Delta Petroleum
M13 GED – GROUP EXERCISE
GROUP 2 PORTFOLIO
MEMBERS | STUDENT I.D Number | 1) Kemeitupamoere Eradiri | 4585381 | 2) Iranilma Dos Santos | 4693000 | 3) Paul Uchenna Gabriel | 4944924 | 4) Amma Addai-Donkor | 4774941 | 5) Tari Youkedebah | 4534895 | 6) Karen Elom Adiamah | 4761446 | 7) Seidu Babilo | 4816285 | 8) Obinna Vincent Unaegbunam | 4901536 | 9) Henry Ajieh | 4517245 |
INTRODUCTION
Currently, Delta Petroleum is experiencing swift decline in the in its current oil production. Therefore growth and replacements is its top priority, with a focus on the rationalization of 5 upstream assets in different countries, namely: Algeria, Canada, Kazakhstan, Mozambique and UK North Sea.
The different assets are economically analysed and a portfolio developed with an aim to ascertain the best and most profitable asset(s) affordable with the limited budget of $900M/year for five years. Assets are analysed and Portfolio drawn based on the following factors: * VALUE (Net Cash flow, Profit-to-Investment Ratio) * CONTINUING PRODUCTION * PRODUCT MIX (Oil + Gas) * DIVERSITY OF SUPPLY * POLITICAL STABILITY
DATA
Prices (as @ 8/02/13): BRENT = $114.5/bbl, WTI = $92.08/bbl and Nat. Gas = $3.46/MMbtu
Tax rates: Algeria = 20%, UK = 30%, Canada = 15%, Kazahkstan = 20%, Mozambique = 32%
Conversion Rates: 1BOE = 5658.5Cuft and 1Cuft = 1020Btu
1) PRODUCT MIX AND VALUE:
Product mix can be defined as the total number of product lines a company offers to its customers. * Algeria has 2 product mix (Oil and Gas). Has 3 oilfields and a net reserve of 280 million bbls. Has an API value of 34. But, the price cap of $35/bbl which is below the current market price of $92.08 makes it less desirable for our company. Also has a gas field with net reserve of 1.5Tcf with quality gas but a price cap of 2.95/mmbtu instead of the current $3.46/mmbtu is also bad for our company. * UK North Sea has 5 mature oil
GROUP 2 PORTFOLIO
MEMBERS | STUDENT I.D Number | 1) Kemeitupamoere Eradiri | 4585381 | 2) Iranilma Dos Santos | 4693000 | 3) Paul Uchenna Gabriel | 4944924 | 4) Amma Addai-Donkor | 4774941 | 5) Tari Youkedebah | 4534895 | 6) Karen Elom Adiamah | 4761446 | 7) Seidu Babilo | 4816285 | 8) Obinna Vincent Unaegbunam | 4901536 | 9) Henry Ajieh | 4517245 |
INTRODUCTION
Currently, Delta Petroleum is experiencing swift decline in the in its current oil production. Therefore growth and replacements is its top priority, with a focus on the rationalization of 5 upstream assets in different countries, namely: Algeria, Canada, Kazakhstan, Mozambique and UK North Sea.
The different assets are economically analysed and a portfolio developed with an aim to ascertain the best and most profitable asset(s) affordable with the limited budget of $900M/year for five years. Assets are analysed and Portfolio drawn based on the following factors: * VALUE (Net Cash flow, Profit-to-Investment Ratio) * CONTINUING PRODUCTION * PRODUCT MIX (Oil + Gas) * DIVERSITY OF SUPPLY * POLITICAL STABILITY
DATA
Prices (as @ 8/02/13): BRENT = $114.5/bbl, WTI = $92.08/bbl and Nat. Gas = $3.46/MMbtu
Tax rates: Algeria = 20%, UK = 30%, Canada = 15%, Kazahkstan = 20%, Mozambique = 32%
Conversion Rates: 1BOE = 5658.5Cuft and 1Cuft = 1020Btu
1) PRODUCT MIX AND VALUE:
Product mix can be defined as the total number of product lines a company offers to its customers. * Algeria has 2 product mix (Oil and Gas). Has 3 oilfields and a net reserve of 280 million bbls. Has an API value of 34. But, the price cap of $35/bbl which is below the current market price of $92.08 makes it less desirable for our company. Also has a gas field with net reserve of 1.5Tcf with quality gas but a price cap of 2.95/mmbtu instead of the current $3.46/mmbtu is also bad for our company. * UK North Sea has 5 mature oil
References: * http://www.nrcan.gc.ca/energy/sources/petroleum-crude-prices/1225 * http://www.mbendi.com/indy/oilg/af/mz/p0005.htm * http://www.bloomberg.com/news/2012-02-09/canada-stability-will-entice-investors-kinsale-s-franklin-says.html * http://www.ey.com/Publication/vwLUAssets/Exploring_the_top_10_opportunities_and_risks_in_Canadas_oilsands_2012%E2%80%9313/$FILE/Exploring_the_top_10_opportunities_and_risks_in_Canadas_oilsands_2012%E2%80%9313.pdf * http://www.mbendi.com/indy/oilg/af/mz/p0005.htm * http://www.oilgasarticles.com/articles/456/1/Political-Stability-Proximity-to-European-Markets--North-Sea-Region-Play-a-Major-Role-in-World-Markets/Page1.html * www.eia.gov/cabs/algeria/full.html * www.fas.org/sgp/crs/row/RS21532.pdf