C39 In cells E8-E18, do the following: Problem 11 Plato Energy is an oil and gas exploration and development company located in Farmington, New Mexico. The company drills shallow wells in hopes of finding significant oil and gas deposits. The firm is considering two different drilling opportunities that have very different production potentials. The first is in the Barnett Shale region of central Texas and the other is in the Gulf Coast. The Barnett Shale project requires a much larger initial investment but provides cash flows (if successful) over a much longer period of time than the Gulf Coast opportunity. In addition, the longer life of the Barnett Shale project also results in additional expenditures in Year 3 of the project to enhance production throughout the project's 10-year expected life. This expenditure involves pumping either water or CO2 down into the wells in order to increase the flow of oil and gas from the structure. The expected cash flows for the two projects are as follows: Given Data: Cash Flows (Barnett Shale Cash Flows (Gulr Coast) Year 0 Annual Cumulative Annual Cumulative (S5,000,000) S2,000,000 $2,000,000 ($1,000,000 S2,000,000 (S1,500,000) 800,000 S800,000 $400,000 $100,000 2 S1,500,000 S1,500,000 7 S1,500,000 $800,000 $500,000 S100,000 10 11-23 eady |