Oil and Gas Well Drilling - 20 Year Cash Flow Financial Model

 This financial analysis template is built for oil and/or gas well drilling, exploration and extraction. It has up to 46 drilling cohorts that allow for an arbitrary number of drill holes that take place over time and the resulting economics. The main purpose of the model is to create an accurate cash flow forecast based on a drilling deployment schedule. Includes options for a joint venture / waterfall with IRR hurdles.

$75.00 USD

After purchase, the template will be immediately available to download. This is also include in the industry-specific financial model bundle and the industrial sector niche bundle.

oil field

The economics of oil and gas well drilling can be complex and depend on a variety of factors, including the location and geology of the reservoir, the cost of drilling and completing the well, and the price of oil and gas. In general, the drilling process involves a significant up-front investment, as the drilling and completion of a well can cost millions of dollars. Additionally, there are ongoing costs associated with operating and maintaining a well, as well as the cost of extracting and transporting the oil or gas.

The price of oil and gas also plays a significant role in the economics of well drilling, as a higher price can make it more economically viable to drill in certain areas. However, the price of oil and gas can also be volatile, making it difficult to predict the long-term economic viability of a well.

Another important factor to consider is the estimated size of the reserve. If the reserve is large and can produce enough oil/gas, it will be economically viable to extract it.

In general, the economics of well drilling can be challenging, and it requires careful analysis and forecasting to determine whether a well is economically viable. Here is a good project management template that can help an organization keep track of multiple deployment schedules.

This entire forecasting template runs off a deployment schedule. For each of the 46 cohorts, the following can be defined:

  • Gas / Oil Well Description
  • Drilling Start Month
  • Average Length of Exploration Period
  • Average Length of Production (months)
  • Count of Drill Holes
  • Average Drilling success rate
  • Successful Drills (ok to be a decimal)
  • One-time Exploration Costs
  • Ongoing Exploration Costs (monthly)
  • One-time Drill costs (successful find)
  • Ongoing Extraction Costs (monthly)
  • Average Selling Price per unit
  • % of Production Revenue Kept
  • Average Annual Price Change
  • Expected Initial Production per Day
  • Monthly Decline in Production (%)
Output Summary Data per Cohort
  • Production at Stop Month (per column E)
  • Production (in  units per day) at Stop Month
  • Total Units Extracted Over Well Life  
  • Monthly Value of Units Produced (end month)
  • Gross Monthly Revenue per Well at End Month 
There is a lot you can do with this model. If you just want to look at a single well site and plug in the assumptions for just that one, you can easily clear out the data in the other well cohorts. If you are trying to model the deployment of 100s or 1,000s of drill holes deployed over time, that is also feasible. The type of output metrics include IRR, NPV, equity multiple, total contributions required, total distributions, minimum cash position and lots of visualizations.

There is a cash flow waterfall with IRR hurdles (3 hurdle rates) but this also works if you have no investors (0 out their percentages) or if you have a strict percentage split for all cash flows (simply enter the same percentage share for each hurdle. It can also work if this is a hard/soft preferred equity with a single IRR hurdle for the LP / outside preferred investors.

Output Reports and KPI Metrics Displayed
  • Monthly and Annual cash flow
  • Monthly Cash Flow Waterfall (option for joint venture)
  • Executive Summary (high level financial summary with revenue/royalties/costs/cash flow)
  • Average gross revenue per active well
  • Total wells drilled per month/year
  • Total successful drills vs. total exploration drills
  • Average annual drilling success rate
  • Lots of visualizations for the data above
  • Annual summary of the cash flow waterfall for the GP/LP
  • This template doesn't come with financial statements or a 3 statement model, but you can use this general financial statement creator for actuals.
Favorable Conditions for a New Oil Field
  • Proximity to existing infrastructure: An oil field that is located near existing pipelines, roads, and other infrastructure can be more cost-effective to develop and can also provide easier access to markets for the oil.
  • High-quality reservoir: An oil field with a high-quality reservoir, meaning it has high porosity and permeability, will produce more oil at a lower cost.
  • Low production costs: Low production costs, such as the cost of drilling and completing wells, can make an oil field more profitable.
  • High oil prices: High oil prices make it more economically viable to extract and produce oil from a field.
  • Political stability: A stable political environment in the area of oil field can make it more attractive for investment and development
  • Proven reserves: The size of the oil reserves and the probability of finding more are also important factors to consider. If the field has a large reserve and a high chance of finding more, it will be more favorable for development.
  • Favorable geology: Oil fields that are located in areas with favorable geology, such as those with multiple layers of oil-bearing rock, can be more productive than fields in areas with less favorable geology.
  • Environmental regulations: Oil fields with less strict environmental regulations can be more favorable for development as the cost of compliance is lower.