YR.

END ANNUAL
PROD.RATE. PROD. OIL PRICE
YR. (BBL/DAY) (BBLS) ($/BBL) ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________

1 0 0 $25.00 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
2 0 0 $25.38 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
3 0 0 $25.76 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
4 15,000 2,737,500 $26.14 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
5 30,000 8,212,500 $26.53 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
6 45,000 13,687,500 $26.93 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
7 45,000 16,425,000 $27.34 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
8 45,000 16,425,000 $27.75 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
9 45,000 16,425,000 $28.16 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
10 45,000 16,425,000 $28.58 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
11 41,391 15,766,412 $29.01 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
12 38,072 14,502,050 $29.45 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
13 35,019 13,339,081 $29.89 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
14 32,211 12,269,375 $30.34 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
15 29,628 11,285,452 $30.79 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
16 27,252 10,380,433 $31.26 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
17 25,066 9,547,991 $31.72 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
18 23,056 8,782,305 $32.20 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
19 21,207 8,078,023 $32.68 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
20 19,506 7,430,219 $33.17 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
21 17,942 6,834,364 $33.67 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
22 16,503 6,286,293 $34.18 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
23 15,180 5,782,174 $34.69 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
24 13,963 5,318,482 $35.21 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
25 12,843 4,891,975 $35.74 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________
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SOLUTIONS - CHAPTER 4

4-4 CASH FLOW FOR LIPAN PRODUCTION SHARING CONTRACT (PSC)

BASIC DATA CONTRACT TERMS SUMMARY OF RESULTS

Production decline rate = 0.0835918411 /YEAR NOC share of profit oil = 80% Initial total reserves = 250,000,000 BARRELS
Current oil price = $25.00 /BARREL Contr. Share profit oil = 20% Contractor's NCF = $742,823,562
Oil price escalation = 1.50% /YEAR Cost oil limit = 40% OF GROSS REVENUE Dev. Cost/(B/d) = $6,222 /(max BBL/day)
Current contr. Overhead = $1,000,000 /YEAR Royalty = 20% OF GROSS REVENUE
OH escalation = 2.0% /YEAR Income tax = 0% (Paid by NOC)
Currrent DOC: Exploration program:
Fixed = $12,000,000 /YEAR First Year = $10,000,000
Variable = $4.50 /BARREL Second year = $20,000,000
DOC escalation = 2.0% /YEAR Bonuses:
Development: Signature Bonus = $15,000,000
Year 3 = $50,000,000 Discovery Bonus = $5,000,000
Year 4 = $150,000,000 Production Bonus = $5,000,000 (When production reaches 25,000 B/d)
Year 5 = $80,000,000

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
COST OIL ACCOUNT PROFIT OIL CUMULATIVE
EXPL.& DEV. YR. END ANNUAL OIL GROSS ROYALTY CONTRACTOR'S TOTAL UNPAID TOTAL NOC CONTR. CONTR'S. CONTR'S
INVESTMENT BONUSES PROD.RATE. PROD. PRICE REVENUE PAYMENTS OVERHEAD DOC CURRENT TO CONTR. BALANCE 80% 20% NCF NCF
YR. ($) ($) (BBL/DAY) (BBLS) ($/BBL) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)

1 $10,000,000 $15,000,000 0 0 $25.00 $0 $0 $1,000,000 0 $11,000,000 $0 $11,000,000 $0 $0 $0 ($26,000,000) ($26,000,000)

2 $20,000,000 0 0 $25.38 $0 $0 $1,020,000 0 $21,020,000 $0 $32,020,000 $0 $0 $0 ($21,020,000) ($47,020,000)
3 $50,000,000 $5,000,000 0 0 $25.76 $0 $0 $1,040,400 0 $51,040,400 $0 $83,060,400 $0 $0 $0 ($56,040,400) ($103,060,400)
4 $150,000,000 $0 15,000 2,737,500 $26.14 $71,563,614 $14,312,723 $1,061,208 $25,807,252 $176,868,460 $28,625,446 $231,303,415 $28,625,446 $22,900,356 $5,725,089 ($142,517,925) ($245,578,325)
5 $80,000,000 $5,000,000 30,000 8,212,500 $26.53 $217,911,204 $43,582,241 $1,082,432 $52,991,819 $134,074,252 $87,164,482 $278,213,185 $87,164,482 $69,731,585 $17,432,896 ($34,476,874) ($280,055,199)
6 $0 45,000 13,687,500 $26.93 $368,633,120 $73,726,624 $1,104,081 $81,253,447 $82,357,527 $147,453,248 $213,117,464 $147,453,248 $117,962,598 $29,490,650 $94,586,370 ($185,468,829)
7 $0 45,000 16,425,000 $27.34 $448,995,140 $89,799,028 $1,126,162 $96,751,429 $97,877,591 $179,598,056 $131,396,999 $179,598,056 $143,678,445 $35,919,611 $117,640,076 ($67,828,753)
8 $0 45,000 16,425,000 $27.75 $455,730,067 $91,146,013 $1,148,686 $98,686,457 $99,835,143 $182,292,027 $48,940,115 $182,292,027 $145,833,622 $36,458,405 $118,915,289 $51,086,536
9 $0 45,000 16,425,000 $28.16 $462,566,018 $92,513,204 $1,171,659 $100,660,187 $101,831,846 $150,771,961 $0 $219,280,854 $175,424,683 $43,856,171 $92,796,286 $143,882,822
10 $0 45,000 16,425,000 $28.58 $469,504,509 $93,900,902 $1,195,093 $102,673,390 $103,868,483 $103,868,483 $0 $271,735,124 $217,388,099 $54,347,025 $54,347,025 $198,229,847
11 $0 41,391 15,766,412 $29.01 $457,439,113 $91,487,823 $1,218,994 $101,114,189 $102,333,183 $102,333,183 $0 $263,618,107 $210,894,486 $52,723,621 $52,723,621 $250,953,469
12 $0 38,072 14,502,050 $29.45 $427,066,851 $85,413,370 $1,243,374 $96,062,134 $97,305,508 $97,305,508 $0 $244,347,973 $195,478,378 $48,869,595 $48,869,595 $299,823,063
13 $0 35,019 13,339,081 $29.89 $398,711,195 $79,742,239 $1,268,242 $91,346,212 $92,614,454 $92,614,454 $0 $226,354,502 $181,083,601 $45,270,900 $45,270,900 $345,093,963
14 $0 32,211 12,269,375 $30.34 $372,238,249 $74,447,650 $1,293,607 $86,946,131 $88,239,738 $88,239,738 $0 $209,550,861 $167,640,689 $41,910,172 $41,910,172 $387,004,136
15 $0 29,628 11,285,452 $30.79 $347,523,009 $69,504,602 $1,319,479 $82,842,860 $84,162,339 $84,162,339 $0 $193,856,068 $155,084,854 $38,771,214 $38,771,214 $425,775,349
16 $0 27,252 10,380,433 $31.26 $324,448,769 $64,889,754 $1,345,868 $79,018,555 $80,364,424 $80,364,424 $0 $179,194,591 $143,355,673 $35,838,918 $35,838,918 $461,614,268
17 $0 25,066 9,547,991 $31.72 $302,906,573 $60,581,315 $1,372,786 $75,456,485 $76,829,271 $76,829,271 $0 $165,495,987 $132,396,790 $33,099,197 $33,099,197 $494,713,465
18 $0 23,056 8,782,305 $32.20 $282,794,699 $56,558,940 $1,400,241 $72,140,962 $73,541,204 $73,541,204 $0 $152,694,555 $122,155,644 $30,538,911 $30,538,911 $525,252,376
19 $0 21,207 8,078,023 $32.68 $264,018,179 $52,803,636 $1,428,246 $69,057,279 $70,485,526 $70,485,526 $0 $140,729,018 $112,583,214 $28,145,804 $28,145,804 $553,398,180
20 $0 19,506 7,430,219 $33.17 $246,488,350 $49,297,670 $1,456,811 $66,191,648 $67,648,459 $67,648,459 $0 $129,542,221 $103,633,777 $25,908,444 $25,908,444 $579,306,624
21 $0 17,942 6,834,364 $33.67 $230,122,437 $46,024,487 $1,485,947 $63,531,144 $65,017,091 $65,017,091 $0 $119,080,859 $95,264,687 $23,816,172 $23,816,172 $603,122,795
22 $0 16,503 6,286,293 $34.18 $214,843,160 $42,968,632 $1,515,666 $61,063,650 $62,579,316 $62,579,316 $0 $109,295,212 $87,436,169 $21,859,042 $21,859,042 $624,981,838
23 $0 15,180 5,782,174 $34.69 $200,578,370 $40,115,674 $1,545,980 $58,777,812 $60,323,792 $60,323,792 $0 $100,138,905 $80,111,124 $20,027,781 $20,027,781 $645,009,619
24 $0 13,963 5,318,482 $35.21 $187,260,710 $37,452,142 $1,576,899 $56,662,987 $58,239,886 $58,239,886 $0 $91,568,682 $73,254,945 $18,313,736 $18,313,736 $663,323,355
25 $0 12,843 4,891,975 $35.74 $174,827,293 $34,965,459 $1,608,437 $54,709,202 $56,317,639 $56,317,639 $0 $83,544,195 $66,835,356 $16,708,839 $16,708,839 $680,032,194
26 $0 11,813 4,499,671 $36.27 $163,219,408 $32,643,882 $1,640,606 $52,907,112 $54,547,718 $54,547,718 $0 $76,027,808 $60,822,247 $15,205,562 $15,205,562 $695,237,756
27 $0 10,866 4,138,827 $36.82 $152,382,245 $30,476,449 $1,673,418 $51,247,963 $52,921,381 $52,921,381 $0 $68,984,415 $55,187,532 $13,796,883 $13,796,883 $709,034,639
28 $0 9,994 3,806,920 $37.37 $142,264,628 $28,452,926 $1,706,886 $49,723,551 $51,430,438 $51,430,438 $0 $62,381,265 $49,905,012 $12,476,253 $12,476,253 $721,510,892
29 $0 9,193 3,501,630 $37.93 $132,818,784 $26,563,757 $1,741,024 $48,326,196 $50,067,220 $50,067,220 $0 $56,187,808 $44,950,246 $11,237,562 $11,237,562 $732,748,453
30 $0 8,456 3,220,823 $38.50 $124,000,109 $24,800,022 $1,775,845 $47,048,701 $48,824,546 $48,824,546 $0 $50,375,541 $40,300,433 $10,075,108 $10,075,108 $742,823,562
SUM $310,000,000 $25,000,000 250,000,000 $7,640,855,803 $1,528,171,161 $40,568,079 $1,922,998,755 $2,273,566,834 $2,273,566,834 $3,839,117,808 $3,071,294,246 $767,823,562 $742,823,562