An integrated approach to delivering customized tax and economic modeling services for the oil and gas industry

1. Global tax and
economic modeling
An integrated approach to
delivering customized tax and
economic modeling services for
the oil and gas industry

2. Page 2 Global Tax and Economic Modeling
EY’s global tax and economic modeling
Informed business decisions in today’s economic environment require substantial quantitative analysis
Numbers are at the core of determining how to optimize a transaction, how to capture the most favorable economics, how to respond to a
taxing authority’s inquiry, and how to design tax and economic regimes to improve global competiveness.
EY helps businesses and governments make informed decisions based on rigorous analysis applicable to any stage of a transaction,
investment, or regime change.
EY is appropriately positioned to assist with tax and economic modeling analyses by combining deep technical tax and economic expertise
with in-depth oil and gas industry experience (upstream, midstream, downstream, petrochemicals and oilfield services (OFS)).
Our
customized
modeling
services
Our
integrated
team
Introduction
and
overview
Our
capabilities

3. Page 3 Global Tax and Economic Modeling
Our leading-class tax and economic modeling capabilities
EY can develop (and/or review) detailed financial and tax models that provide a wide variety of strategic analysis from
both a tax and/or economic perspective to assist clients (both private and government) in considering investment, fiscal
regime changes, capital allocation and other matters.
Private
companies
2
NOCs
4
Non-
operators
6
IOCs
1
Private
equity
3
Governments/
fiscal
regimes
5

4. Integrated modeling approach
Investor take
(cash flow
metrics)
Analysis/
KPI reporting
Withholding
tax
Impairments
Owner
taxes
Accounting
recognitionInvestment
appraisal
Financing
Cash
repatriation
Treasury,
finance and
hedging
Processes
(advisory)
1
2
3
4
5
6
7
8
9
10
Government
take
01
0203
Revenues
Fiscal
terms
Costs
Tax and
economic
modeling
► Timing
► Exploration success
► Production
► Selling price
► Export duties
► Global prices
► Contracts or differentials
► Benchmarking
► Customs duties, VAT, employment taxes
► Drilling optimization
► Decommissioning
► Operations
► Infrastructure

5. Page 5 Global Tax and Economic Modeling
Modeling and strategy
Strategic decisions — whether for investment, capital allocation, regime change or competiveness reviews, or any other purpose
— require an in-depth quantitative analysis to understand the risks and rewards of certain changes or decisions related to
direction.
Fully understanding the tax and economic implications of potential actions can help shape and define the overall strategy. Tax and
economic modeling thus goes hand in hand with overall strategic decisions, addressing business model disruption and opportunities for
growth, and identifying pitfalls or areas of improvement, among others.
EY’s Global Oil & Gas Tax and Economic Modeling practice can assist in an integrated, comprehensive tax and economic analysis. Our
services are supportive, and many times supplementary, to the existing capabilities, and we work in tandem with investment banks and law
firms, providing a key analytical and quantitative approach.

6. Our capabilities
EY’s Global Oil & Gas modeling network
Americas
150 professionals
Europe, Middle East and Africa
140 professionals
Asia-Pacific and Japan
20 professionals
Houston London
Aberdeen
Moscow
Delhi
EY’s Global Oil & Gas modeling
network consists of 300+ professionals
deployed around the globe
300+
A fully integrated
adviser
► A fully integrated oil and
gas advisory, offering
vast experience across
tax and corporate
finance, providing you
with insights and
coordinated advice
► A structure focused on
the Global Oil & Gas
sector, combining our tax
and economic modeling
expertise with the power
of our complete offerings
across transaction
advisory, advisory,
assurance and tax
03
An experienced team
► Successful track record
and relevant experience
in providing quantitative
analysis for IOCs,
governments, NOCs,
private equity firms and
private companies as
they navigate the
complexities of
investment decisions,
capital allocations, fiscal
regimes, cash
management and
other key decisions in
the oil and gas space
02
Global experience
in energy
► 300+ tax and economic
modeling professionals
serving clients on a
global basis and
seamlessly coordinating
with our 10,000+ energy
professionals, providing
a complete range of
services to companies
and governments
operating in all sectors
of the industry
► Market presence in all
key oil and gas market
areas and access to key
decision-makers among
the major industry
players
01

7. Page 7 Global Tax and Economic Modeling
Our customized modeling services
With our customized suite of modeling services, we can develop (and/or review) detailed models that facilitate an evaluation of different
alternatives and scenarios from both a tax and economic perspective. Our integrated approach focuses on the following key categories;
however, in many cases, the analysis spans multiple categories.
Our customized suite of tax and economic modeling services for the oil and gas industry
Transaction
and
investment
analysis
Cash
repatriation
Government
fiscal
regimes
Capital
allocation
decisions
Agreement
modeling
and model
review

8. Page 8 Global Tax and Economic Modeling
Transaction
and
investment
analysis
Cash
repatriation
Government
fiscal regimes
Capital
allocation
decisions
Agreement
modeling
and model
review
Transaction and investment analysis

9. Page 9 Global Tax and Economic Modeling
Transaction and investment analysis
Numbers are at the core of determining how to
optimize a transaction, how to capture the most
favorable economics or how to respond to a
taxing authority’s inquiry. From evaluating
production-sharing agreements to farm-in
agreements and arrangements in light of the
applicable petroleum laws and regimes, our team
can assist you in evaluating transactions and
investments. With its customized quantitative tax
and economic modeling services, EY’s global
team helps businesses make informed decisions
based on rigorous analysis applicable to any
stage of a transaction, including planning and
structuring, implementation (pre- and post-
closing) and potential taxing authority
controversy. Our professionals combine technical
knowledge in tax with substantial industry and
capital markets experience and skill sets in
economics, finance and modeling. This cross-
disciplinary background uniquely positions EY to
assist businesses in meeting their economic
objectives.
Scenario planning
(and planning models)
Constructing scenario analyses, such as
Monte Carlo simulation, for key economic
variables including interest rates,
commodity prices, exchange rates and tax
assumptions to test the impact of these
drivers on a structure.
Capitalization
Multinational companies commonly use
debt to finance internal or third-party
transactions, implement reorganizations or
modify their capital structure. We can assist
in research and data gathering, cash-flow
model construction, debt structuring,
sensitivity and simulation analyses, and
capital market analysis. We can also assist
in impairment modeling and review.
Capital raise
We evaluate capital raise alternatives,
including the preparation of illustrative
examples to demonstrate the economics of
various tax concepts to equity or debt
investors and their financial advisors. We
can also provide assistance with modeling
the impact of alternative tax assumptions on
projected cash flows and economic returns.
Financial products
Businesses often use financial derivatives
to help achieve their desired tax planning
and economic objectives. Quantifying the
benefit(s) or cost(s) associated with such
instruments is central to helping businesses
achieve such objectives (interest-rate term
structure models, warrants, swaps, hedges,
puts and calls, among others).

10. Page 10 Global Tax and Economic Modeling
Transaction and investment analysis: modeling to support
an evolving project
A robust economic and financial model which will meet the needs of the process and support decision-making is essential. Our Global Tax
and Economic Modeling team has experience in both building and reviewing economic and financial models to support transaction and
investment decisions. We will work with you to ensure that your model is able to support decision-making throughout the process from idea
or concept through closing and beyond.
Initial feasibility modeling Economic modeling
Investment decision
modeling
Modeling for financial
commitments
High-level calculations with
many options:
► General financing assumptions
► Broad-brush capex estimates
► High-level supply and offtake
modeling
► Multiple options, e.g., with or
without power station offtake,
pipeline vs. vessel, alternative
ownership options
Reduced options and
increased detail:
► Tax considerations
► More detail on appraisal costs,
and indicative timing for
development
► Illustrative financing
► Indicative financial statements
Detailed modeling of locked-down
contracts:
► Financing in line with proposed
financing agreements
► Hedging
► Capital spend in line with
Engineering, Procurement, and
Construction (EPC) or purchase
contracts
► Supply and offtake agreements to
match contract details
► Scenarios to show key downside
risks including Forex (FX),
inflation and delays
Further, with increased focus on
risk and detailed investor
returns:
► Shareholder tax consequences
► Equity structuring and
guarantees
► Financial statements
► Impact of risks — cost
overruns, delays, financing
costs
Evolving project

11. Page 11 Global Tax and Economic Modeling
Transaction and investment analysis: select services
Blueprinting and tax
considerations
Business modeling Tax modeling Evaluation of partners,
counterparties or
financial products
Long-range planning
Tax planning with respect to
various tax considerations
on a global basis
Feasibility studies,
blueprinting and design
Provision of market insights
on market rates of return or
cost of capital for applicable
structure or geography
Review of current models
and/or revenue income
forecasts; development of
base-case comparison
model; and performance of
compilation and analysis
of results
Development of tax and
economic model that
compares the benefits and
risks of each investment
identified during the
blueprinting phase
Determining acquisition
value or price
Evaluation of after-tax
return on investment
Capitalization strategies
Evaluation of counterparty
or partner economics,
including the uses of
various acquisition or
transaction capital
Identification and analysis
of a variety of economic
and financial instruments
and products
Comprehensive model
providing insights and
guidance with respect to
future transactions,
alternative investments,
and the anticipated tax cost
of alternatives and/or
structure selection
We understand the various structures and approaches required to represent your transaction. From capital costs to detailed contracts and precise financing, we
can advise you on ways to structure the model to meet your requirements.

12. Page 12 Global Tax and Economic Modeling
Capital allocation decisions
Transaction
and
investment
analysis
Cash
repatriation
Government
fiscal regimes
Capital
allocation
decisions
Agreement
modeling
and model
review

13. Page 13 Global Tax and Economic Modeling
Capital allocation
decisions
Determining
the right
allocation
of capital among
projects and
investments
Understanding
total after-tax
returns on
projects
Assessment of
capital
structure

14. Page 14 Global Tax and Economic Modeling
Capital allocation decisions
Determining the appropriate and optimal capital allocation is one of the most important and crucial responsibilities of senior management
and leadership. To properly analyze the current state of capital allocation, as well as to properly analyze the strategy around future capital
allocation decisions, a robust analysis ought to include both tax and economic factors, among others. EY’s Global Oil & Gas Tax and
Economic Modeling team can develop interactive models that can aid in an evaluation of current capital allocation matters, as well as
provide a flexible analysis for future capital allocation decisions, such as the following:
► Geography-based capital decisions
► Project-based capital decisions
► Timing-based capital decisions
Whether a business is evaluating various investments in various geographies, or various forms of capital to fund internal or external
projects, our team can supplement your analysis with our robust quantitative modeling services.

15. Page 15 Global Tax and Economic Modeling
Transaction
and
investment
analysis
Cash
repatriation
Government
fiscal regimes
Capital
allocation
decisions
Agreement
modeling
and model
review
Cash repatriation

16. Page 16 Global Tax and Economic Modeling
Repatriation of
stranded cash
from global
assets and
operations
Cash repatriation
Scenario
modeling to
evaluate method
and timing of
repatriation,
as well as optimal
repatriation
structure

17. Page 17 Global Tax and Economic Modeling
Cash repatriation
Chief financial officers and tax directors of multinationals are operating in an environment of intense scrutiny and challenge. Transactions,
intercompany pricing, supply chains, structuring and funding are increasingly under the spotlight. More than ever, executives are looking to
align their global tax position with their overall business strategy, to be competitive and provide value to shareholders.
Our integrated and globally connected team can develop scenario planning and analysis to allow your business to evaluate global cash
positions and avenues for cash repatriation. Using multidisciplinary teams, we work with you to help you manage global operational
changes and transactions, and repatriation issues.
We can develop robust scenario analyses to illustrate methods and avenues with respect to cash management and repatriation (as well as
evaluation of a holding company structure).

18. Page 18 Global Tax and Economic Modeling
Transaction
and
investment
analysis
Cash
repatriation
Government
fiscal regimes
Capital
allocation
decisions
Agreement
modeling
and model
review
Agreement modeling and model review

19. Page 19 Global Tax and Economic Modeling
Agreement
modeling
Verify that term sheets
and transaction
documents accurately
reflect the desired
transaction economics and
highlight potential
inconsistencies (along with
recommendations for
improvement)
Analyze existing models to
ensure that outputs are
accurately calculated and
properly projected (in line
with the parameters of the
legal or contractual
agreement)
Understand tax impact
on overall economic
results and provide
solutions on alternative
means of arriving at the
desired outcome

20. Page 20 Global Tax and Economic Modeling
Model review
Financial models have become
increasingly complex, and are often
used to underpin more significant
business decisions. In many cases,
insufficient rigor is employed to ensure
model integrity and models fail to meet
the standards of governance applied to
other business processes. We provide
a range of modeling products and
services that not only mitigate the risks
in the use and reliance on financial
models, but also support and augment
strategic planning and decision-
making.
Mitigating model risk
1
EY is a leader among professional
firms with an established team
dedicated solely to the provision of
business modeling services. Our
modelers have a range of skills and
backgrounds that enable us to
effectively review a wide range of
financial, tax and economic models.
We have a wealth of experience in
advanced modeling techniques, and
diverse industry experience through
our review of many hundreds
of models.
Experience in model
reviews – our people
2
Our experience in reviewing models
in the oil and gas sector shows that
the vast majority contain significant
errors and departures from modeling
best practices. Such errors degrade
model accuracy and place the
decision quality at risk. It is inevitable
that humans make errors. In a written
document, this may manifest in an
inconsequential typographical error.
In a model, this can cause a critical
flaw and result in an errant decision
being made. Our experience tells us
the types of errors that are frequently
made and has led to the development
of our tools and methodologies to
locate model errors.
Insights from our
experience
3
We use proprietary tools that increase
efficiency and let our teams focus on
the more complex and risky areas of
the review. While our findings are often
large in number, they are categorized
by the severity and nature that
dramatically aids the modeler in their
resolution. Using sophisticated
analytical software and our in-depth
modeling skills, we are able to provide
corporations, banks, equity investors
and other third parties with
independent assurance that the
relevant financial model is free from
material errors. We are able to tailor
our approach and services to address
any specific needs.
You can trust our reviews!
4

21. Page 21 Global Tax and Economic Modeling
Risks and implications
Our experience in performing many hundreds of model reviews has helped us identify many high risk indicators. These, together with the
implications for model errors, are set out below.
Flags for high-risk models
► Models attempt too much, get too complex
► Model is old and has grown from its original aim
► Spreadsheets bypass traditional system disciplines
► Model developed generically and not “custom-built”
► No segregation of inputs, calculations and outputs
► No data book or other documentation of assumptions
► Inconsistent formulae across rows
► Complex or non-transparent logic (e.g., nested IF statements)
► Circular references
► Inexperienced modeler
► Model constructed under time pressure
Implications
► Management decisions are based on the model’s
outputs.
► These decisions may, therefore, be based on
inaccurate information.
► Wrong decisions can be made.
► In many cases, implementing decisions are
expensive.
► This can affect the reputation and cause financial
risk for the company and its management teams.

22. Page 22 Global Tax and Economic Modeling
Transaction
and
investment
analysis
Cash
repatriation
Government
fiscal
regimes
Capital
allocation
decisions
Agreement
modeling
and model
review
Government fiscal regimes

23. Page 23 Global Tax and Economic Modeling
Government fiscal regimes
EY works with various stakeholders, including governments and public authorities, international organizations, such as the World bank,
the European Bank of Reconstruction and Development, the United Nations, as well as national and international companies and industry
associations. EY has strong experience and deep knowledge in designing and implementing government policies and fiscal regimes for
the oil and gas industry, both for mature and emerging energy markets.
We offer fully integrated services provided by our multidisciplinary team, which includes fiscal policy professionals, economists,
business and tax modelers, and others, to provide our clients full-scope assistance with fiscal policy and government
take matters.
Our service delivery approach combines our core fiscal policy professionals team and geographical reach through our
global network of experienced people with deep expertise in local markets, providing for tailored solutions and best-fit
teams to suit specific client needs. EY has the experience and track record of successfully working both independently
and also as a part of a broader project team (with technical advisors, investment bankers, strategic consultants and other
third parties, including public relations teams).
We provide a strong international brand that brings additional transparency, fairness and support to key decision-making processes.

24. Evaluate current
government take and
fiscal regime
(including royalty
regime)
1 Design or revise
existing fiscal
structures, whether
sector-wide, for
particular segments or
classes of assets
(e.g., conventional
fields, unconventional
resources, marginal
fields, offshore fields,
exploration activities,
refining or
petrochemicals)
2 Provide in-depth
tax and economic
analysis and modeling
support for policy
proposals, licensing
matters, investment
decisions, or fiscal
regime design
(including, but not
limited to,
benchmarking and
competitiveness
review and analysis,
feasibility modeling
and analysis, and
implementation)
3 Provide support for
policy representation
and responses
(including the
development of
responses or
submissions or a
review thereof);
provide
in-depth feedback,
insight and
recommendations to
increase potential
impact with
policymakers and
other key stakeholders
Analyze potential
impact certain policy
proposals or changes
may have on
particular sector
segments, companies,
or businesses (or a
combination thereof);
design a framework to
assess various
impacts of such policy
proposals, including
tax and economic
modeling analysis and
support, qualitative
support, and support
with the development
of responses and
positions
54
We have deep knowledge in government take and fiscal regime modeling and analysis, and we have a business-oriented
focus by working with upstream, OFS and downstream businesses. EY can assist you with respect to a vide range of fiscal
regime and government-take-related analyses:
How we can assist you
Engage in
discussions with key
stakeholders and
describe analysis, and
provide support on
technical matters,
including international
benchmarking — this
can also include
undertaking broader
studies, research and
analysis custom-made
to fit your particular
needs
6

25. Page 25 Global Tax and Economic Modeling
Tax policy economics
Tax policy development
and analysis1
We work with organizations early in
the process to develop and analyze
tax policy proposals to achieve their
objectives. Tax policy development
includes identifying problems and
noncompetitive features of the current
tax system as they affect large firms or
specific industries, quantifying the
effects and providing tax policy
options, or otherwise evaluating and
analyzing important aspects of the tax
system.
Business tax
competitiveness analysis to
support a tax policy change
2
We provide organizations with detailed
comparisons of their tax burdens with
those of other types of firms or
industries within a country or state, or
across countries or states. This may
help build the case for reducing or
eliminating non-uniform taxation that
places the organization at a
competitive disadvantage. The
competitiveness analysis can include
comparisons of operating cost
differences and selected taxes paid by
employees.
Revenue estimates
3
Organizations need to know the
revenue effects of tax proposals
before they publicly discuss their
proposals. Given our experience, we
can provide credible estimates before
government estimates are available.
Economic and fiscal impact
analysis (of tax policy
changes)
4
Our team provides organizations with
detailed studies of the economic and
fiscal importance of specific industries
or facilities in a country or state’s
economy. These analyses may include
the impact of a significant new
business investment on employment,
income, revenues and economic
growth in a jurisdiction, or the national
and state macroeconomic impacts of
major tax policy proposals.
Our team assists organizations with:
As part of a broad government fiscal regime analysis or a discrete, policy-focused engagement, specific tax or regulatory policies need to
be addressed or analyzed often. We work with corporations, industry trade associations and business coalitions, to provide objective,
empirical analyses of tax and nontax legislative and regulatory proposals and policies.
We provide tax policy analyses, reports and modeling to help develop legislative strategies and to inform policymakers. Given our
extensive government experience, we know the types of analyses which are highly effective with policymakers and their staff. We also
provide empirical analyses for various state, local and national governments.

26. Page 26 Global Tax and Economic Modeling
Government fiscal regime analysis
Policy impact
analysis
Revenue
estimation
Economic and
fiscal impact
analysis
Benchmarking
and
competitive
analysis
Estimation of
economic
impacts of
changes in tax,
trade and
regulatory policy
on the overall
sector
Estimation of the
tax revenue that
the government
would receive
from a change in
tax policy (e.g.,
change in
government
take)
Strategic
planning
Estimation of tax
and economic
impacts by
project (e.g.,
execution of
PSC, pipeline
construction)
Comparison of
fiscal and tax
regime
competitiveness
among peers
and identification
of methods for
optimization
Capital
markets
transactions
Development of
fiscal and tax
framework for
public market
vehicles or other
capital market
instruments
Cost-benefit
analysis
Estimation of the
benefits of
government tax
incentives (jobs,
tax revenue) vs.
its costs
Expenditure
management
and efficiency
improvement

27. Page 27 Global Tax and Economic Modeling
Our integrated team
We have in-depth modeling knowledge in both developing and reviewing financial and tax models for a
range of companies and within the oil and gas sector, as well as for governments and trade groups.
Our tax and economic modeling professionals combine technical knowledge in tax with substantial industry
and capital markets experience and skill sets in economics, finance and modeling. This cross-disciplinary
background makes EY uniquely qualified to assist businesses in meeting their economic objectives.

28. Page 28 Global Tax and Economic Modeling
► Greg Matlock
Global Tax and Economic Modeling
Markets Leader
greg.matlock@ey.com
Partner, Global Oil & Gas Tax Leader
dleith@uk.ey.com
► Derek Leith
Partner, TAS, Valuation & Business
Modeling CIS Lead
anna.guseva@ru.ey.com
► Anna Guseva
Associate Director, Business
Valuation Group
konstantin.kuryumov@ru.ey.com
► Konstantin Kuryumov
Partner: EMEIA Head Oil & Gas Transaction
Advisory Services
jclark5@uk.ey.com
► Jon Clark
Partner, Global Head of Tax Policy
csanger@uk.ey.com
► Chris Sanger
Assistant Director:
Oil & Gas Transaction Advisory Services
ecotton@uk.ey.com
► Emma Cotton
Global Oil and Gas Tax Sector Resident
aaron.puiszis@ey.com
► Aaron Puiszis
EY National Tax –
Transaction Economics Group
amin.khalaf@ey.com
► Amin Khalaf
Our Tax and Economic Modeling
team members use their extensive
knowledge and experience to
recommend approaches that have
been proven to be successful.
EY National Tax – Transaction
Economics Group
kevin.richards@ey.com
► Kevin Richards
EY National Tax – Transaction
Economics Group
andreas.pecher@ey.com
► Andreas Pecher

29. EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax, transaction and
advisory services. The insights and quality services we deliver
help build trust and confidence in the capital markets and in
economies the world over. We develop outstanding leaders
who team to deliver on our promises to all of our stakeholders.
In so doing, we play a critical role in building a better working
world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or
more, of the member firms of Ernst & Young Global Limited,
each of which is a separate legal entity. Ernst & Young Global
Limited, a UK company limited by guarantee, does not provide
services to clients. For more information about our
organization, please visit ey.com.
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All Rights Reserved.
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This material has been prepared for general informational purposes only and is not
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refer to your advisors for specific advice.
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