沃顿 高级公司理财学Gulf09.pptVIP

The NPV of Exploration We are going to try to determine the NPV of Gulf’s investment in exploration We’ll do this for 1982 The aim is to see if they are a positive or negative NPV investment We also want to infer how they might be affecting the value Gulf’s shares Finance 203: Notes on Gulf * Why is Gulf a Takeover Target? We are particularly interested in whether Gulf’s investment in new reserves through exploration might make them at target If so how does this affect the premium a bidder might pay? Finance 203: Notes on Gulf * Getting started How quickly does exploration result in new reserves? What’s the exploration cost of new reserves? Finance 203: Notes on Gulf * Finance 203: Notes on Gulf * Exploration Cost andAdditions to Reserves Finance 203: Notes on Gulf * Exploration Cost andAdditions to Reserves It’s not clear from the information in the previous slide how much of a lag exists between exploration and the resulting additions to reserves There does seem to be a lag of at least a year and perhaps two Finance 203: Notes on Gulf * Exploration Costs per Barrel To be specific we’ll use a one year lag, from this point on. Profits from Production We next determine the profits we might expect to earn from a barrel of new reserves? Finance 203: Notes on Gulf * Finance 203: Notes on Gulf * After Tax Profitsfrom Oil Finance 203: Notes on Gulf * Tax Shelter from CapitalizedExploration Expenses Finance 203: Notes on Gulf * WACC Finance 203: Notes on Gulf * WACC Debt, Equity and beta are for Gulf Rates are from the Economic Report of the President for the end of ‘83 Finance 203: Notes on Gulf * NPV (Nominal) of Explorationin 1982 Finance 203: Notes on Gulf * NPV in Nominal Terms Tax shelter from Expensed Exploration expenses in ‘82 is 50% of $727 million It was assumed that neither oil prices nor costs would grow in real terms over the period from ‘84 to ‘96. It was stated in the case that oil prices were not expected to rise (in real terms) over the next ten