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→Calculations in the cash flow model
:<sup>Estimated dry hole cost if the well is unsuccessful is $750,000 (After-tax = $750,000 x (1 - 0.34) = $495,000)
:<sup>Estimated dry hole cost if the well is unsuccessful is $750,000 (After-tax = $750,000 x (1 - 0.34) = $495,000)
A completed cash flow time diagram is shown in [[:Image:Rose_time-value-of-money_1.jpg|Table 2]] along with the equivalent net present value calculation.
A completed cash flow time diagram is shown in Table 2 along with the equivalent net present value calculation.
{| class="wikitable"
|+ Table 2. Net Present Value Calculation
|-
! Time || Cash Flow || Discount Factor || Present Value
|- 0 || $-1375 || 1.0000 || $-1375.0
|-
| 1 || 1359.098 || 0.9615 || 1306.8
|-
| 2 || 578.462 || 0.9246 || 534.8
|-
| 3 || 314.450 || 0.8890 || 279.5
|}
The same steps also apply to a multiwell project. Field development projects are constructed by combining individual well models in a realistic time frame. The income tax calculation must be done on a total project basis since oil and gas taxation applies to the total property. An example of a multiwell field extension project is shown in [[:Image:Test.png|Table 3]]. Since the project has a longer life than the example development well, the results are summarized in a slightly different format. [[:Image:Charles-l-vavra-john-g-kaldi-robert-m-sneider_capillary-pressure_3.jpg|Table 4]] presents the production, investment, and tax assumptions for the multiwell extension project.
The same steps also apply to a multiwell project. Field development projects are constructed by combining individual well models in a realistic time frame. The income tax calculation must be done on a total project basis since oil and gas taxation applies to the total property. An example of a multiwell field extension project is shown in [[:Image:Test.png|Table 3]]. Since the project has a longer life than the example development well, the results are summarized in a slightly different format. [[:Image:Charles-l-vavra-john-g-kaldi-robert-m-sneider_capillary-pressure_3.jpg|Table 4]] presents the production, investment, and tax assumptions for the multiwell extension project.