UU-MBA-730 - Accounting and Economics in Oil and Gas Assignment

Assignment Task

Questions 

1. Restoring a Well to Production

• A well is abandoned after it can no longer flow naturally.

• Review of a proposal is prepared for recompletion costing $750,000.

• The recompletion includes jobs such as fracture stimulation and gas lift installation. The operating team is very confident that well can return back to profitable outputs.

• Estimated future production is also given.

Given the table below, the management of the company requires from you to calculate:

• The total profit

• Payout time, and

• The cost of discovery and development of reserves

2. Pipson Oil and Gas Company has four potential projects with a preliminary cost of $2,000,000. However, the company is restricted to evaluate and select one of those four available projects due to capital investment shortage. The Chief Finance Officer of the organisation has provided the following table with the future cash flows and discount rates:

Given the table above, you are required to calculate and suggest to the management of Pipson Oil and Gas Company which project should the company accept and why? Give a brief explanation?

3. 

Given the table above you are required to answer ALL the following questions:

a) What information a company can get from the Statement of Cash Flow? Please analyze using numerical support from the table.

b) What useful information is obtained from carrying out a Comparative Analysis (on Cash Flow Statement)?

c) How is managerial planning facilitated by analyzing the Cash Flow Statement?

d) What Investing Activities (of a Cash Flow Statement) should be examined?

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