Finance Project 2 The Elite Takeover - victorious 2005 as a representative year; given salute of majuscule as 14%; and crude oil being go away in cornerstone for approx. 8 years 1. rate of the tax revenue: Revenue: $6.503 billion pose found: 359 millon barrel sold: 290 angiotensin-converting enzyme thousand thousand Price of one metal drum: $6503/290 = 22.42413793 = $22.42 Value of barrels found in 2005: $22.42 X 359 million = $8048.78m Lifting costs 2005: Production:$911m Wellhead taxes: $792m some other operating expenses:$358m total:$2.061b $2061/290 = 7.106896552 7.106896552 X 359 = $2551.37m 2. Present Value of the Revenue Revenue Expenses = Profit $8048.78m - 2551.37 = 5497.41 Tax install: Profit of $5.497b @ 50% = 2748.7 Exploration expense of $594m @ 50% = 297 $2748.7m + 297 = 3045.7 presumption cost of majuscule of 14% and the oil being left in the ground for approx. 8 years: $3045.7/(1.14)8 = 1067.7m $1067.7m - 2189 = -1121.3m Tax set up on exploration cost: $2.
189b @ 50% = 1094.5 $1094.5m/(1.14)8 = 383.68m 3. Perpetuity how much(prenominal) are they wasting every year? -1121.3m + 383.68m = -737.61 -737.61/0.14 = -5268.66m -5268.66m/165.3 million pcts = -$31.87 per share Findings: They are destroying approx. $31.87 per share through bad wishment of the exploration scheme i.e. leaving the oil in the ground for too long. This is wherefore the shares were trading at $43. If Sonoma take over Elite and manage the exploration strategy i.e. take the oil of the ground fast-paced the price of $80 per share will be justified.If you pauperi! sm to get a full essay, order it on our website: OrderCustomPaper.com
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