Finance-Economic Analysis and Evaluation of Oil and Gas Industry : A Case Study of X Oil Field in Nam Con Son Basin

Abstract

Investors, when investing in petroleum exploration and exploitation are concerned with the profitability of the project to choose the cases to get the maximum benefit. One needs to take a right effective decision for every dollar spent especially when oil projects pose such great risks. The analysis will help make a decision of whether to invest or not based on evaluating comprehensively all aspects such as economic, technical, social factors as well as resources and environment protection factors. In specific, I will have to calculate the expenses of investment in oil and gas prospecting, exploration and production and the profits the investment would bring back. The standard economic indicators like Net Present Value (NPV), Internal Rate of Return (IRR) etc. will be the tool to evaluate the appeal of a project and for various risk-scenarios, the impacts on those measures will be indicated through sensitivity analysis. It has to be understood that the economic evaluation project will analyze what investors should look at to determine on the project, not the project screening process, which will essentially come after when investors compare and select among available options. Therefore, projects before being taken up to request for funds had to go through many "qualification" processes to ensure the Board of Directors (BOD) can make informed decisions to pick out the best projects for the company considering the scarcity of capital versus the plethora of choices on the table.