ABSTRACT

Recent expansion in microcomputer user memory to 128k and greater, offers the petroleum industry the opportunity to use the Visicalc (spreadsheet) program for economic analysis of potential oil and gas production. This places within the reach of most professionals a tool which can produce an economic analysis previously denied them due to extensive time and/or capital investment requirements. Even when owning a larger computer, the savings in mainframe time, and in standby time for professionals, merit consideration of using a microcomputer spreadsheet type analysis.

The basic design of the system presented involved an economic analysis which can be made on a microcomputer with a minimum usable memory of 128k. Both input and calculated data values are displayed. A fifteen year maximum potential production cash flow is developed.

The economic analysis system described consists of four sections:

1. Section I, Input data;
2. Section II, Pre-tax cash flow and present net worth;
3. Section III, After tax cash flow and present net worth;
4. Section IV, Sensitivity analysis with present net worth and return on investment.

Data is entered and calculations are displayed on an annual basis. Forty-eight subjects are addressed in the data input section. Once the basic data for the analysis is entered, the economic analysis is completed in a matter of seconds. A predicted production schedule is developed for the project and a cash flow is calculated. The economic limit of the project is recognized. The analysis contains an after tax cash flow section. A sensitivity section illustrates present net worth and return on investment, both before and after tax, using various discount rates. Once the initial economic analysis has been made, the impact of individual scenario variations on the present net worth of the project may be obtained in a few seconds. An enlarged system requiring a 256k CPU capacity, develops the analysis on a monthly basis.

Spreadsheet economic analysis can be fast, well displayed, user friendly and easily learned. The system provides an excellent opportunity for use as a training aid for professional and non-professional personnel who have had little or no prior association with the economics of oil and gas production.

A microcomputer spreadsheet program is a very powerful calculation and display tool, which, properly utilized, has great potential for use in oil and gas economic analysis. Regardless of the microcomputer or spreadsheet considered, there now exists the opportunity to ease the time consumption burden, diminish the potential for errors in repetitive calculations, and have a consistent, rapidly reviewable approach to economic analysis.

Poster session presentation

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TABLE. THE OIL AND GAS ANALYZER

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