PROJECT FEASIBILITY AND SENSITIVITY ANALYSIS OF MENILO-26 INFILL WELL DRILLING IN SOKO BLOCK

• Main Author: Richardie, Rafi
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/53241
• Institution: Institut Teknologi Bandung

PT Java Energy has been awarded an extension of Soko Block by Government of Indonesia. Pursuant to Ministry of Energy and Mineral Resources (MEMR) Regulation No. 52 of 2017, Production Sharing Contract (PSC) of Soko Block applies gross split scheme. Furthermore, in accordance with MEMR Regulation No. 37 of 2016, PT Java Energy, in certain terms and conditions, has the obligation to offer 10% of its participating interest (PI) to Badan Usaha Milik Daerah (BUMD) using the cooperation scheme that BUMD’s liabilities is financially carried for further repaid through BUMD’s revenue. In order to fulfill the firm commitments in the first three (3) years of PSC and increase the production, PT Java Energy will perform the drilling of development (infill) well named Menilo-26, in its existing Menilo field. The business environmental analysis for Menilo-26 infill well drilling project is based on external and internal analysis and followed by feasibility analysis using capital budgeting framework with discounted cash flow during the project’s life under the PSC terms. In order to analyze the impact of set variables to economic feasibility of the project, sensitivity analysis is conducted to seek the most influencing variables. The project feasibility and sensitivity analysis are conducted for both conditions, which are PT Java Energy as the holder of 100% PI of Soko Block and as the holder of 90% PI, considering inclusion of 10% PI to BUMD. The study demonstrates that the Menilo-26 infill well drilling project is economically feasible in both conditions, 100% PI and 90% PI, as indicated by positive NPV and IRR exceeds the discount rate. The result of sensitivity analysis ranks variables of oil production, oil price, Capex and Opex in terms of its effect to the project feasibility. This study recommends PT Java Energy to maintain the level of oil production and optimize cost incurred particularly for drilling operations.