技术经济学英文版演示文稿C42.pptVIP

The advantage of joint venture agreement from the host countrys perspective is the management control, or at least, the influence. Also, by participating in the day to day operations, the domestic labor force can learn the practical side of the operation. This should help in the future when the domestic oil company ventures on its own. The schematic of the overall cash flow calculations are shown in Figure 4.5 for standard concession types of agreements and joint venture agreements. The flow diagram also shows sample calculations starting with l,000 units of gross revenue. Less Less Less Less Equal To Equal To Less Less Equal To Equal To Less Equal To Concession Agreement Net Cash Flow $375 Gross Revenue $1,000 Operating and capitalized costs $100 Royalty @ 15% = $150 Royalty @ 15% = $150 Operating and capitalized costs $100 ed costs $200 Gross Revenue $1,000 Joint Venture Agreement Taxable Income $750 Taxable Income $750 Tax @ 50% = $375 Net Profit $450 Tax @ 40% = $300 Host Country’s Share =525/900 =58.33% Country’s Participation @ 16.7% = $75 Net Cash flow $375 Host Country’s Share =525/900 = 58.33% Figure 4.5 Schematic of cash flow profile for concession agreements Example 4.17 A royalty agreement is signed between an international oil company and a national oil company. The agreement calls for 20% of the royalty interest on the gross income. The capitalized expenditure can be depreciated over a seven year period using a double declining balance method with the remaining balance to be depreciated in year seven. Depreciation can only start after the production has commenced. The income tax rate is 55% per year. The following data for the expected costs and production rates are gathered. Examine the economic feasibility of the project. 15% MROR: $18.5 per barrel assumed constant Oil price: 6% per year Operating cost decline rate: $18 million in year four Operating costs: 15 years Years of production: 10% per year Production de