Calculation of economic efficiency

 

As an example, consider the positive economic effect of the transfer operation on the ESP LTD "KarakudukMunai» (LukOil Overseas Holding LTD.).

 

Table 2.1 - Input data for calculation.

Indicators
Numberof ESP
The average daily increase in production rate, t	7,9	10,2
Additional oil production thousand tonnes	11,1	29,2	138,5
The cost of one ESP,thousandtenge
Settlementperiod	3 years
Discountrate,%
Price of 1 ton oil, tenge
The share of conditional fixed costs,%
Rate of change in flow rate	0,95
Since / C, tenge / t

 

Carry out the calculation of the PDN (cash flow) and NPV (net present value).Then, the increase in revenue (DVr (Q) t) due to additional sales of crude oil (gas) can be determined by the formula:

 

DВр(Q)_t = DQ_t P_t,

 

wherePt - the price of the company for oil or gas without the excise tax and VAT, tenge / t

 

ΔB(Q)₂₀₀₇ =11100 * 27480 = 305,03 million tenge

ΔB(Q)₂₀₀₈=29200 * 27480=802,42 million tenge

ΔB(Q)₂₀₀₉=138500 *27480=3805,98 million tenge

Increase in current (additional) costs of the event can be calculated by the formula:

DC_t = Cadd_t+ Ceve_t,

 

where C addt - current cost of additional oil production, mln. tenge

Cevet - current expenditure in the t-th year for the event NTP (cattle, ORS, etc.), mln.Tenge

Cadd_t = DQ_t * C / o * d_svar /100,

 

whereDQt - additional oil t-th year, thousands of tons;

dsvar - the proportion of semi-variable costs,%;

C / o - the cost of oil, tenge / t.

 

Cadd₂₀₀₇ =11100 12720 0,45 = 63,54 million tenge

Cadd₂₀₀₈=29200 12720 0,45=167,14 million tenge

Cadd₂₀₀₉=138500 12720 0,45=792,77 million tenge.

Ceve_t = C_1eve * N_eve

where C1eve - the average cost of holding a single event (cattle, PRS, etc., to take on actual data reported by NGDP);

Neve - the number of events (cattle, PRS.i etc.).

Ceve₂₀₀₇ = 4*11625000= 46,5million tenge

Ceve ₂₀₀₈=8 11625000=93,0 million tenge

Ceve ₂₀₀₉=18 11625000=209, 25 million tenge

According to the formula 2.2 we find that the current cost of the event:

ΔC₂₀₀₇ = 63,54 +46,5 = 110,04 million tenge

ΔC₂₀₀₈= 167,14 + 93 = 260,14 million tenge

ΔC₂₀₀₉=792,77 + 209,25 =1002,02 million tenge

Capital expenditures are not available, since the costs of ESPs are included in the cost of production, according to the instructions on how to cost accounting and cost calculation of oil.

 

Gain on sale of:

ΔPrreal_t= ΔВ_t – ΔC_t

ΔPr real₂₀₀₇ = 305,03 – 110,04 = 194,99 million tenge

ΔPr real₂₀₀₈ =802,42 – 260,14 = 542,28 million tenge

ΔPr real₂₀₀₉ =3805,98 – 1002,02 = 2803,96 million tenge

Income tax is calculated as follows:

DTinc_t = ΔPrreal_t T_inc / 100,

where the ΔP realt - an increase of profit from the sale of the t-th year, million tenge;

Tinc- income tax rate,% (to 30%);

DTinc₂₀₀₇= 194,99 0,3=58,497 million tenge

DTinc ₂₀₀₈= 542,28 0,3=162,684 million tenge

DTinc ₂₀₀₉=2803,96 0,3=841,188 million tenge

We find cash flow:

ΔCF_t= ΔR_t - ΔC_t – ΔT_inc

whereΔRt - increase revenue through additional sales of oil, million tenge;

ΔC t - current cost of the event, tenge;

ΔTinc - income tax.

CF₂₀₀₇ =305,03 – 110,04– 58,497 = 136,493 million tenge

CF₂₀₀₈ =802,42 – 260,14 – 162,684 = 379,596 million tenge

CF₂₀₀₉ =3805,98 – 1002,02– 841,188 = 1962,772 million tenge

Cumulative cash flow (ΔCCF) is calculated for all the years of the billing period as follows:

DCCF_t = åDCF_к,

where t - current year;

k - the years preceding the current period, inclusive;

ΔCFk - increase cash flow in the k-th year, mln.

DCCF ₂₀₀₇ =DCF₂₀₀₇ = 136,493 million tenge

DCCF ₂₀₀₈= DCCF ₂₀₀₇+DCCF ₂₀₀₈=136,493 + 379,596 =516,089 million tenge

DCCF ₂₀₀₉= DCCF ₂₀₀₈+DCCF ₂₀₀₉= 516,089 + 1962,772 =2478,861 million tenge

Since the flow of cash will be received in installments over several years, i.e. in the future, and the cost is currently implemented, they should lead to the same time. This calculation is called the discounted cash flow, and the resulting calculations of the value – growth discounted cash flow (DDCF), the accumulated discounted cash flow (åDDCF) represents the net present value (DNPV):

DDCF_t = CF_t a_t

where at - the discount factor on the t-th year of the project;

a_t = 1 / (1 + Е_cr)^t

where the Ecr - a constant discount rate;

T - year implementation of the event, (t = 1,2,3..., T);

a₂₀₀₇=1/(1+0,1)¹=0,9091;

a₂₀₀₈=1/(1+0,1)²=0,8264;

a₂₀₀₉=1/(1+0,1)³=0,751.

Then D DCF ₂₀₀₇= 136,493 0,9091 =124,086 million tenge

D DCF ₂₀₀₈ = 379,596 0,8264=313,7 million tenge

D DCF ₂₀₀₉ = 1962,772 0,751=1474,04 million tenge

We find the net present value (DNPV):

DNPV _t =

DNPV ₂₀₀₇=DDCF₂₀₀₇= 124,086 million tenge

DNPV ₂₀₀₈=DDCF₂₀₀₇+DDCF₂₀₀₈= 437,786 million tenge

DNPV ₂₀₀₉=DNPV ₂₀₀₈+DDCF₂₀₀₉= 1911,826 million tenge

The calculation results CCF and NPV are presented in Table 2.2. You can determine the payback period under review the cost of an innovative proposal. Since the value of CCF and NPV are positive in the first year, then costs recouped within 5 months.

Т_recoup. =110,04/305,03= 0,37 year

 

 

Table 2.2

Thecalculationofeconomicindicators, milliontenge

 

Indicators	Designation	2007 y.	2008 y.	2009 y.
Numberof ESP	Nt
The increase in oil production, kt	Qt	11,1	29,2	138,5
Increase in revenue from the sale of	Rt	305,03	802,42	3805,98
Currentexpenses	ΔCt	110,04	260,14	1002,02
Increaseinprofits	Prrealt	194,99	542,28	2803,96
Taxonprofits	Tinc	58,497	162,684	841,188
CashFlow	CFt	136,493	379,596	1962,772
Cumulative CF	CCFt	136,493	516,089	2478,861
Discountcoefficient	αt	0,9091	0,8264	0,751
Discounted CF	DCF t	124,086	313,7	1474,04
NetPresentValue	NPVt	124,086	437,786	1911,826

 

Conclusion: As shown by the calculation of the cost-effectiveness of the project, there are no negative NPV, that is, under present economic circumstances, hold the event pays for 5 months. On account of the enterprise for the period under review were received funds amounting to 2478.861 million tenge, and taking into account the time factor, that is, the discount - 1,911,826 million tenge. As you can see, the net present value is positive, i.e., NPV> 0, and this is the criterion of the effectiveness of the project.