Time-phased cash flow

The production phase commences with the first commercial quantities of hydrocarbons ( first oil ) flowing through the wellhead. This marks the turning point from a cash flow point of view, since from now on cash is generated and can be used to pay back the prior investments, or may be made available for new projects. Minimising the time between the start of an exploration campaign and first oil is one of the most important goals in any new venture. 

All of the R D cost studies described above begin with estimates of R D cash outlays in each phase of development, the time required to complete each phase, and the success rate for projects in each phase of the process. These estimated cash flows are then capitalized with a cost of capital that differs among studies. The validity of the studies rests ultimately on the accuracy of the estimates of cash outlays and the timing of those outlays. In this section, OTA analyzes the validity of the estimates of cash... 

The repayment of the initial investment starts with the first production, which is considered the time zero. The cash flow will cumulate over the years up to the point where the production stops. The initial capital Investment can be recovered at the end of the lifecycle as a salvage value. In the first phase of operation the cash flow is used... 

---