Marginal oil fields in Nigeria, some of which the International Oil Companies (IOCs) have abandoned for over 10 years previously, are now being awarded to indigenous oil companies. Due to difficulty with raising development finance domestically, some of the indigenous Marginal Field Operators (MFOs) have resorted to allowing foreign-listed Financial Partners (FP) to ‘carry’ their share of development costs. We test the optimality of such ‘carried’ cost arrangements by using the discounted cash flow method to analyse the economic viability of two model marginal fields (one onshore and the other offshore) in the Niger Delta/Gulf of Guinea region. Four different scenarios (sole risk [MFO], sole risk [FP], joint venture without carry, and joint venture with carry) for each model are compared. The empirical results appear to imply that marginal field operators are better off if they can contribute their share of development costs, by equally sourced debt and equity financing domestically, than when they are carried by a foreign financial partner. The computed net present value (NPV), NPV per barrel, modified internal rate of return (MIRR) and payback period all show that carrying of interest favours the FP over the MFO in a joint venture arrangement. Additionally, oil price and Petroleum Profit Tax (PPT) have the greatest impact on NPV in both models.

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