- •Content
- •2. Polar Lights Company review …………………………………………………………… 21
- •Introduction
- •1. The theory of economical appraisals of capital investment
- •1.1. Essence of economical appraisals of oil reserves development
- •Internal rate of return
- •Index of profitability (pi)
- •1.2. Risk estimation
- •1.3. Estimation of volume reserves
- •2. Polar Lights Company review
- •2.1. General review
- •2.2. Finance review
- •3. Financial estimation of capital investment program
- •3.1. Calculation of break-even success and finance estimation of one well
- •3.2. Drilling schedule
- •3.3. Assumptions and results of financial estimation
- •4. Oil pricing
- •4.1. History of oil pricing
- •4.2. Oil price structure. World oil market long-term prospects.
- •5. Oil price influence on financial estimation of the company
- •5.1. Analysis of different price situations
- •Variants of the oil prices with npv equal 0.
- •5.2. Analysis of npv sensitivity in at different markets
- •Conclusion
2.2. Finance review
From the beginning of oil field development the Company has demonstrated high production and economic results. For this period the economy of Russia has gone through a number of collapses and rises. The fiscal regulations, in particular, have noticeably changed for oil companies. These factors, in a combination to the long period of very low world oil prices, have seriously complicated economic conditions. However it was possible to the Company, despite of this, to keep steady financial results of its activity. The main reason is hi-tech and completely adequating to the problems the oil recovery complex demanding mall annual current expenses.
The tables 2.1, 2.2 and 2.3 shows financial results of the company (the balance and the profits and losses report under standards GAAP) for 2002 - 2004, and also the cash flow report for 2004. Apparently from financial reports the Company has stable enough financial position.
Table 2.1 Net cash flow of the Company
Net cash flow - 2004 |
|
|
|
|
MM $ |
|
|
Revenue |
233 |
Pipilene tariffs |
(17) |
Operating and overhead expenses |
(23) |
Taxes |
(88) |
Capital expenses |
(8) |
Interest expenses |
(11) |
cash flow before debt payments |
86 |
|
|
Credit repayments |
(30) |
Dividend payments |
(28) |
Net cash flow |
28 |
Table 2.2 Balance of the Company for 3 years
Balance |
|
|
|
|
|
|
|
|
2004 |
2003 |
2002 |
Assets |
|
|
|
|
|
|
|
Cash |
41,627 |
13,616 |
12,244 |
A/R |
22,688 |
28,773 |
20,887 |
Inventories |
9,486 |
8,625 |
5,457 |
Total CA |
73,801 |
51,014 |
38,588 |
|
|
|
|
Fixed assets |
231,637 |
261,070 |
263,465 |
|
|
|
|
Total assets |
305,438 |
312,084 |
302,053 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
A/P |
7,157 |
10,004 |
12,952 |
Interest payable |
748 |
1,030 |
1,066 |
Taxes payable |
6,927 |
26,757 |
5,293 |
Total CL |
14,832 |
37,791 |
19,311 |
|
|
|
|
Long-term debt |
98,727 |
133,303 |
156,672 |
|
|
|
|
Total liabilities |
113,559 |
171,094 |
175,983 |
|
|
|
|
Capital contributed |
80,000 |
80,000 |
80,000 |
Retaining earnings |
111,879 |
60,990 |
46,070 |
Total equity |
191,879 |
140,990 |
126,070 |
|
|
|
|
Total L&E |
305,438 |
312,084 |
302,053 |
Table 2.3 Income statement of the Company for 3 years
Income statement |
|
|
|
|
|
|
|
|
2004 |
2003 |
2002 |
|
|
|
|
Revenue |
231,110 |
143,373 |
127,021 |
|
|
|
|
Operating expenses |
(14080) |
(15336) |
(15812) |
Administrative expenses |
(7821) |
(9566) |
(8978) |
Pipeline and selling expenses |
(17640) |
(15773) |
(13106) |
Taxes other than income tax |
(48547) |
(65454) |
(31753) |
Other income / expenses |
(3044) |
1724 |
(4671) |
|
|
|
|
EBITDA |
139,978 |
38,968 |
52,701 |
|
|
|
|
Depreciation & Amortisation |
(31491) |
(25646) |
(19451) |
|
|
|
|
EBIT |
108,487 |
13,322 |
33,250 |
|
|
|
|
Interest expenses |
(11157) |
(8180) |
(8773) |
|
|
|
|
EBT |
97,330 |
5,142 |
24,477 |
|
|
|
|
Income tax benefit / (expenses) |
(18166) |
9778 |
(8436) |
|
|
|
|
Net income |
79,164 |
14,920 |
16,041 |