Project Capital Rationing using Discounted Cash Flow Method, Sensitivity Analysis and Monte Carlo Simulation: Case Study Tambura Oil Development

This paper will analyze capital rationing on Tambura Insert PCP, which is currently in preparation. To prolong field production time, the company needs to find a most profitable method produce oil gas has no artificial list infrastructure installed. One of possible options using Progressive Cavity Pump or PCP well lift from down hole surface. driven by surface motor installed at wellhead, above x-mas tree. Electrical power required run motor. With electricity source available, three strategy must be chosen commence project. First “cable laying” option high upfront with very low operating costs. Second “in situ genset installation” lower higher And third “rental basis” but much cost. A business situation analysis first conducted determine why this project needed. It consisted internal resource-based view framework, external PESTEL and Porter Five Forces, PSC context. The used evaluate quantitative calculating economic financial parameters discounted cashflow compare are profitable. second consideration sensitivity what parameter affects each option. risks Monte Carlo simulation define robust parameters. Discounted cash flow shows Net Present Value insert Project valuation positive range 1.32-1.44 Million USD, indicates as base case all feasible economically. Scenario lowest net present value NPV negative 1.09 MUSD, maximum 2.62 million USD. several that sensitive changes price volume. finally, probability failure having ranging 10% 30%, means different based options. In conclusion, comparing analysis, it recommended Option-3, rental basis Although not highest, Option-3 provided best small difference first. gives result for other terms risk, among Despite risk already low, there still some mitigations need implemented further reduce potential such conducting more thorough technical uncertainty reserves reservoir properties, accuracy rate. also conduct research forecast future fluctuations, considering one highest aspect