Projected Income Statement

Projected Income Statement

Prime South American Oil Prospect VENTURE CAPITAL: US $5.5 million
SCOPE: South America, giant oil discoveries in the Sub-Andean Arch are progressing towards this prospect, which is stepped out from an existing oil field.

PetroInti
13 Charlottetown Place
St. John's, Newfoundland
A1A 2P5

FAX: 1 (709) REX-LIMA

The highest return on risk investment in the world today, comes from reasonable drilling cost, very low development cost and very high after tax returns. Any questions regarding this projected income statement should be addressed to PetroInti.

Rich Prospect in a Rich Land
The following projected income statement is from a single exploration well discovering oil on South America. The government is democratic and stable. The tax and royalty regimes are generous. The nationals can capably develop the entire project. Compared with North Americans the people are more honest and trusting. They have a friendlier society where people care for their countrymen and value respectful behaviour. However rumor spreads extremely quickly and the people and government will not tolerate corruption. With a different legal and accounting system, it is important to learn their methods, honour their sensibilities, and to realize they are extremely accommodating to resolve any incumbrances to productive work. I have negotiated with the Government and arranged terms wherein a single discovery well may finance the next well, and cumulatively so on until the entire oil development is completed.

Averaged Costs and Prize
When making investments with uncertain returns, to avoid boom or bust senarios, investments should be spread amongst many ventures. The return will thus tend to the cumulative average return of those investments. This prospects� projected income statement is based on its� risk weighted average reserves and development costs, and a price of US $20 per barrel of oil. It should be noted that the average is not precise, as the particular formation to produce oil will be one or more specific formations. Also the price of the oil will unpredictably vary over the future. Should returns prove poor, you need not reinvest in further development, but may recoup all returns from the exploration wells production.

Conservative Evaluation
To placate the caution reflex to exploration risk, I have been extremely conservative against this prospects� economics. The original exploration well cost of US $5.5 million is the dearest rationally conceivable. By properly planning the original well's drill program I expect a US $4 million cost to drill to the deepest formation. Better if commercial oil is discovered in a shallower formation, as the drill program may be stopped and production commence to finance all further development. The oil flow rates will probably be almost double the rate used here. Taxes and royalties are inflated. Not added to this evaluation is the ability to readily make further "step out" discoveries from this prospect.

Category \ Year
Gross Revenue
Well Investment
Field Facilities and Plant
Operating Expence
Operations Revenue
All Taxes and Royalties
Net Foreign Income
Cash Exported
Cumulative Investment
Pay Out
Pay Out / Cum. Invest.

2000
4.380
8.231
0.000
0.438
3.942
1.183
5.125
-5.500
8.231
5.125
0.623

2001
182.434
57.002
50.000
18.243
164.191
56.840
107.351
0.000
115.232
112.476
0.976

2002
597.840
33.370
195.100
59.784
538.056
261.409
276.647
45.420
343.703
389.123
1.132

2003
657.000
0.000
0.000
65.700
591.300
414.238
177.061
177.061
343.703
566.184
1.647

2004
658.800
0.000
0.000
65.880
592.920
436.791
156.129
156.129
343.703
722.313
2.102

2005
657.000
0.000
0.000
65.700
591.300
450.373
140.927
140.927
343.703
863.239
2.512

2006
657.000
0.000
0.000
65.700
591.300
450.373
140.927
140.927
343.703
1004.166
2.922

2007
657.000
0.000
0.000
65.700
591.300
479.931
111.369
111.369
343.703
1115.535
3.246

2008
658.800
0.000
0.000
65.880
592.920
484.218
108.702
108.702
343.703
1224.237
3.562

2009
657.000
0.000
0.000
65.700
591.300
482.895
108.405
108.405
343.703
1332.642
3.877

2010
657.000
0.000
0.000
65.700
591.300
482.895
108.405
108.405
343.703
1441.047
4.193

2011
657.000
0.000
0.000
65.700
591.300
482.895
108.405
108.405
343.703
1549.452
4.508

2012
658.800
0.000
0.000
65.880
592.920
484.218
108.702
108.702
343.703
1658.154
4.824

2013
657.000
0.000
0.000
65.700
591.300
482.895
108.405
108.405
343.703
1766.559
5.140

2014
657.000
0.000
0.000
65.700
591.300
482.895
108.405
108.405
343.703
1874.964
5.455

2015
657.000
0.000
0.000
65.700
591.300
482.895
108.405
108.405
343.703
1983.369
5.771

2016
658.800
0.000
0.000
65.880
592.920
484.218
108.702
108.702
343.703
2092.071
6.087

2017
625.000
0.000
0.000
62.500
562.500
459.375
103.125
103.125
343.703
2195.196
6.387

2018
550.000
0.000
0.000
55.000
495.000
404.25
90.750
90.750
343.703
2285.946
6.651

2019
425.000
0.000
0.000
42.500
382.500
312.375
70.125
70.125
343.703
2356.071
6.855

Note that the actual money spent returns itself 428.376 times by 2019. This is based on conservative averages. Petro Inti believes that there is greater likelyhood of oil, and more oil, and possibly more than one formation to produce, from this prospect. A thousand times return on money outlaid is more realistic. The payout over cumulative investment of only 6.855 by 2019 looks poor, but $338.2 million investment comes from the oil fields' production, and only $5.5 from venture capital.

Introduction

Risk Analysis