ECONOMIC ANALYSIS

Analysis of Crude Oil Investor

INTRODUCTION3

DISCUSSION3

LAND OIL RESOURCES3

Factors Requiring Consideration3

Locality3

Political Stability3

Future Political Stability Assessment4

Gravitational Traits and Sulphur Percentage4

Oil Exploration & Production4

Investment Conditions and Probable Benefits4

Probability of Discovering “Wet” Wells4

Exploring Risks and Opportunities4

Probable Risks4

Possible Opportunities5

Price Differentials6

Quality of the Crudes6

Location of Production6

Benchmark Crude7

Production Sharing Agreement7

Probable Terms of the Production Sharing Agreement8

Maximum Share Ratio for the Government8

Excessive Contribution by Government8

Equal Royalty on Production8

Minimal Income Tax Amount9

Comparison to Uganda's Production Sharing Agreement9

Comparison to Land Oil Resources9

MARINE PETROLEUM COMPANY9

Factors Requiring Consideration9

Locality9

Political Stability10

Gravitational Traits and Sulphur Percentage10

Oil Exploration and Production10

Investment Conditions and Probable Benefits10

Probability of Discovering “Wet” Wells10

Setup of Oil Pipelines and Infrastructure10

Exploring Risks and Opportunities11

Probable Risks11

Possible Opportunities11

Price Differentials11

Quality of the Crudes12

Location of Production12

Benchmark Crude12

Production Sharing Agreement13

Probable Terms of the Production Sharing Agreement13

Equal Share of Resources13

Maximum Contribution by the Investor13

Increasing Royalty on Production13

Extensive Income Tax Amount14

Comparison to Jamaica's Production Sharing Agreement14

Comparison to Marine Petroleum Company14

CONCLUSION14

Analysis of Crude Oil Investor

Introduction

Being in any business, the toughest decision to ever make is regarding the investment of resources; especially considering the capabilities of some resources which might be affected by numerous factors. Being an accredited expert in the sector of crude oil trading and energy economics, I have to analyze the different investment opportunities and present them in form of a clearly presented report to a global entrepreneur. In order to better understand the reliability of the two companies under consideration, an in depth discussion regarding their economic stability and oil resources is required.

Discussion

As mentioned above, making an investment is a tough decision. Moreover, if the investment amount is in billions, a number of distinct factors are required for evaluation to ensure that the selection made is indeed the best among all the possibilities. In this case, the following companies are under consideration:

Land Oil Resources

As mentioned in the case, Land Oil Resources is a company with the following traits and characteristics:

Factors Requiring Consideration

Being an economic analyst and advisor, the following characteristics relative to Land Oil Resources presented themselves as most crucial for consideration:

Locality

The company has discovered oil resources in a West African Country with only land borders.

Political Stability

The West African Country had been subject to political instability for numerous years. Moreover, it has recently recovered from civil war and insurgence.

Future Political Stability Assessment

The current leader of the country is using force to rule the power with cooperation of the army. Therefore, the risk of political instability in the future is not recovered by even a fractional rate.

Gravitational Traits and Sulphur Percentage

The Crude sample taken from the resources of Land Oil Resources has an API Gravity of 35° and Sulphur Content of 0.12%.

Oil Exploration & Production

Currently the West African Country has minimal amount of Oil E&P. However, the government is seeking opportunities to invest in Oil Exploration and Production to support the Country's Economic Stability.

Investment Conditions and Probable Benefits

Due to different factors relative to the company's environment, investors have hesitated from investing in Land Oil Resources. However, due to loss of investments, the governments and banks are ready to help anyone willing to invest in the ...