Brent falls - impact on E&A

Brent (above) has now fallen >25% since June...what are the E&Ps going to do... Onshore flexibility, but not in the offshore Longer lead times, offshore spend tends to be committed vs. onshore Likely see cut back in E&A instead Delayed payments Kurdistan, DNO and Genel are still to be paid for pipeline exports Egypt, TransGlobe has built up USD185m of receivables Nigeria, Seplat has built up USD215m receivables as government...

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Thoughts around using a high discount rate

Higher discount rates may be used to reflect the greater risk averseness adopted by a company/project manager. This may also be used as a screening tool, with lower NPV projects rejected. In O&G, and other fields, higher discount rates should be used in conjunction with other tools to evaluate projects.At the planning level, the use of higher discount rates has its own limitations due to conflicting interests between the project team (e.g. staying in the job) and management.Encourages projects with near term and/or higher levels of early production Implication:...

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