Question: There is a project for developing a petroleum field with the following assumptions: Production = 1,600 bbl Oil price = $50/bbl Production tax rate =

There is a project for developing a petroleum field with the following assumptions:

Production = 1,600 bbl Oil price = $50/bbl Production tax rate = 4% OPEX (excl. tax) = $50,000 Royalty = 1/8 Working Interest (WI) Company A (operator) 80% Company B 20% Assume that you are working for company B. Compute the following values for your company: (a) NRI, (b) Share of production, (c) Revenue, (d) Production tax, (e) Share of OPEX, (f) Cash flow.

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