Relationship between Crude Oil Reserve Size and Portfolio Management
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International Journal of Recent Engineering Science (IJRES) |  |
| © 2021 by IJRES Journal | ||
| Volume-8 Issue-3 |
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| Year of Publication : 2021 | ||
| Authors : Nwosi-Anele Adaobi Stephenie, Okeyah Onyinyeyah, Uku Eruni |
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| DOI : 10.14445/23497157/IJRES-V8I3P106 |
How to Cite?
Nwosi-Anele Adaobi Stephenie, Okeyah Onyinyeyah, Uku Eruni, "Relationship between Crude Oil Reserve Size and Portfolio Management," International Journal of Recent Engineering Science, vol. 8, no. 3, pp. 36-44, 2023. Crossref, https://doi.org/10.14445/23497157/IJRES-V8I3P106
Abstract
The relationship between crude oil reserve size and portfolio (investment) management was investigated in this paper for different reservoir sizes (small, medium, and large) using portfolio management tools such as the net present value (NPV), profitability index (PI), present value ratio (PVR), payback period (POP), internal rate of return (IRR), and unit technical cost (UTC). The field life performances of the three reserves were also looked into, taking into consideration of the daily production rate, annual production rate, and cumulative production rate. A cash flow analysis was developed showing the cost implications of the gross revenue, variable operating expenditure, fixed operating expenditure, royalty and tax payment, net revenue, profits, discount factor, and cash flows of the large, medium, and small reservoirs. A decision tree that estimates the risk associated with each investment (small, medium, and large) and the expected monetary value of the investment is presented in this work. The net present values (NPV) were all positive for each reservoir: small ($17.29 MM), medium ($4853.80 MM), and large ($6990.28 MM). Profitability index (PI) were all greater than one for each reserve small, medium and large, Present value ratios (PVR) were all greater than zero, and the Payback period (POP) presents a time frame of below two (2) years. It is clear that all reserves are mutually exclusive and can be collectively exhaustive depending on the risk attitude and portfolio size of the investor.
Keywords
Relationship, Crude, Oil, Crude oil, Reserve size, Crude oil reserve size, Portfolio management.
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