W10_Candra Nugraha_Cash Flow Analysis (2) – Gold Price


Opportunity Statements

I have done an assessment for the cash flow analysis for project scenarios to develop new Gathering Center. As reviewed for the oil and gold price trends on previous W9 blog posting,  I am trying to revisit my W7 posting. This brings up the important effect on the investment analysis.

What will be the impact of the Cash Flow Analysis (Capex and Opex) related to the future of project estimation and the future of oil price?

Root Cause

  • Cash Flow analysis was developed based on the assumption of US$65/bbl along the project service years (year 2011-2021)
  • Analyze the impact of gold and oil price trend into the cash flow model.

Develop Alternatives

Based on the W7 blog posting, the prefer alternative to be developed is Upgrade Gathering Center + Fuel Gas Package – Placed Into Service on 1 Oct 2011.

Development of the outcomes

The Force Field Analysis is developed as per below:

Minimum Acceptable requirements

The criteria of economic selection are:

  • The Highest Net Cash Flow and NPV.
  • Life Time is predicted for 11 years.
  • NPV calculated at 12% Discount.

I am referring to “W10_Adi Nugroho_Oil vs Gold” which regression is fitted by Polynomial order 3 with R value 0.904. Using the equation of polynomial order 3 we can extrapolate the data to forecast the oil price up to year 2021.

Oil Price

The following are extrapolated data( from the equation: y = 0.00506131769197 x3 – 30.05137057587460 x2 + 59,472.74272267360000 x – 39,230,522.17962910000000).

Gold Price

The following are extrapolated data( from the equation: y = 0.303561217254617x3 – 1,816.111149038100000x2 + 3,621,718.306134750000000x – 2,407,481,471.199230000000000):

The most likely case (P50) 1.56 oz gold is equal to USD 1000.

Analyze and compare the alternatives

Based on the alternatives as given, we come up with the preliminary economic calculation  as per below table:

Develop preferred alternative

Scenario: Upgrade Gathering Center + Fuel Gas Package – Placed Into Service on 1 Oct 2011, what is the difference between first analysis and second analysis?

Monitor and Evaluation (Post Mortem

The key to achieve the forecast investment is monitoring Bbl/Oz gold price in between 4.73 – 19.3 Bbl / Oz Gold as refer to my previous analysis in W9 blog posting and also focus on project achievement as per metrics below:

  • Spills – zero.
  • Industrial Accident / LTI  – zero.
  • Cost performance – +/- 10% of budget.
  • Schedule performance – +/- 10% of milestone dates.

References:

  1. Nugroho,Adi ,Oil-vs-Gold. Retrieved from Web site:
    https://aacesubajou.wordpress.com/2011/05/20/w10_adi-nugroho_oil-vs-gold/
  2. Kiemele, Mark J., Schmidt, Stephen R. & Berdine, Ronald J. (2000), Basic Statistic, Tools for Continuous Improvement 4thEdition, Colorado: Air Academy Press, LLC.
  3. Sullivan, William G., Wicks, Elin M. & Koelling, C. Patrick (1942), Engineering Economy 15th Edition, Singapore: Prentice Hall, Inc.
  4. Brassard, Michael & Ritter, Diane (2010), The Memory Jogger 2nd  edition, Tools for Continuous Improvement and effective planning, Canada:GOAL/QPC.
Advertisements

About Candra Nugraha

I'am living in jakarta, indonesia
This entry was posted in Candra Nugraha, Week #10, Weekly Submission. Bookmark the permalink.

One Response to W10_Candra Nugraha_Cash Flow Analysis (2) – Gold Price

  1. DrPDG says:

    Simply AWESOME, Mas Candra!!! Very nicely set up, explained and documented. WOW!!

    I can’t wait to see the paper you write!! Keep up this level of work in your paper and you will surely have your paper selected for publication!!!

    BR,
    Dr. PDG, Jakarta

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s