Kuwait Energy
EL-12-211107
92
7.
ECONOMIC ASSESSMENT
GCA has conducted an ELT for the low, mid and high oil production profiles for each
asset to assess Proved, Proved plus Probable and Proved plus Probable plus Possible
Reserves for each. The economic limit (or economic cut-off) is defined as the production
rate beyond which the net operating cash flows would be negative; this is the point in time
that defines the end of the project’s economic life.
Additionally, for each asset governed by a PSC/PSA or Service Contract, GCA has
conducted an economic entitlement calculation based on the Contract’s terms in order to
derive KE’s Net Entitlement Reserves. Such entitlements are made up of Cost Oil plus
Profit Oil for PSC/PSAs in Egypt and Yemen, of Incremental Oil Share for the Area A
Service Contract, Egypt, and of Cost Recovery and Remuneration Fees for the
GDPSC/EDPSCs in Iraq.
Finally, GCA has estimated NPVs at certain discount rates for each Reserves category
from the projected cash flows, discounted on a mid-year basis to 31
st
May, 2014.
GCA’s assessments have been based upon GCA’s understanding of the fiscal and
contractual terms governing these assets, and the various economic and commercial
assumptions described herein.
7.1
Oil and Gas Pricing Scenario
GCA’s Brent Crude oil price scenario for 2Q14, shown in Table 7.1, has been used as the
reference oil price. The reference oil price has been adjusted for quality and location for
each field in the portfolio, as advised by KE, as shown in Table 7.2.
For gas from Abu Sennan, as advised by KE, a price of US$2.65/MMBTU will apply if the
Brent price is US$22/Bbl or more. A calorific value of 1.363 MMBTU/Mscf has been used
to arrive at a gas price of US$3.61/Mscf.
TABLE 7.1
BRENT CRUDE OIL PRICE SCENARIO
Year
Price
(US$/Bbl)
2014 (Remainder)
106.55
2015
102.38
2016
98.24
2017
95.48
2018
96.45
2019
99.37
2020+
+2% p.a.
