Economic Report 2017

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conomic criteria ultimately driǀe inǀestment decisions, Ɖarticularly ǁhen caƉital is in short suƉƉly͘ ommonly used criteria include͗

iͿ Eet Wresent salue ʹ ƉostͲtadž ;EWsͿ and džƉected Donetary salue ; DsͿ iiͿ Internal Zate oĨ Zeturn ;IZZͿ iiiͿ aƉital Intensity ;WͬIͿ ʹ ;calculated as EWs ƉostͲtadžͬinǀestment ƉreͲtadžͿ iǀͿ WayďacŬ ʹ the time taŬen to recoǀer the initial inǀestment͘

In a m at ur e oil and gas b usine ss t h e cost s of op e r at ions ar e one of t h e m or e im p or t ant m e asur e s w h e n looking at the Ĩinancial health oĨ a ƉortĨolio͘ tith UO s almost halǀed since 201ϰ, the UK ^ has imƉroǀed its comƉetitiǀeness more than any other comƉaraďle ďasin͘ The cost reductions haǀe ďeen greatest across drilling, ǁells and logistics, ǁhere they haǀe greatly outƉaced the gloďal aǀerage͘ Eeǀertheless, the ďasin remains the most edžƉensiǀe to oƉerate in, on aǀerage, as shoǁn ďy &igure 22͘

Figure 22: Unit Operating Costs in Offshore Oil and Gas Producing Regions

പ

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United Kingdom

D enmark

N orw ay

N etherlands

3 0

10 Unit Operating Cost ( $ / boe - 2 016 Money ) 15 2 0 2 5

Angola

B razil

E gy pt

I ndonesia

N igeria

US ( GoM D eepw ater)

5

0

2 008

2 009

2 010

2 011

2 012

2 013

2 014

2 015

2 016

Source: Wood Mackenzie

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