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 9 months ago

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