Project Economics and Decision Analysis Volume 1 Determinisitic Models 2nd Edition by Mian ISBN 9781593702083 1593702086
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Project Economics and Decision Analysis Volume 1 Determinisitic Models 2nd Edition by M. A. Mian – Ebook PDF Instant Download/Delivery: 9781593702083, 1593702086
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Product details:
ISBN 10: 1593702086
ISBN 13: 9781593702083
Author: M. A. Mian
The Project Economics and Decision Analysis books provide all the necessary concepts of capital investment evaluation, capital budgeting, and decision analysis. They take the reader step-by-step through the decision-making process, providing comprehensive coverage of all decision analysis tools currently available while outlining how investment decisions are made under different stages of risk. Further, he focuses on practical application, using a straightforward approach with solved “real-life” examples and solutions, end-of-chapter problems, and illustrations throughout the book.
In the updated second edition, M. A. Mian has expanded and updated the first volume by incorporating new advancements and clarifying concepts to facilitate their understanding. The book presents a balanced blend of theoretical concepts and their practical utility. New to the second edition is a section on netback pricing and indexed netback pricing. Additionally, the new edition expands the weighted average cost of capital (WACC) concept for better comprehension and to recognize its weakness in practice. The concept of unit technical cost, also known as long-run marginal cost (LRMC), has been expanded as well to aid with its calculation and application. Included is a re-written and expanded section on international economics (fiscal systems).
Explain the ever-expanding role of economics in prudent capital investment decision-making.
Assist readers in developing a knowledgeable vocabulary of the terms associated with economic analysis.
Review the procedures used in preparing capital investment evaluations and decision analysis.
Relate the new vocabulary and knowledge to some specific problems.
Present ways of interpreting estimates that include uncertainty (i.e., converting probabilistic description into a measure of profitability).
Provide solid hands-on experience with capital investment evaluation and decision analysis.
Expanded spreadsheet applications sections to elaborate MS Excel’s capabilities
Companion CD with applications, spreadsheets, and tables that expand the practical application of the book’s material
Table of contents:
1. Introduction
Profit Planning
Typical oil company objectives
The role of management in planning
Planning of capital expenditures.
Some Basic Principles of Economics.
Demand, supply, and equilibrium price.
Crude oil price volatility.
Energy independence.
Inflation
Consumer price index
Uncertainty and Risk..
Questions and Problems
2. The Time Value of Money.
The Concept of Interest.
Simple and compound interest
Nominal and effective interest rate.
Cash Flow Diagram
The Time Value of Money.
Present value of future sum
Future value of present sum.
Present value of an annuity
Future value of an annuity
Present value of deferred annuity
Annuity from present value.
Annuity from future value.
Present value of uniform gradient series
Present value of shifted gradient series
Calculation of unknown interest rate.
Loan Amortization Schedule
Funds Flow and Compounding/Discounting
Spreadsheet Applications
The Time Zero Dilemma
Questions and Problems.
3. Before-Tax Cash Flow Models
Cash Flow Model.
Data Required for Project Evaluation
Forecasting Product Stream
Volumetric calculations
Decline curve analysis
Gas reservoir material balance
Production forecast by analogy
Product Pricing.
Capital Expenditures (CAPEX).
Geological and geophysical (G&G) costs..
Estimating drilling costs.
Facility costs
Operating Expenditure (OPEX).
Abandonment costs and sunk costs
Opportunity costs
Types of Cost Estimates
Order of magnitude estimate..
Optimization study estimate
Budget estimate..
Control estimate
Variations in Actual Project
Costs.
Cost overrun
The accuracy of the estimates
Contingencies and allowances.
Transfer Pricing
Transfer price at cost.
General formula for computing transfer price
Transfer at market price.
Aspects of Leasing
System of land ownership identification
Ownership interest computation
Severance and Ad Valorem Taxes
Cash Flow Estimation Bias
Cash Flow Analysis of Foreign Investments.
Cash Flow Analysis and Inflation
The Cost of Capital.
The Cash Flow Spreadsheet…
Questions and Problems.
4. After-Tax Cash Flow Model
Depreciation
Tangible property
Intangible property
Modified accelerated cost recovery system
Accelerated cost recovery system
Straight-line depreciation.
Declining balance depreciation.
Sum-of-years’-digits depreciation.
Units of production depreciation
Amortization and Depletion.
Amortization
Depletion
Intangible Drilling Costs (IDCs)
Spreadsheet Application
Questions and Problems.
5. International Petroleum Economics
Types of Contract Arrangements.
The concessionary system
Sample concessionary system cash flow spreadsheet.
The production sharing system.
Sample PSC cash flow spreadsheet.
Basic elements of production sharing and royalty tax systems.
Contract initiation and award
Government and contractor take
Risk service contracts
Rate of return (ROR) contracts.
Effects of Various Fiscal Terms.
Efficient fiscal regime
The effect of cost recovery ceiling.
Designing fiscal systems.
Questions and Problems.
6. Capital Budgeting Techniques
Accounting Approaches
Payback period
Average return on investment (AROI).
Discounted Cash Flow Approaches.
Discounted payback period.
Internal rate of return (IRR)
Profitability index (PI)
Unit technical cost (UTC) or long-run
marginal cost (LRMC)
Netback value (NBV) and indexed pricing
Growth rate of return (GRR)..
Adjusted net present value (ANPV)..
Effect of Discounting Frequency
Treatment of Financing Mix
Pattern of project debt repayment schedule
After-tax weighted average cost of capital method.
Equity residual method-NPVER
Arditti-Levy method-NPVAL.
Adjusted net present value-NPVA
Comparison of the four methods
Questions and Problems.
Further Reading
7. Investment Selection Decision Making
Service-Producing Investments
Equivalent cost analysis
Rate of return analysis
Present value ratio or PI analysis.
Service life breakeven analysis.
Unequal life service-producing alternatives
Lease versus Buy Decision Analysis.
Income-Producing Investments.
Project screening economics
Mutually exclusive investment analysis
Non-mutually exclusive investment analysis.
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