Delta petroleum

M13 GED – GROUP EXERCISE
GROUP 2 PORTFOLIO

MEMBERS | STUDENT I.D Number | 1) Kemeitupamoere Eradiri | 4585381 | 2) Iranilma Dos Santos | 4693000 | 3) Paul Uchenna Gabriel | 4944924 | 4) Amma Addai-Donkor | 4774941 | 5) Tari Youkedebah | 4534895 | 6) Karen Elom Adiamah | 4761446 | 7) Seidu Babilo | 4816285 | 8) Obinna Vincent Unaegbunam | 4901536 | 9) Henry Ajieh | 4517245 |
INTRODUCTION
Currently, Delta Petroleum is experiencing swift decline in the in its current oil production. Therefore growth and replacements is its top priority, with a focus on the rationalization of 5 upstream assets in different countries, namely: Algeria, Canada, Kazakhstan, Mozambique and UK North Sea.
The different assets are economically analysed and a portfolio developed with an aim to ascertain the best and most profitable asset(s) affordable with the limited budget of $900M/year for five years. Assets are analysed and Portfolio drawn based on the following factors: * VALUE (Net Cash flow, Profit-to-Investment Ratio) * CONTINUING PRODUCTION * PRODUCT MIX (Oil + Gas) * DIVERSITY OF SUPPLY * POLITICAL STABILITY

DATA
Prices (as @ 8/02/13): BRENT = $114.5/bbl, WTI = $92.08/bbl and Nat. Gas = $3.46/MMbtu
Tax rates: Algeria = 20%, UK = 30%, Canada = 15%, Kazahkstan = 20%, Mozambique = 32%
Conversion Rates: 1BOE = 5658.5Cuft and 1Cuft = 1020Btu

1) PRODUCT MIX AND VALUE:
Product mix can be defined as the total number of product lines a company offers to its customers. * Algeria has 2 product mix (Oil and Gas). Has 3 oilfields and a net reserve of 280 million bbls. Has an API value of 34. But, the price cap of $35/bbl which is below the current market price of $92.08 makes it less desirable for our company. Also has a gas field with net reserve of 1.5Tcf with quality gas but a price cap of 2.95/mmbtu instead of the current $3.46/mmbtu is also bad for our company. * UK North Sea has 5 mature oil