Question: please answer a-b for a good rating Permian Partners (PP) produces from oging oil felds in west Texas. Production is 1.81 milion barrels per year
Permian Partners (PP) produces from oging oil felds in west Texas. Production is 1.81 milion barrels per year in 2018, but production is decining at 8% per year for the foreseeable future. Costs of production, transportation, and administration add up to $25.10 per barrel. The average ol price was $65.10 pet barrel in 2018. PP has 71 milion shares outstanding. The cost of capital is 10\%. All of PP's net income is distributed as dividends. For simplicity. assume that the company will stay in business forever and that costs per barrel are constant at $2510. Also, ignore taxes. a. Assume that of prices are expected to fall to $60.10 per barrel in 2019, $55.10 per barrel in 2020, and $50.10 per barret in 2021 . After 2021, assume o long-term trend of ollprice increases at 6%5 per year, What is the ending 2018 value of ane PP share? (Do not found intermediate calculations. Round your answer to 2 decimat places.) b-1. What is PPs EPS.P ratio? (Do not round intermediate calculations. Round your answer to 4 decimat places.) b.2. Is in equal to the 10% cost of capitan
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