 875| 958. 125| 494. 875| 2| | 1, 916. 25| 383. 25| 574. 875| 958. 125| 1, 453. 000| 3| | 1, 916. 25| 383. 25| 574. 875| 958. 125| a couple of, 411. 250| 4| | 1, 916. 25| 383. 25| 574. 875| 958. 125| several, 369. 250| 5| | 1, 916. 25| 383. 25| 574. 875| 958. 125| some, 327. 375| TOTAL| | 9, about 580, 25| you, 916. 25| 2, 874. 375| 4, 327. 375|

Pay-back Time (Investment/NCF) = money...

References: 5. http://www.nrcan.gc.ca/energy/sources/petroleum-crude-prices/1225

2. http://www.mbendi.com/indy/oilg/af/mz/p0005.htm

* http://www.bloomberg.com/news/2012-02-09/canada-stability-will-entice-investors-kinsale-s-franklin-says.html

5. http://www.ey.com/Publication/vwLUAssets/Exploring_the_top_10_opportunities_and_risks_in_Canadas_oilsands_2012%E2%80%9313/$FILE/Exploring_the_top_10_opportunities_and_risks_in_Canadas_oilsands_2012%E2%80%9313.pdf

2. http://www.mbendi.com/indy/oilg/af/mz/p0005.htm

5. http://www.oilgasarticles.com/articles/456/1/Political-Stability-Proximity-to-European-Markets--North-Sea-Region-Play-a-Major-Role-in-World-Markets/Page1.html

5. www.eia.gov/cabs/algeria/full.html

5. www.fas.org/sgp/crs/row/RS21532.pdf

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