In this research, we develop a model to estimate the value of a declining oilfield under stochastic oil prices and nonconstant interest rates. Using the Schwartz-Smith model, oil prices are decomposed into two stochastic elements, the long-term dynamics which follow the arithmetic Brownian motion, and the short-term variation which follows the Ornstein-Uhlenbeck process that reverts to zero. The term structure of interest rates is represented using cubic spline interpolation. Considering the option to abandon before lease expiration, the contingent claim valuation method is employed to determine the oilfield value. Monte Carlo simulation is used to obtain the solution to the multistage valuation problem. Using the fixed sample size procedure, the simulation came up with the probability distribution of oilfield value, with a mean of US$13,341,969 and a 95% conditional value-at-risk of US$9,393,704. The mean of the remaining economic life of the field is 10.4 years.