1. Petroleum Project Economics Econ210D Presentation 4 Petroleum Project Appraisal and Screening Week 4

8. Discount rate and Net Present Value Discount Rate Net Present Value IR +ve IR -ve PW -ve PW +ve Internal Rate of Return 0 Petroleum Project Appraisal and Screening Week 4

9. Internal Rate of Return IR +ve = Interest rate with positive present worth IR -ve = Interest rate with negative present worth PW +ve = Positive present worth PW -ve = Negative present worth Petroleum Project Appraisal and Screening Week 4

11. Year Oil Production MMbbls Oil Price ($/BBL) Total Capex $m Total Opex $m 1986 0 15.0 -30 0 1987 0 19.2 -22 0 1988 0 16.0 -112 0 1989 0 19.6 -110 0 1990 0 24.5 -77 0 1991 2 21.5 -10 -1.4 1992 4 20.6 -7 -2.8 1993 8 18.5 -4 -8.4 1994 15 17.2 0 -19.6 1995 14 18.4 0 -15.7 1996 14 22.2 0 -13.3 1997 12 20.6 0 -11.3 1998 9 14.4 0 -9.6 1999 8 19.3 0 -8.2 2000 7 30.3 0 -7 2001 6 25.9 0 -5.8 2002 5 26.1 0 -4.8 2003 4 31.1 0 -2.7 2004 2 41.4 0 -1.3 2005 0 56.5 0 0