Valuation of Upstream Oil and Gas Projects using Discounted Cash Flow Methods - Case Study: 'AAX' Oil Field Development Project, 'NW NTX' Working Area

摘要

The objectives of this study are to valuing the interest in the project development of the "AAX" oil field, "NW NTX" working area which is currently held by "AX" limited and "STX" Limited as contractor under the terms of Production Sharing Contract (PSC) with the Indonesian government, represented by Special Task Force for Upstream Oil and Gas Business Activities. Sluggish global economic downturn and low oil prices lately caused a lot of upstream oil and gas industry to reduce or even stop investing. Therefore do the valuation of the interest value of this project that has been in the development stage. Valuation using the Discounted Cash Flow (DCF) methods version of government rules on the submission of Plan of Development (PoD) and modified version use the long-term forecast of crude oil prices issued by OPEC and considered additional risk based on project conditions. The sensitivity analysis was performed on the results of calculations to determine the sensitivity of interest with respect to changes in input variables. The results of both valuation models show that interest in the project is positive and net cash flow present value during the production period is positive every year. The modified DCF model generate a lower value than the DCF model PoD because of using Minimum Attractive Rate of Return (MARR) that is higher. The result of sensitivity analysis shows that the interest in the project is very sensitive to changes in crude oil prices.