Financial Model, Mining Industry, Oil & Gas

10-year Financial Projections, 5-year Financial Projections, Break-Even, Budgeting, Business Valuation, Cash Flow Analysis, Cash Flow Projections, Cash-on-Cash Multiple, CFO, Cost Calculation, DCF Model, Dividends, Economic Indicators, Excel, Financial Analysis, Financial Model, Financial Modeling, Financial Planning, Financial Projections, Forecasting, Investment Multiple, Investor Cash Flows, IRR (Internal Rate of Return), KPIs (Key Performance Indicators), NPV (Net Present Value), Private Equity, Private Equity Waterfall Distribution Models, Pro-Forma, Return on Invested Capital (ROIC), Return on Investment (ROI), Revenue Projections, Scenario Analysis, Sensitivity Analysis, Startup Financial Models, Venture Capital

Video Overview:

Configure up to 46 wells deployment cohorts for up to 20 years, with granular assumptions for each. The logic was designed for the extraction of anything that can be sold in unit quantities. I modeled for the oil and gas industry specifically, but there is a lot of flexibility in what might also fit the logic.

You will be able to plan out when the exploration drilling starts, the success rate, production length, how much it costs for initial deployment and ongoing extraction, as well as the flow rate decline percentage, price per unit, price change per year, and more. All the data comes together in a monthly and annual cash flow projection.

To make all these assumptions dynamic, I did have to employ the use of a matrix tab where everything can be referenced properly. The user can easily see the economics of a single cohort of well drilling or many. Plan out pricing changes of whatever you are extracting over time, and you may be testing environments of falling prices, stagnant prices, or rising prices to see the feasibility when various variables change.

I attached a general cash flow waterfall to the resulting monthly cash flow, so which means an option to define IRR hurdles for a GP/LP joint venture setup. The waterfall is completely flexible, and if you want to set a fixed percentage of profit share and equity contribution, that is possible. If it is not a joint venture and rather an operator coming up with the entire investment requirement, simply 0 out the investor contribution and carry interest.

I put a large fixed cost schedule, so there shouldn’t be any worry about fitting general and administrative, research and development, and other fixed running costs.

This oil and gas extraction business requires large initial investments, and from what I was researching, it is really hard to get any kind of bank loan. That means the emphasis is on unleveraged cash returns, and for that, the following metrics were included: IRR, Equity Multiple, and a DCF Analysis. The waterfall is summarized in an annual view as well. There are plenty of visualizations that make it easy to view the results of your drilling deployment and extraction assumptions.

Here are some of the most profitable and largest oil fields in the world:
– Ghawar Field in Saudi Arabia: Considered the largest conventional oil field in the world, Ghawar has been in production since 1951 and has produced more than 70 billion barrels of oil.
– Prudhoe Bay Field in Alaska: This field was the largest oil field in the United States and one of the largest in the world when it was discovered in 1968. It has produced more than 13 billion barrels of oil.
– Burgan Field in Kuwait: This field is the second largest in the world and has produced more than 70 billion barrels of oil.
– East Texas Oil Field in the United States: This field was one of the most productive in the world in the early 20th century and has produced over 7 billion barrels of oil.
– Orinoco Belt in Venezuela: This field is considered one of the largest heavy oil reserves in the world and has estimated reserves of around 300 billion barrels.