So now we're gonna work on the depletion of pp and e and the amortization of our soft costs. So to begin, we're gonna bring in the reserve assumptions for both crude oil and natural gas. So let's bring those numbers in from the sources and uses tab. And here we have the total reserves for crude oil. So we can bring that in. And because we have the same layout here as we do on the sources and uses tab, I can simply copy the formula, paste it down here, and I can do the same for our production rates or our percent production paste it here. We're gonna change the format to percentages, copy this formula, paste it here, and now we can simply take these numbers and copy them all the way to the right. So we have effectively pulled in all the assumptions from our sources and uses. Now we can begin calculating our reserves over the operational period. We're gonna start by simply taking the total reserves for our crude oil. That's 59.6. We're then gonna take our natural gas reserves of 172.8.

Next, we need to convert our natural gas reserves into millions of barrels of oil equivalent. So for that we're gonna take the 172.8. We're gonna divide it by the conversion ratio in the sources and use this tab. We're gonna lock that in and then multiply times 1000.

Now we can simply add our total oil reserves and our natural gas reserves to get our total reserves.

So now we're ready to forecast our reserves over the operational period. Starting with our oil reserves here, we can take last year's reserves and we're gonna subtract the reduction in the reserves due to production. So to compute that, we can simply take the total reserves of 59.6. We can lock that in and multiply times our percent production of 5%. And as you can see, our reserves go down by 5%. We can do the same for our natural gas reserves. We're gonna take last year's reserves minus the total reserves, multiplied times the percent production.

Now we can convert the 164.2 into millions of barrels of oil equivalent using the same formula we used before. So in this case, we can just copy this to the right. And of course our total reserves is also the same formula. We can copy that to the right.

So now we're ready to simply take our formulas here and copy them all the way until the end of the operational phase.

Let's do just that. And you can see that we're gonna deplete all of our reserves. We're gonna extract all of our reserves by the end of our, our our operational phase. Now the last thing we we get we can do here is we can compute our total production. And that's just simply the change in our total reserves year over year. So I can take last year's total minus this year's total, and that's gonna give us the total production for the year. So I can copy that right as well.

So now let's move on to our development costs. So the first thing we need to do here is we need to come up with our total development costs and we can get this number from our sources and users of funds stable. So we'll go all the way up here, and here we have our total development CapEx and that's 2142. And now we can compute the depletion in dollars per barrel of oil equivalent. And the way to do that is to simply take our total development costs and divided by the total reserves of 89.4. Now we want this number to be negative because we're gonna expense this depletion. So I'm gonna put a negative sign in front of it and that gives us $24 of depletion per barrel of oil equivalent. Using that information, we can now build out our base calculation for our PP&E. So our beginning balance equals last year's ending balance. And during the construction phase we're gonna take the CapEx, the development CapEx, we can get that from our sources and uses of funds stable. Let's get that from row 6 in the sources and uses tab. So that's gonna be 180 for the first year of construction. There is no depletion yet. So for now I'm just gonna take the sum of the beginning balance as well as the CapEx and the depletion line. Now we can take this and we can copy this to the right for just the years of the construction phase, and now we can work on the operational period. So my beginning balance in the first year of operations is gonna be equal to last year's ending balance, and that's 2142. There'll be no more CapEx during the operational period. We are for simplicity, ignoring maintenance CapEx. So now we can calculate our depletion and we can simply take our depletion per barrel of oil equivalent of $24 and multiply times the total production for that year. And that gives us 107.1. I can sum all three rows and that's our ending balance of PP&E. After the first year of operations, I can now take all four rows and copy them to the right all the way until the end of our operational period. And as you can see toward the end, our PP&E gets fully depleted to 0. Now let's work on our soft costs. So the first thing we need here, similarly to what we did with the development cost, is to bring in my total soft costs. And I'm gonna bring this in from my sources and use this tab down here in the soft cost section.

We should have our soft costs. So we're gonna actually take the sum of all three years of soft costs and we're gonna include interest in this calculation.

So that's my total soft costs of 204.5. Next we're gonna compute the amortization in dollars per barrel of oil equivalent. And we're gonna do this the same way we did it for our depletion. We're gonna take our total soft costs and we're gonna divide it by the total production of 89.4 or the total reserves of 89.4. We also need to have a negative sign in front of this number since we're gonna be expensing this amortization figure.

Now we're ready to calculate our base calculation for our soft costs. So we're gonna start with our beginning balance in the first year of construction at zero. Then we need to pull in our soft cost spend, and that's gonna come from the sources and use tab. Here we have the year one in the construction phase, soft cost spend.

We're gonna leave the amortization empty because that's only gonna be expensed during the operational period. And then we take the sum of all three lines to get our ending balance. After one year in the construction phase, we can take all four lines, copy them until the end of the construction phase, and now we can start our operational phase with a beginning balance equals to last year's ending balance of 204.5. We have no more soft costs spent. So now we have to calculate our amortization and that's simply the Two 2.3 amortization per barrel of oil equivalent. We're gonna lock that in and we're gonna multiply that times the production for the year, which is 4.5.

Then we can sum this numbers up to get our ending balance after one year of operations. And finally, we can copy this to the right all the way until the end of our operational period.