Project Investment Analysis on New Oil and Gas Field Development (M-X) at Pt. PTM

Abstract

PT.PTM as one of major oil and gas company in Indonesia contributes highly to fulfilling oil and gas demand in Indonesia. However, with more than 40 years of operation, PT. PTM is currently at its declining phase. Aggressive development projects have been planned to sustain PT. PTM production. The latest development project is M-X new field developments. This Final Project is intended to assess the M-X Project feasibility in terms of economic terms considering possible dynamic changes in several factors. The results of this final project will help PT.PTM management decide whether to invest in the development of the M-X field. Both Discounted and Non-Discounted Cash Flow (DCF and Non DCF) will be used in the M-X Project investment analysis. Revenue and cost breakdown will follow Production Sharing Contract (PSC) – Cost Recovery scheme as applied for PT. PTM. The Non-DCF analysis shows that 264.65 MMUSD net cash flow will be generated for the Government due to M-X development while PT. PTM will gain 49.97 MMUSD with payback period of 3 years after M-X production. DCF analysis result shows that Project Net Present Value (NPV) is 4.35 MMUSD with an IRR of 12%. Financial risk due to dynamic changes in oil and gas project is analyzed using Montecarlo simulation that resulted on 23.3% probability to have negative NPV with Mean NPV of 13.93 MMUSD. The analysis result from Non-DCF and DCF method shows positive result for PT. PTM management to proceed with investment planning for M-X field development.