In the evaluation of oil and gas properties, the reserve estimator must forecast the timing of cash receipts and cash expenditures. The cash flows can then be discounted to account for the time value of money. One of the cash flows estimated is the cash tax liability or savings generated by the project. The treatment of these cash flows in project evaluation is investigated in this paper. Two alternatives-using pre-tax investment dollars for the "Time 0" investment and using after-tax investment dollars for the "Time 0" investment, are compared to a more "rigorous" treatment of cash flows. The results show that the use of after-tax investment dollars with mid year discounting consistently results in higher values for some popular managerial indicators than those obtained using pre-tax investment dollars. Both methods give results which are greater than the more rigorous quarterly approach.

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