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LaTeX Math Block

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\mbox{NPV} =  - \mbox{I}_0 + \sum_{i=1}^n \frac{\mbox{FCF}_i}{(1+r)^i}

LaTeX Math Block

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\mbox{PI} =  \frac{1}{ \mbox{I}_0 } \cdot \sum_{i=1}^n \frac{\mbox{FCF}_i}{(1+r)^i}

FCF = (Sales − COGS − OPEX − Interest) · ( 1 − IncomeTaxRate) + CAPEX

COGS = m_F^↑ · C_F^↑+ m_F^↓ · C_F^↓+ q_O^↑ · C_O^↑ + q_G^↑ · C_G^↑ + q_W^↑ · C_W^↑ + q_G^↓ · C_G^↓+ q_W^↓ · C_W^↓

Sales = q₁ · Price_income

Price_income = Tax_mining · Price_market

where

FCF

Free Cash Flow for each year (with year index "

LaTeX Math Inline

body	_i

" omitted)

q_O^↑

surface oil volumetric production

Sales

q_G^↑

surface gas volumetric production

COGS

q_W^↑

surface water volumetric production

q_G^↓

surface gas volumetric injection

OPEX

q_W^↓

surface water volumetric injection

CAPEX

C_O^↑

production oil processing/transportation cost

Interest

C_G^↑

production gas processing/transportation cost

IncomeTaxRate

C_W^↑

productio nwater processing/transportation cost

Tax_mining

C

_W^↓

_G^↓	injection gas processing/transportation cost
Price_market

C_W^↓

injection water processing/transportation cost

m_F^↑


Price_income		m_F

^↓

_^↑	fluid production lift cost
q₁		m_F^↓	fluid injection lift cost
		C_F^↑	η↑ · g · H · C_E
		C_F_^↓	η↓ · g · H · C_E
		H	TVD of the hydrocarbon pay
		C_E	electricity cost per energy unit
		g	Standard gravity constant (= 9.80665 m/s²)
		η↑	fluid production efficiency (frac)
		η↓	fluid injection efficiency (frac)

The link between the above FCF algorithm and the general principals of P&L is given below:

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