Marks (N ) Question S. Comprehensive calcalation for interuational oil agrecment in Indonesia. Please answer questions follow instruction. (Totally 25 marks) Pertamina is the aational oil company in Indonesia. Pertarnina has signed a contract with an oil company (contracior) to explore for and produce from a newiy establishod concession. The foll to field c Expected Field Conditions Signing bonus: Exploration Costs S6 million in year zero $80 million in year one $50 million in year two $60 million in year three S60 million in year four 15 million bbls in first year Starting in year four 10% per year 15 years $18 million in year one Initial production: Years of production: $18.5 per barel Oil price: MROR Coatractual Terms Firs transfer of 30% Investment tax credit: 17% on tangible property 71.1538% obligation: market price Tax rate: Other information for Indonesia's Production Sharing Contract (a) Production sharing percentage for Pertamina is 71.1538% and production sharing percentage Question 4. Comprehensive calculation for US oil agreement for integrated oil company. Please answer questions follow instruction. (Totally25marks) A promoter wants to drill a well in yet to be explored area. The cost of drilling is expected to be $1 million. Other start up costs are expected to be $250,000. The equipment costs related to the well,if successful, would be $250,000. Based on the wells in the nearby area, the well is expected to produce 5,000 MSCFD. The production will decline at a rate of 10% per year. The well is expected to produce at least for 15 years. Assume that the equipment cost can be depreciated over 7 years using a combination of DDB and a straight line method. A total of 70% cost of drilling can be deducted in year one and the rest over the next five years with a straight line depreciation. The other start up costs are deducted over the life of the well proportional to the frectional gas produced each year. Assume that the total gas produced from the well is equal to 15 years of total production. The operating cost of the field is $10,000 per year plus $0. 15/MSCF of gas production. If the marginal tax rate is 34% and if all the money is invested by the promoter, what is the rate of return on this investment? If the promoter only invests 10% of the required initial investment and 90% of the money is borrowed at 14% interest per year, what would be the rate of return? Assume that the interest payment is tax deductible. The price of gas is S1.75/MSCF in the fist year and is expected to increase at rate of 3% per year. Assume zero salvage value. (1) Filing in blanks on Table 1.Write down the answer oa blanks direetly. (20 blanks, 20 aarks) (2) If in the following Table 1, the IRR-139%, ind the promoter only Invests 10% of the required initial investment and 90% of the money is borrowed at 14% interest per year, please cateulate the annual value. (5 marls) Marks (N ) Question S. Comprehensive calcalation for interuational oil agrecment in Indonesia. Please answer questions follow instruction. (Totally 25 marks) Pertamina is the aational oil company in Indonesia. Pertarnina has signed a contract with an oil company (contracior) to explore for and produce from a newiy establishod concession. The foll to field c Expected Field Conditions Signing bonus: Exploration Costs S6 million in year zero $80 million in year one $50 million in year two $60 million in year three S60 million in year four 15 million bbls in first year Starting in year four 10% per year 15 years $18 million in year one Initial production: Years of production: $18.5 per barel Oil price: MROR Coatractual Terms Firs transfer of 30% Investment tax credit: 17% on tangible property 71.1538% obligation: market price Tax rate: Other information for Indonesia's Production Sharing Contract (a) Production sharing percentage for Pertamina is 71.1538% and production sharing percentage Question 4. Comprehensive calculation for US oil agreement for integrated oil company. Please answer questions follow instruction. (Totally25marks) A promoter wants to drill a well in yet to be explored area. The cost of drilling is expected to be $1 million. Other start up costs are expected to be $250,000. The equipment costs related to the well,if successful, would be $250,000. Based on the wells in the nearby area, the well is expected to produce 5,000 MSCFD. The production will decline at a rate of 10% per year. The well is expected to produce at least for 15 years. Assume that the equipment cost can be depreciated over 7 years using a combination of DDB and a straight line method. A total of 70% cost of drilling can be deducted in year one and the rest over the next five years with a straight line depreciation. The other start up costs are deducted over the life of the well proportional to the frectional gas produced each year. Assume that the total gas produced from the well is equal to 15 years of total production. The operating cost of the field is $10,000 per year plus $0. 15/MSCF of gas production. If the marginal tax rate is 34% and if all the money is invested by the promoter, what is the rate of return on this investment? If the promoter only invests 10% of the required initial investment and 90% of the money is borrowed at 14% interest per year, what would be the rate of return? Assume that the interest payment is tax deductible. The price of gas is S1.75/MSCF in the fist year and is expected to increase at rate of 3% per year. Assume zero salvage value. (1) Filing in blanks on Table 1.Write down the answer oa blanks direetly. (20 blanks, 20 aarks) (2) If in the following Table 1, the IRR-139%, ind the promoter only Invests 10% of the required initial investment and 90% of the money is borrowed at 14% interest per year, please cateulate the annual value. (5 marls)