Escalation Models allow defined increase or decrease over time in economic variables and are named/numbered as Project or Unique for reference by selection in the other tabs such as:

• CAPEX & other Investments
• Pricing (but not differentials)
• Expenses and Production Taxes

Note that "Caps" can be set to override escalation via maximums in the Pricing and Expenses tabs.

Escalation is either be set to increment by % per year or $ per year ($ Escalations are always simple by period though). The Escalation Frequency can change either Monthly or Yearly increments. The Compound Method can be either Compound or Simple(Linear).

Example: assuming a % escalation, the four following models could be created at +10% APY of a $1000 per month expense for 3-years:

• Monthly Simple: $100 is added every year but is applied monthly as $100/12=$8.33 added each month
• Monthly Compound: Each month increases by multiplying the previous by 10%/12 and adding the previous month total.
• Yearly Simple: Every 12th month increases $100 (12-mo @ $1000, 12 @ $1100, 12 @ $1200)
• Yearly Compound: Every 12th month increases 10% over preceding month (like 12-mo @ $1000, 12 @ $1100, 12 @ $1210)

Users can also define a reference date for their escalations so that the escalation will impact all time-series steps based on that reference date, via the Calculation Method dropdown. Calculation Method was added to give greater control over time-series lines in all tabs. A dropdown with the following:

Also, be aware that any selection made here of "Adjust All From Date" will override the same type of start control given explicitly in the CAPEX model Escalation Start. Selection of "Adjust Active Series" will leave full control on the CAPEX Escalation Start Option in the CAPEX tab.

• Adjust Active Series (default and historically, the only method) - this only escalates a time-series line (like $2000 fixed expense for 1-year, then $3000 thereafter) while it is being actively used (in service for the rolling calculated month being investigated in econ). Therefore, the $3000 fixed expense would come in at $3000 even if your escalation scheme started many years before that date. This method would be good for a model of "I know what I want until the end, then escalate the last value thereafter".
• Adjust All from Date - new feature to start ALL escalation lines from a specified date. So each time-series would be pre-escalated if the date here as well as the scheme started before the line came into service.
• FPD - Same as Date below but auto-adjust the start date to be equal to the FPD returned from the hierarchy in the dates tab.
• As of - Same as Date below but auto-adjust the start date to be equal to the As of selection in the dates tab.
• Date - Allows entry of a date on a pop-in row of "Adjust Start Date". This method would be good for a model of "I know what my expenses are today but if a well starts in many years, I want those escalated to account for inflation".

Use of the "Adjust..." date set to FPD and "Month Period" here might be a good way to model "I want the expenses to stay the same but start escalating when the well starts".

More complex models are possible to schedule via the plus icon but one scheme (monthly/yearly & simple/compound & %/$) is allowed per model

Note that positive escalation increases (inflates) numbers over time and negative escalation decreases (deflates) numbers over time. Whether this increases or decreases depends on where it is applied: positive escalation increases NPV for pricing but decreases NPV for expenses for example.