Next, let's work on our income statement. We're gonna start building out the income statement for the project in the first operational year. Starting with our crude oil revenues, we can pull this number from our revenue tab.

The number is 220.5. Right below we have our natural gas revenues, and we can sum up the two to get our total revenues. Now to the costs we're gonna get the lifting costs as well as the transportation costs. Again, from our revenue staff, our lifting costs for year one would be 22.4, and right below we have our transportation costs depletion, which is essentially the depreciation of the PP&E in the project is gonna be taken from our depletion tab row 24, and that is 107.1. If we sum up all of these costs, we get our total cost of goods sold. Now keep in mind our cost section here could be a lot more detailed. We're keeping it somewhat simple in this model. Our gross profit, of course, is our revenue minus our cost of goods sold. In this case, I'm gonna use the plus sign because my cost of goods sold is a negative value.

Now to our royalties, we have forecasted this number in our revenue tab. So let's go there and pull the number in 49.6. Next, amortization, this number will come from our depletion tab, but here we have to be careful because we have two lines for amortization, we have amortization of our soft costs, and we also have amortization of our asset retirement obligation asset. So we have to make sure that we include both of these values and we get 12.1.

Now we can get our SG&A operating expense from an assumption in our sources and users tab.

Here we have a straightforward assumption of 10, and now we can compute our operating profit by taking the gross profit plus the sum of all of these operating expenses.

Now we get 116.2.

Moving on to the interest, we're gonna leave the interest blank for now until we work on the debt model for this project, but we can compute our profit before tax, and that will be equal to the operating profit, plus the sum of all of the interest lines.

That's again, of course, 116.2. Now we can calculate our tax expense. We're given a tax rate in the sources and uses tab, so let's go ahead and Pull that tax rate of 20% and we can multiply that times the profit before tax calculation, and that's 23.2. Finally, we can compute our net income as our profit before tax minus our tax expense. So the last step here to complete our income statement is to take all of our calculations and copy them to the right across the entire operational phase.