Changes

==Calculations in the cash flow model==

==Calculations in the cash flow model==

[[File:Charles-l-vavra-john-g-kaldi-robert-m-sneider capillary-pressure 1.jpg|thumbnail|'''Table 1.''' Cash flow model for a development well]]

[[File:Charles-l-vavra-john-g-kaldi-robert-m-sneider capillary-pressure 1.jpg|thumbnail|left|'''Table 1.''' Cash flow model for a development well]]

[[File:Rose time-value-of-money 1.jpg|thumbnail|left|'''Table 2.''' Comparison of project cash flows and equivalent present value fir example development well (in $ thousands)]]

[[File:Rose time-value-of-money 1.jpg|thumbnail|left|'''Table 2.''' Comparison of project cash flows and equivalent present value fir example development well (in $ thousands)]]

:<math>\text{After-tax NOI} = (\text{Net revenue interest}~\times~\text{Production}~\times~\text{Wellhead price})~-~\text{Wellhead taxes}~-~\text{Operating costs}~-~\text{Federal income taxes} \ </math>

:<math>\text{After-tax NOI} = (\text{Net revenue interest}~\times~\text{Production}~\times~\text{Wellhead price})~-~\text{Wellhead taxes}~-~\text{Operating costs}~-~\text{Federal income taxes} \ </math>

[[File:Test.png|thumbnail|right|'''Tabe 3.''' Cash flow model for example multiwell extension project.]]

[[File:Test.png|thumbnail|'''Table 3.''' Cash flow model for example multiwell extension project.]]

[[File:Charles-l-vavra-john-g-kaldi-robert-m-sneider capillary-pressure 3.jpg|thumbnail|left|'''Table 4.''' Assumptions for example multi well extension project]]

[[File:Charles-l-vavra-john-g-kaldi-robert-m-sneider capillary-pressure 3.jpg|thumbnail|'''Table 4.''' Assumptions for example multi well extension project]]

After the revenue and expenditure schedule has been determined, we can now calculate cash income taxes for our project. Finally, once the cash income taxes have been calculated for each year, the cash flow time diagram can be prepared and we are ready to calculate the net present value for our venture. (For an example and explanation of a cash flow time diagram, see the previous chapter on [[The time value of money|The Time Value of Money]].)

After the revenue and expenditure schedule has been determined, we can now calculate cash income taxes for our project. Finally, once the cash income taxes have been calculated for each year, the cash flow time diagram can be prepared and we are ready to calculate the net present value for our venture. (For an example and explanation of a cash flow time diagram, see the previous chapter on [[The time value of money|The Time Value of Money]].)