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Select the relevant costs and other data from the following, and calculate the All Source F&D...

Select the relevant costs and other data from the following,
and calculate the All Source F&D Cost for Big Oil Co. on a BOE basis
(Use a 6 to 1 conversion ratio)
Big Oil Data for All Source F&D Calculation - Oil and Gas
Costs $Millions
Unproved property acquisitions $75
Exploration $850
Development expenses $900
Proved Property Acquisitions $250
SG&A $225
Interest payments $75
Oil Reserve Additions Million Barrels
Oil reserve discoveries and extensions 105 MMBO
Oil revisions 5 MMBO
Acquisitions 10 MMBO
Gas Reserve Additions Bcf
Gas discoveries 165 Bcf
Gas revisions 5 Bcf
Acquisitions 30 Bcf

Solutions

Expert Solution

Calculation of All source Finding & development costs for Big Oil Co.

All source relevant F&D expenses
Expense head Amount (in millions)
exploration $850
development expenses $900
proved property acquisitions $250
Interest payments $75

Total relevant expenses = $2075 millions

BOE is barrels of oil equivalent per day as per conversion rate of natural gas given. Here One BOE is equal to 6 units of gas So, the conversion table is as follows:-

Head Oil reserve (barrels in millions) Gas reserve BOE Total BOE including oil barrrels
Discoveries and extensions                                                              105 165 27.5 10,50,00,027.50
revisions                                                                   5 5 0.833333         50,00,000.83
Acquisitions                                                                 10 30 5     1,00,00,005.00
Total 12,00,00,033.33
BOE = Gas reserve/6
Total BOE = BOE + Oil reserve barrels

All Source F&D costs = total relevant F&D expenses /BOE as calculated

= $2075 million /120 million BOE

= $17 million per unit of barrel of oil

ekkarill92 answered 11 months ago
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