The Fundamentals of Upstream Petroleum Economics & Risk Analysis

Audience

The course is suitable for delegates of all technical and commercial disciplines from oil and gas companies, governments, banks, legal and accounting organizations.

Content

The primary aim of this course is to equip delegates with the necessary skills to:

• Understand the theory of petroleum economics based on discounted cashflow
• Calculate with confidence the key economic metrics used in investment decision making
• Appreciate the geological and engineering inputs to the cashflow model
• Understand oil and gas pricing
• Understand the principles and appreciate the diversity of worldwide fiscal systems
• Build Excel-based economic models in both a Tax/Royalty and Production Sharing Contract fiscal system
• Interpret the economic results and quantify the risks so as to put values to prospects, fields and companies
• The fundamentals of discounted cashflow including real vs nominal economics and the derivation of a company’s hurdle discount rate
• The calculation and application of economic metrics NPV, EMV, IRR, Payback and DPIR for investment decision making
• The components of an oil or gas cash flow; revenue, tariffs, costs and pricing
• Global international fiscal systems: structure, comparisons, fiscal take
• Government and oil company perspectives and the role of the National Oil Company
• The financial structure and mechanisms of production sharing contracts including the calculation of cost recovery and profit oil splits
• Production Sharing Contract and Tax/Royalty model building workshop sessions.
• Incremental, project consolidation and ringfencing analysis
• Quantification of risk; both deterministic and probabilistic techniques including decision trees and Monte Carlo analysis
• Workshop session applying risk and a decision tree to make a drill or drop decision on an exploration prospect
• Delegates are provided with electronic copies of all model solutions and exercises at the end of the course

Duration

5-day

Number of Participants

Maximum 20

Prerequisites

Excel™: working knowledge

Software Used

None

Course Format

Classroom delivery with presentations, practical exercises and modelling workshop

Audience

The course is suitable for delegates of all technical and commercial disciplines from oil and gas companies, governments, banks, legal and accounting organizations.

Content

The primary aim of this course is to equip delegates with the necessary skills to:
- Understand the theory of petroleum economics based on discounted cashflow
- Calculate with confidence the key economic metrics used in investment decision making
- Appreciate the geological and engineering inputs to the cashflow model
- Understand oil and gas pricing
- Understand the principles and appreciate the diversity of worldwide fiscal systems
- Build Excel-based economic models in both a Tax/Royalty and Production Sharing Contract fiscal system
-Interpret the economic results and quantify the risks so as to put values to prospects, fields and companies
- The fundamentals of discounted cashflow including real vs nominal economics and the derivation of a company's hurdle discount rate
- The calculation and application of economic metrics NPV, EMV, IRR, Payback and DPIR for investment decision making
- The components of an oil or gas cash flow; revenue, tariffs, costs and pricing
- Global international fiscal systems: structure, comparisons, fiscal take
- Government and oil company perspectives and the role of the National Oil Company
- The financial structure and mechanisms of production sharing contracts including the calculation of cost recovery and profit oil splits
- Production Sharing Contract and Tax/Royalty model building workshop sessions.
- Incremental, project consolidation and ringfencing analysis
- Quantification of risk; both deterministic and probabilistic techniques including decision trees and Monte Carlo analysis
- Workshop session applying risk and a decision tree to make a drill or drop decision on an exploration prospect
- Delegates are provided with electronic copies of all model solutions and exercises at the end of the course

Learning Objectives

Duration

5-day

Number of Participants

Max 20

Prerequisites

Excel: working knowledge

Software Used

None

Course Format

Classroom delivery with presentations, practical exercises and modelling workshop

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Our proprietary courses are fully customizable and can be offered at a time and location convenient to you. Please request a course for more information.