6 Fern House
10 Pinewood Place
Windsor SL4 3SP UK
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It gives quick and easy answers to the many ‘what if ?’ questions that are asked by oil asset dealers, oil producers and oil cargo traders in their daily business and which also get asked during a dispute. Invaluable information to help manage your assets.
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This valuation instrument is not based on any one specific country’s petroleum legislation, but includes the components of the production sharing contracts that are encountered repeatedly around the world- royalty paid in cash or in kind, cost recovery, profit sharing with the government or national oil company (NOC), petroleum tax and corporation/profit tax. This model allows the user to tailor the analysis to its own situation by inputting appropriate assumptions for each project. This encourages the user to focus on the assumptions it is making about the project and highlights the consequences if these assumptions turn out to be wrong.
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Images do not represent real data and are illustrative only
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FREQUENTLY ASKED QUESTIONS
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The web app is just that, an app that you access via your computer browser (we recommend you use the latest version of Chrome).
The site is secure and once you’ve purchased a subscription from our secure online store https://ceag.org/shop/ , you will be sent a username and password to access the web app software. You have the facility to change your password at any time and we recommend you do so.
There is no requirement to store any personal data (other than basic profile information) or credit card information on this site.
[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="Will this programme work for oil fields anywhere in the world?"][vc_column_text]Yes, it works for any field that contains any or all of the following features-Government/National Oil Company Royalty, in Cash or in Kind; and /or,Producing company Cost Recovery, with or without a cap on the amount of historic costs that can be recovered in any year; and /or,Profit Sharing with the Government/National Oil Company after Royalty and Cost Recovery have been deducted; and /or, Petroleum or Special Tax levied on revenue after Royalty, Cost Recovery and deduction of the Government/ National Oil Company's Profit Share ; and /or, Corporation Tax, applied after all the other deductions; and /or, a field or asset ring fence. This programme may not be appropriate for US domestic oil fields, or Middle East Service Agreements.[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="I am a joint venture participant in a number of different oil fields some of which are already in production and others that start up in different future years. Can the programme accommodate these different dates?"][vc_column_text]Yes, if you have current production from any oil field at the outset, enter the current year in the field entitled "Year 1" in the "Years Input Area". Then bring in the other fields in the "Production Day/ Quarter Assumption Input" area in the year in which you expect to commence production from each field.[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="I do not know what my oil production is likely to be or when it is likely to commence. Is this programme of any use to me?"][vc_column_text]Yes, the programme provides for input of up to 20 different oil fields. So, the user may employ these input areas to analyse different cases for the same field, in accordance with its own range of assumptions. For example it may name different assumptions for the same oil field called, for example, "Huile", as "Field Huile- lo production" ,"Field Huile- hi production" , "Field Huile- likely production".[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="Can I rely on Consilience's oil price forecasts?"][vc_column_text]Consilience does not forecast oil prices. But, the programme provides for input for up to 20 different oil fields. So, the user may employ these fields to analyse different price cases for the same field, in accordance with its own range of assumptions. For example it may name different assumptions for the same oil field called, for example, "Huile", as "Field Huile- lo price" ,"Field Huile- hi price" , "Field Huile-base case price".[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="I do not know at what price my oil production is likely to trade and which benchmark price I should use for assessing the project economics and constructing my hedge. How should I choose the right benchmark and the right differential?"][vc_column_text]At the earliest opportunity extract a sample of the oil and commission a laboratory-based refining assay from one of the specialist companies like Intertek or Caleb Brett or SGS. Other specialists exist too. Consilience has chemical engineers with trading experience in its team who analyse refining assays to estimate the likely price differential for your oil compared with one of the benchmark grades of oil available in the market. Please note that a PVT assay is inadequate for this purpose: it has to be a refining assay.[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="My field contract allows the Government/National Oil Company to vary its policy of taking royalty in cash or in kind, or in the early years to take no royalty at all. Can this programme accommodate such variations?"][vc_column_text]Yes, the programme allows the user to input its own assumption about whether royalty is taken in cash or in kind on an annual basis and to vary the royalty percentage over time.
[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="Does this programme take exploration, development and operating costs into account?"][vc_column_text]No, the programme is revenue- focused, not cost-focused. The user will be able to recognise the relevance of costs to the revenue stream by inputting its own assumptions concerning payback and any cost recovery cap in the areas entitled "Payback Assumption Input" and "Cost Recovery Cap Assumption Input".[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="My oil field is not allowed to recover its historic costs from current production revenue. Will the programme still work for my field?"][vc_column_text]Yes, just enter "Y" in the Payback Assumption Input" area and/or "0" in the Cost Recovery Cap Assumption Input Area" for all years.[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="My field does not give the Government/ National Oil Company a share of production, but instead it levies a big special petroleum tax rate. Does this programme work for this scenario?"][vc_column_text]Yes. Just enter "0" in the "Profit Share Assumption Input" area and enter the relevant percentage in the Petroleum Tax Assumption Input area.[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="My field is not subject to any special petroleum tax but gives the Government/ National Oil Company a large share of production. Does this programme work for this scenario?"][vc_column_text]Yes. Just enter "0" in the "Petroleum Tax Assumption Input" and enter the relevant percentage in the "Profit Share Assumption Input" area.[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="Some of the input variables depend on the profitability of the field or asset. How do I cope with that in this model?"][vc_column_text]The user must make their own assumptions about costs and therefore the profit that will determine the value of the relevant variable. This analytical programme focuses on revenue, not costs or profits, but it will allow the user to review rapidly the impact of a range of profit scenarios on the variable in question.[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="My field is subject to ring fencing as to costs. What assumption should I make about corporation/company tax?"][vc_column_text]The programme permits the user to enter different corporation tax rates inside and outside the ring fence. Corporation tax inside the ring fence is applied to the revenue remaining after the deduction of royalty, cost recovery, profit share and special petroleum tax.[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="My field financier wants me to hedge all of my forecast gross volume of production to ensure I will be able to pay back my loan from the financier. Is that right? How much should I hedge in reality?"][vc_column_text]This programme will allow you to estimate the amount of revenue you will be allowed to retain inside the ring fence after the deduction of royalty, cost recovery, profit share, petroleum tax and corporation tax. It will also allow you to input the amount of revenue you will retain or losses you will be allowed to offset against tax outside the ring fence on your hedge positions. This programme takes the ratio of retained revenue inside the ring fence to retained revenue outside the ring fence and applies this ratio to gross production to indicate how much hedging should be undertaken to protect after- tax revenue.[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="My field is subject to hedge accounting, so that hedge gains or losses can be brought inside the ring fence. Does that have an impact on the amount of hedging I should undertake?"][vc_column_text]Yes, it does. In that case please input in the "ORF CT Assumption Input" area the same percentage that is generated by the programme once you have input your royalty, cost recover, profit share, special petroleum tax and inside the ring fence corporation tax assumptions. This can be found in the output area entitled "Field Hedge per cent" in the row entitled "Composite IRF %".[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="My board of directors wishes to minimise the amount of oil we are hedging in the market partly because a portion of the financing is equity rather than debt. Also the company is nervous of substantial market involvement because we are an exploration and production company, not trading specialists, and/or we do not have the access to liquid cash to finance initial margin and adverse variation margin calls. Can I assess the impact on the revenue stream of hedging different percentages of production?"][vc_column_text]Yes, the input area entitled "Hedge Board Limit Assumption Input" permits you to limit the amount of hedging actually undertaken in accordance with any board directive, expressed as a percentage of Gross Production.[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="Once my hedges are in place, how do I work out my revenue stream as prices change in a volatile market?"][vc_column_text]Once commitments to development and hedging have been made, the impact on the after-tax revenue stream of any change in the international benchmark prices can be calculated by inputting new mark-to-market benchmark prices in the area entitled "M to M Price Assumption Input".[/vc_column_text][/qode_accordion_tab][qode_accordion_tab title="Will this programme tell me whether I should invest in a particular oil field or purchase a particular oil asset?"][vc_column_text]No, but it provides a quick and easy way of consolidating all the necessary assumptions required to explore the range of possible future revenue streams, which is typically under-analysed in decision-making because of its complexity. It will also prevent the producer or asset trader from over-hedging at the request of the company providing debt financing. It allows the user to generate a large number of tables and graphs at the touch of a button to try out various "what if?" scenarios.[/vc_column_text][/qode_accordion_tab][/qode_accordion][/vc_column][vc_column width="1/6"][/vc_column][/vc_row][vc_row css_animation="" row_type="row" use_row_as_full_screen_section="no" type="grid" angled_section="no" text_align="left" background_image_as_pattern="without_pattern" z_index="" css=".vc_custom_1637150355530{padding-top: 50px !important;padding-bottom: 50px !important;}" el_class="row-equal"][vc_column width="1/2"][vc_single_image image="799438" img_size="full" qode_css_animation=""][vc_column_text]
Images do not represent real data and are illustrative only
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[/vc_column_text][vc_empty_space height="25px"][vc_column_text]As the data is input by the user in the various input areas, a series of tables are generated automatically and can be accessed via the dropdown menu under the heading “Results”. The results are presented as a series of tables, one for each of the individual oil field projects input by the user. By scrolling down to below the last of the twenty projects the user can access a table of results aggregated for all twenty oil field projects. Hence, the output is presented both in summary tables aggregating all fields or projects and in the individual detail of each separate project on a quarterly basis for up to 20 years. Each table can be downloaded as a pdf or printed out by the user. A separate tab, labelled “Charts”, generates automatically a range of charts that the user is likely to want to produce to illustrate the parameters and output of each field or project separately and each’s contribution in the context of the total asset portfolio.
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