Lecture-9(economics-IRR)

# Lecture-9(economics-IRR) - Iterative Calculations Example 1...

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Iterative Calculations Example 1 - Petroleum Economics Lecture - 9

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Project Cash Flows The amount of cash a company generates and uses during a period Calculated by adding non-cash charges (such as depreciation) to the net income after taxes. Cash Flow can be used as an indication of a company's financial strength. It is also sometimes referred to as the "money value" of trades in a stock during a trading day. Cash flow is crucial to companies, having ample cash on hand will ensure that creditors, employees, and others can be paid on time.
Petroleum Economics Example Oil and Water production profile given: First well drilled Second well drilled

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Example Cont’d =SUM(D16:G16) =L17*(C17-C16)*365
Example Cont’d The following additional data is given: Today's price of oil 56 \$/bbl Price Escalation 10 % Operating Expenses (pipeline + gathering) 3 \$/bbl Escalation 5 % Operating Expenses (oil-water separation) 0.6 \$/bbl (if Water <1000 STB/d) Escalation 5 % 1.2 \$/bbl (if Water >1000 STB/d)

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## This note was uploaded on 04/27/2008 for the course PGE 310f taught by Professor Srinivasan during the Spring '08 term at University of Texas.

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Lecture-9(economics-IRR) - Iterative Calculations Example 1...

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