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\mbox{COGS}_i = \mbox{q}_{L,i}^{\uparrow}\ \cdot \ \mbox{COST/qL} + \mbox{q}_{O,i}^{\uparrow} \ \cdot \ \mbox{COST/qO}+ \mbox{q}_{G,i}^{\uparrow} \ \cdot \ \mbox{COST/qG} + \mbox{q}_{W,i}^{\uparrow} \ \cdot \ \mbox{COST/qW} + \mbox{q}_{WI,i}^{\downarrow} \ \cdot \ \mbox{COST/qWI}
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\mbox{NPV} =  - \mbox{I}_0 + \sum_{i=1}^n \frac{\mbox{FCF}_i}{(1+r)^i}
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\mbox{PI} =  \frac{1}{ \mbox{I}_0 } \cdot \sum_{i=1}^n \frac{\mbox{FCF}_i}{(1+r)^i}
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\mbox{FCF}_i = \left( \mbox{REV}_i - \mbox{COST_i} \right) \cdot \left( 1 - \mbox{TAX}_{\mbox{income}} \right)
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\mbox{REV}_i = \mbox{q}_i \cdot \mbox{INCOME_PRICE}
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\mbox{INCOME_PRICE} = \mbox{MARKET_PRICE} \cdot \left( 1 - \mbox{MINING_TAX} \right)
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\mbox{COST}_i = \mbox{COGS}_i + \mbox{OPEX}_i
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FCF = (Sales − COGS − OPEX − Interest)  · ( 1 − IncomeTaxRate) + CAPEX

COGS =  mF↑ · CF↑ + mF↓ · CF↓ +  qO↑ · CO↑  + qG↑ · CG↑  + qW↑ · CW↑  + qG↓ · CG↓ + qW↓ · CW↓

Sales = q1 · Priceincome 

Priceincome =  Taxmining · Pricemarket

where

FCFi

Free Cash Flow for i-th year 

qO↑

surface oil volumetric production

Salesi
qG↑surface gas volumetric production
COGSi
qW↑surface water volumetric production


qG↓surface gas volumetric injection
OPEXi
 qW↓surface water volumetric injection
CAPEXi
 CO↑production oil processing/transportation cost
Interesti
CG↑production gas processing/transportation cost
IncomeTaxRate
CW↑productio nwater processing/transportation cost
Taxmining
CG↓injection gas processing/transportation cost
Pricemarket
CW↓injection water processing/transportation cost
 Priceincome 
mF↑fluid production lift cost
q1
mF↓fluid injection lift cost


CF↑η↑  · g · H · CE


CF↓

η↓ · g · H · CE



H

TVD of the hydrocarbon pay



CE

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:

FCF = OCF + CAPEX
OCF = Net Income =  EBT  · ( 1 − IncomeTaxRate)
EBT = EBIT − Interest
EBIT = Sales − COGS − OPEX


See also

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Petroleum Industry / Upstream /  Production / Field Development Plan

[ Petroleum Asset NPV ][ Petroleum Asset PI ]

[ Statement of Income ( P&L) ]

[ Netback ]


Reference

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FDP.xls

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