Fundamentals of Petroleum Economics course contentThe petroleum
industry is one of the most influential players in the world
economy. Given the large scale of capital investment required for
most petroleum projects, it is important that investment decisions
are based on a thorough analysis of variables and
uncertainties.This course provides a thorough, practical
introduction to the techniques used within the petroleum industry
to value projects, assets and companies.The material covered
commences with general discounted cash flow principles and
progresses through to the more sophisticated simulation and real
options approaches. It also addresses issues specific to the oil
and gas industry such as fiscal systems, risk analysis and
competitive bidding, providing you with the knowledge to answer
questions such as "How will it work?", "What is the cost?" and
"What is the return/profit?"
The petroleum industry is one of the most influential players in
the world economy. Given the large scale of capital investment
required for most petroleum projects, it is important that
investment decisions are based on a thorough analysis of variables
and uncertainties.This course provides a thorough, practical
introduction to the techniques used within the petroleum industry
to value projects, assets and companies.The material covered
commences with general discounted cash flow principles and
progresses through to the more sophisticated simulation and real
options approaches. It also addresses issues specific to the oil
and gas industry such as fiscal systems, risk analysis and
competitive bidding, providing you with the knowledge to answer
questions such as "How will it work?", "What is the cost?" and
"What is the return/profit?"During the course you will study:Cash
Flow Components and Economic Indicators Why petroleum economics is
required to make investment decisions Distinguishing cash flow from
income and profit Sources of revenue and cost Treatment of capital
expenditures (capex) Depreciation methods and their objectives
Operating expenditures (opex) and their fixed, variable and
marginal components Discounting and time-value considerations
Manipulating the present value and future value formula Inflation,
real and nominal (money-of-the-day) values Capital budgeting and
capital efficiency Weighted-average cost of capital (WACC) and
discount rates Factoring in historic (sunk) costs into cash flow
analyses Valuing incremental investments Economic indicators and
yardsticks used to rank asset values (NPV, IRR, MIRR etc.) Hurdle
and minimum acceptable rates of return Annual worth and annuity
calculations for lifecycle costing Discounted payback, financial
exposure and breakeven analysis Project lifecycles, optimum
economic life and multi-year cash flowsUpstream Petroleum Economics
How cash flows through upstream companies and assets Oil and gas
price forecasting Petroleum reserves categories and their valuation
Oil and gas production profiles and decline forecasts International
fiscal designs and systems Regressive and progressive royalties and
taxes Mineral interest and concession agreements Production sharing
contracts and agreements (PSCs and PSAs) Cost recovery mechanisms,
depreciation, depletion and amortisation (DD&A) Producer,
government and joint venture partner takes: shares of revenues and
costs Loss carry forwards, limitations upon them including ring
fences Farm-out, farm-in and joint venture relationships and terms
Working and carried interests: paying, revenue and earning
components Project finance and evaluation of equity and
debt-supported cash flows Leveraging projects with debt and
establishing debt repayment schedules Capital cost budgeting,
estimating and monitoring Achievement analysis and earned value in
project managementMidstream and Downstream Petroleum Economics Oil
and gas transportation options and their economics Pipeline and
facility tariffs: levelised, incremental and rolled-in options Rate
building methodologies to establish facility tariffs Liquefied
natural gas (LNG) shipping economics and netback calculations
Underground natural gas storage (UGS) economics Gross product worth
(GPW) of refined products and crack spreads Cost and revenue
components associated with refineries Gross, semi-variable, and net
refinery margins and net cash values Petroleum product distribution
logistics and economics Gas to liquids (GTL) economic issues Gas to
power: combined cycle gas turbine (CCGT) economics Retail fuel
margins Significance of non-fuel and convenience store revenues in
retail fuel site economicsManaging and Mitigating Uncertainty and
Risk Definitions of risk and uncertainty Seeking and valuing upside
opportunities Risk versus reward and risk capacity Applying
probabilities to quantify uncertainty Sub-surface risks impacting
the upstream sector The need to evaluate a wide spectrum of
above-ground risks Geopolitical risks and opportunities
Environmental, community, safety and security issues Holistic
approach to risk analysis Quadruple bottom line approach:
integrating financial, societal, safety and environmental benefits
Expected value concepts and calculating expected monetary values
(EMVs) Hedging strategies to mitigate market and price risks
Valuing derivatives (futures, swaps and options)Sensitivities,
Simulations and Decision Analysis Deterministic versus
probabilistic methodologies Establishing ranges and cases to test
base case assumptions Spider diagrams and tornado charts Decision
trees: static and dynamic models Decision models, game theory and
guidelines to provide flexibility Establishing probability
distributions to represent uncertainty Selecting and sampling
appropriate distribution types Representing distributions in
cumulative frequency terms Monte Carlo simulation techniques
Statistical analysis and interpretation of simulation results The
importance of graphics in presenting simulation results Real
options methodologies and valuations Perceptions of risk, overview
of utility theory and avoiding biasValuing Petroleum Assets,
Portfolios and Companies Asset valuation process: fair market
value, probability and risk Risk adjustments when valuing petroleum
reserve categories The portfolio approach to asset and corporate
management Portfolio characterisation, balance and diversification
Asset portfolio theory, efficient frontiers and feasible envelopes
Asset correlation dependency and risk Optimising portfolio
combinations and risked values DD&A calculations integrating
reserves, production and capital cost information Factors driving
petroleum merger, acquisition and divestment valuations Free cash
flow and business valuation methods Analyst and balance sheet
approaches to valuing listed companies Inputs and outputs required
for corporate valuation models Deferred considerations in
acquisition and divestment deals Effective valuation of debt, price
hedges and tax synergies in acquisitions and divestments
Competitive bidding: theory, practice, risks and pitfalls
Upstream Petroleum Economics Using ExcelDAY 1
Principles of Petroleum Economic Analysis
Overview Basic Principles for Economic Analysis Ingredients for
an Economic Evaluation - Objectives and recurring themes;
generating a cash flow forecast, time value of money, understanding
the analysis scope and purpose, project viability. Economic
Analysis Procedure How to start, what to consider, where to go to
get the appropriate information and estimates as inputs. Developing
a Cash Flow Prediction Investments (such as capital expenditures
and operating expenses), revenue (from selling production at a
price), timing issues. Time Value of Money Defining and
understanding the role of discount rate, investigate the effects of
varying discount rate. Economic Metrics Net present value (NPV),
internal rate of return, payout, profit to investment measures,
finding and development costs, and other appropriate metrics.
Fiscal Regime (Tax Royalty) Examples and Exercises Interspersed
Throughout the Day
DAY 2
Petroleum Economics Applications
Multiple Potential Investments Ranking projects, considerations
of constraints and business objectives, formulating fair-comparison
models. Multiple Potential Investments Portfolio considerations and
complexities. Probability of Success Geologic, mechanical,
commercial how to incorporate them in our models. Incorporating
Risk Factors Chance of success, qualitative risk, how risk affects
ranking projects, how risk affects portfolios. Correlation and
Dependency Recognizing dependency or correlation among ventures,
projects, or wells, and why we must consider this in our business
economics. Beyond Deterministic Economics An introduction to
stochastic (probabilistic) economics and the rational for applying
this methodology. Examples and Exercises Interspersed Throughout
the Day Final Comprehensive Exercise - Valuation Case Study
Fundamentals of Petroleum EconomicsProgramme overviewA practical
Energy Training course enabling delegates from all technical and
commercial disciplines to understand the theories and methods used
to value oil and gas prospects. The one week training will reveal
the fundamental aspects of upstream petroleum economics and risk
analysis.Benefits of Attending At the end of the programme,
participants will be able to: Study upstream petroleum economic
discounted cash flow evaluation methodologies Understand the
derivation, calculation & application of economic metrics Learn
the components of an oil/gas field cash flow Evaluate investment
opportunities in exploration, development & production
Construct production sharing contract, tax & royalty concession
models Learn about international fiscal systems Understand
uncertainty & risk in exploration & economic
evaluationProgramme outline Introduction: World oil and gas
industry Fundamentals of production and end-use characteristics The
evolution of the oil and gas industry The price of oil Future
issuesUpstream Petroleum Economics, Risk & Fiscal Analysis
Course OverviewGiven the volatility in oil prices today, the
economic evaluation of an upstream oil and gas investment is
essential. Business decisions involving asset acquisitions,
lease-buy assessments, exploration drilling options, oil and gas
field development, equipment purchases, and fiscal negotiations all
require detailed economic analysis.The course will cover cash flow
analysis, deriving and understanding economic indicators and
detailed probability and fiscal analysis. These are vital
components of the evaluation of investments in todays international
upstream oil and gas industry.This 3 day course is a practical
petroleum economics course that will provide participants with a
complete understanding of the use of the techniques of economic
analysis and risk analysis as currently practiced in the oil and
gas industry. Participants will receive a thorough understanding of
the context of economic analysis as well as practical instruction
and an appreciation of the analytical techniques used. Along the
course, participants will be engaged in exercises and examples to
reinforce their understanding of the concepts learned.Course
Objectives: GAIN a thorough understanding of oil & gas economic
evaluations IDENTIFY the main components and CONSTRUCT cash flow
projections for your upstream projects DETERMINE key elements and
determinants involved in making oil and gas investment decisions
UNDERSTAND and APPLY economic indicators to assess oil & gas
industry projects QUANTIFY and MANAGE uncertainty and risk faced in
upstream business decisions APPLY Monte Carlo Simulation and other
statistical methods in risk analysis to exploration and production
investments effectively UNDERSTAND, EVALUATE and MODEL both fiscal
and production sharing contract terms worldwideSpecially Designed
for: Geoscientists Reservoir Engineers Production Engineers
Petroleum Engineers Planning and Development Analysts/Executives
Commercial Analysts/Executive/Managers Business
Planners/Analysts/Executives/Managers Production Sharing
Executives/Managers Project Executives/Manager Petroleum Economists
General Managers Finance and Account Executive/ManagersCourse
OutlinesDAY 11. INTRODUCTIONAims and scopeContents Cash flow
analysis Economic indicators Economic Evaluation Examples Risk
analysis Fiscal system and PSC analysis Worldwide fiscal terms2.
CASH FLOW ANALYSISNet Cash FlowDiscussion of the main components
and relative importance of components of cash flow for oil and gas
investments (production, price, revenue, operating costs, capital
costs, abandonment costs and fiscal costs). Oil and gas price
forecasts and the treatment of price forecasts in net cash flow
analysis.[EXERCISE]: Delegates exercise in preparing a net cash
flow projection.Economic Life and ReservesHow net cash flow
projections are critical in determining economic life and reserves.
The effects of oil price, costs and fiscal terms on reserves
estimates.[EXERCISE]: Delegates exercise in determining economic
life and estimating reserves.Distinction between Cash Flow and
ProfitHow cash flow is distinguished from profit. The role of
depreciation. When we use cash flow and when we use profit.Cash
Flow and TaxHow tax is incorporated into cash flow projections. The
basic rules for calculating tax worldwide. The effect of tax on
field development decisions. Loss carry forward and the effect of
different petroleum tax regimes.[EXERCISE]: Delegates exercises in
calculating tax and demonstrating the effects of different tax
regimes.Cash Flow and Production Sharing Contracts (PSC)The basic
economic distinction between tax regimes and production sharing
contract regimes. How to make cash flow projections for production
sharing systems worldwide. Cost recovery and profit sharing
arrangements.[EXERCISE]: Delegates exercises in cash flow analysis
with different PSC terms.Sunk CostsThe treatment and mistreatment
of sunk costs in cash flow analyses and petroleum property
acquisitions. Discussions of the effects of sunk
costs.Incorporating Inflflation into Cash Flow Projections.How to
inflate the components of cash flows. The conventions and the
jargon.[EXERCISE]: Delegates exercise in generating cash flow
incorporating inflation.Real and Nominal Cash FlowsThe distinction
between real and nominal cash flows. Fiscal drag and the problems
associated with taking short cuts to derive real cash flows. Common
misunderstandings in the use of real cash flows.[EXERCISE]:
Delegates exercise in preparing real and nominal net cash
flows.DepreciationCoverage of the main depreciation methods used in
fiscal terms worldwide.[EXERCISE]: Delegates exercise in preparing
depreciation schedulesDAY 23. ECONOMIC INDICATORSIntroductionThe
need to measure net cash flow projections with single indicators.
The indicators used in the oil and gas industry.The importance of
time.Net Present Value (NPV)The time value of money. Compounding
and discounting. Using a discount factor table and measuring the
effect of time and discount rate. Discounting a cash flow
projection and calculating NPV. Understanding the meaning, uses and
features of NPV. Valuing petroleum properties using NPV.
Preliminary discussion of choosing discount rates[EXERCISE]:
Delegates exercises in calculating NPV and demonstrating its
features.Real and Nominal NPVsThe distinction between deflating and
discounting and between real and nominal discount rates and NPVs.
Dealing with the pitfalls of using real NPVs.[EXERCISE]: Delegates
exercises in calculating real and nominal NPVs.Internal Rate of
Return (IRR)The definition and application of IRR. Calculating the
IRR.[EXERCISE]: Delegates exercises in calculating IRR.Problems
with IRRMultiple IRRs when, how often and how they arise. How the
NPV and IRR measures can give conflicting results and how to
resolve this. The effect of project delays and the use of
IRR.[EXERCISE]: Delegates exercises in calculating multiple IRRs
and seeing how they arise and how to interpret
them.PaybackCalculation and use of payback and discounted payback
indicators. The use of discounted payback in petroleum fiscal
regimes. Problems with payback.How compound payback is used in some
fiscal regimes[EXERCISE]: Delegates exercises in calculating simple
and compound payback for tax.Capital Productivity Index
(CPI).Calculation and use of CPI. The use of CPI in oil companies
and petroleum fiscal regimes. Capital rationing. Problems with
CPI.[EXERCISE]: Delegates exercises in calculating CPIs and their
application in some PSCs4. EXAMPLE ECONOMIC EVALUATIONSAccelerated
production example.[EXERCISE]: Delegates exercise in incremental
economics and the effects of fiscal terms.Optimising field
development and determining reserves.[EXERCISE]: Delegates exercise
in optimising field development and assessing reserves.Lease-buy
decision example.[EXERCISE]: Delegates exercise in lease-buy
economics and the effects of fiscal terms.DAY 35. RISK
ANALYSISSensitivity AnalysisAnalysing the sensitivity of investment
decisions to variations in input parameters. Interpreting
sensitivity diagrams. The pitfalls in using sensitivity analyses
for oil industry investment decisions.[EXERCISE]: Delegates
exercise in preparing sensitivity analyses and using them for
investment decisions.Probability AnalysisDefining and using
probability distributions. Means, standard deviations, levels of
confidence. Industry standard reserves definitions and
classifications.[EXERCISE]: Delegates exercise in preparing
probability analysis.Using Probability in the oil and gas
industryMaking estimates under uncertainty in the petroleum
industry. Combining uncertain variables and issues with adding
reserves, adding costs and analysing economics.[EXERCISE]:
Delegates exercises in combining uncertain oil industry
variables.Monte Carlo SimulationThe mechanics of Monte Carlo
simulation. Choosing probability distributions. The pitfalls of
Monte Carlo simulation and how to avoid them. Reserves estimation
using Monte Carlo simulation. Investment decisions using Monte
Carlo simulation.[EXERCISE] : Delegates exercises in deriving and
using probability distributions of oil in place, NPV and reserves
using spreadsheet Monte Carlo simulation.Exploration decisionsThe
definition, meaning and examples economics for oil and gas
exploration drilling decisions. Expected value (EV) versus
probability of success lines. Using EV to compare drilling and
farmout decisions. The effects if fiscal terms and common problems
with using EV. Choosing probabilities of success. Valuing
properties using EV.[EXERCISE]: Delegates exercises in the
economics of drilling, farming out acreage and the effects of
fiscal terms.6. PRODUCTION SHARING CONTRACTS, FISCAL SYSTEMS AND
TERMS IN THE ASIA PACIFIC REGIONAnalysis of example PSCs and fiscal
terms in the Asia-Pacific region. Evaluating the severity of fiscal
terms. How the fiscal components work. How certain fiscal terms can
distort oil and gas project investment decisions. How to avoid
potential investment distortion in the design or negotiation of
fiscal terms. Examples for Indonesia, Malaysia, Thailand, Vietnam
and Australia.[EXERCISE]: Delegates exercises in showing the
structure and dynamics of example fiscal regimes in SE Asia.7.
WORLDWIDE FISCAL TERMSThe economic comparison of fiscal terms
across the world - severity and efficiency.8. SUMMARY AND
CONCLUSIONThe above is a guide to the topics covered during the
course and the approximate timing of the topic. The presenter
reserves the right to make modifications to these depending on the
delegates background and experience and the progress of the
course.
Course OverviewAdvanced upstream petroleum economics describes
the philosophy, process, and methods underlying upstream economic
evaluation of capital investments under different categories of
risk and uncertainty and risk attitudes of decision makers. The
short course facilitates a thorough understanding of all the
necessary concepts of capital investment evaluation, capital
budgeting, and investment decision criteria available and
techniques for making rational economic decisions in the oil and
gas industry under risk and uncertainty.Topics covered include
deterministic measures of profitability; applications of expected
value concept, decision tree and expected utility functions in
decision analysis; spreadsheet stochastic modeling tools and Monte
Carlo simulation process and applications in the oil and gas
industry.Key Course Content includes: Future Global E&P outlook
Overview of Measures of Profitability Exploration Risk Analysis
Methods Stochastic Modeling of Profitability Monte Carlo Simulation
ApplicationsSpecially design for: Petroleum Economists Petroleum
Engineers Planning Officers and Managers Business Analysts and
Managers Regulator Oil & Gas Financial Consultants Legislative
Staff Independent Operators
Advanced Upstream Petroleum Economics
Course OutlineDay 1 - Economic Decision Tools and Investment
CriteriaReview economic decision tools to evaluate projects,
understand what investment criteria really mean, and know which
criteria to use to make rational economic decisions on best
investment options; practice building spreadsheet cash flow
economic models to characterize the economic factors inherent in
different petroleum fiscal arrangements
Introduction/course expectationsFuture global E&P
outlookPetroleum economic evaluation fundamentals NCF concepts /
time value of money / DCF modelsPetroleum economic evaluation
fundamentals fiscal arrangements overview/ review economic
profitability measuresReview of expectations and feed backSyndicate
Exercise -- Build and analyze economic evaluation spreadsheet
models fifiscal systemsDay 2 - Understanding the Basic Language of
Risk and UncertaintyLearn to calculate and use descriptive
statistics in business decisions, know common probability
distributions and use them to express judgments about risks and
uncertainties; use built-in capabilities of a spreadsheet
application to generate descriptive statistics and solve various
problems associated with probability calculations and probability
distributions
ReviewBasic principles of probability and statisticsmeasures of
central tendency, measures of variabilityBasic principles of
probability and statisticstypes of distribution curves and
interpretations and applicationsReview of expectations and feed
backSyndicate Exercise -- Descriptive statistics and probability
analysis using Excel spreadsheet applicationsDay 3 - Risk and
Uncertainty Analysis Methods and ApplicationsReview approaches to
risk and uncertainty analysis and the advantages and disadvantages
of each method; apply these methods to manage risk and uncertainty;
apply add-in software package to quantify probabilistic treatment
of uncertainty in decision making in terms of expected value and to
solve decision analysis problems
ReviewExpected value approach and decision tree analysis
definitions, calculation, meaning & interpretationExpected
utility theoryincorporating risk attitude, utility function,
decision criteria and application for exploration economic
decisionsReview of expectations and feed backSyndicate Exercise --
Spreadsheet applications using excel add-in to solve decision
analysis problem examplesDay 4 - Monte Carlo Modeling Process and
Simulation AnalysisLearn simulation modeling for Monte Carlo
applications using spreadsheets. Understand how to use commercial
spreadsheet simulation add-ins to achieve simulation modeling
analysis of uncertainties and risks
ReviewRisk and uncertainty analysis using simulationoverview,
process, modeling & applicationsMonte Carlo simulation
spreadsheet modeling tools, analysis and interpretations of
simulation resultsReview of expectations and feed backSyndicate
Exercise -- Spreadsheet applications using excel add-in software
packages (Group Practicum)Day 5 - Monte Carlo Simulation
Applications in the Oil and Gas IndustryDevelop skill to understand
the process of using probabilistic spreadsheet models for Monte
Carlo simulation for risk and uncertainty analysis. Apply
spreadsheet simulation modeling tools to characterize business
decision parameters subject to risk exposure.
ReviewSpreadsheet probabilistic modeling and simulation analysis
of royalty and tax contract examplesSpreadsheet probabilistic
modeling and simulation analysis of contractual system
examples.Review of expectations and feed backSyndicate Exercise --
Risk and uncertainty analysis in the petroleum industry using excel
add-in (Group Practicum)
Fundamentals of Upstream Petroleum Economics and Risk Analysis
Who should attend:This is a practical course that will enable
delegates from all technical and commercial disciplines to become
familiar with the theories and methods used to value oil and gas
prospects, discoveries and fields in the international petroleum
industryOverview:The course covers the fundamental aspects of
upstream petroleum economics and risk analysis through a variety of
lectures and workshop exercises. The practical application of
theory via computer-based workshops allow participants to construct
economic models, incorporate relevant cash-flow data and draw
conclusions to aid decision-making.Content:This course will cover
the following: Develop knowledge of upstream petroleum economic
discounted cash flow evaluation methodologies Become familiar with
the derivation, calculation and application of economic metrics
such as NPV, EMV, IRR, Payback and PIR Learn about the components
of an oil or gas cash flow Evaluate investment opportunities in
exploration, development and production Incremental and project
consolidation analysis Lean about international fiscal systems
Understand government and oil company perspectives Understand the
financial structure and mechanisms of production sharing contracts
including the calculation of cost recovery and profit oil splits
Construct production sharing contract and tax & royalty
concession spreadsheet models Understand practices to quantify
uncertainty and risk in exploration, reserves, costs and economic
evaluation The application of risk in the evaluation of exploration
prospects
Introduction to Strategic Management in Exploration and
Production Who should attend:The course will be valuable for all
those in E&P who are interested and involved in strategic
decision making. These can be general- and functional managers and
planning managers, who need a good grasp of modern concepts of
strategic management in terms of: tools and techniques to be used.
developing plans to realize the aims and purposes of the
organization. developing strategies to adequately respond to the
forces in the outside world. contributing and participating
valuably in the strategic decision making process.Overview:Purpose
of strategic management is to ensure that an organisation knows
where it is going to, and how it is going to get there. This must
be based on a realistic understanding of the business environment
and how the organisation must change to be in shape for
tomorrow.Strategic management requires us to make sense of complex
and dynamic situations in the Upstream part of the Oil and Gas
business where the emphasis lies in getting access to increasing
volumes of HC's on a regional or global scale. It requires an
organisation which has the desire and the capability to adept and
therefore to change.Content: Introduction to strategy E&P
business environment Strategic analysis Visioning Strategic
Decisions Managing value in E&P Performance measurement
Balanced scorecard Roadmap to determine the strategiesDuring the
course the participants will be focusing on topics such as;
Strategic Analysis (i.e. to identify key questions to evaluate and
understand the industry and market around you), Visioning (i.e. to
understand the capabilities of your enterprise, creating a vision),
Decisions, Creative thinking, Managing Value, Performance
measurement (i.e. value drivers, key success factors and
performance indicators) and Balanced Scorecards. Appropriate case
studies and exercises will clarify the theory.Introduction to
Upstream EconomicsWho should attend:The course is designed to be at
an introductory level for those new to the subject of petroleum
economics. It is suitable for personnel from all technical and
commercial disciplines.Overview:This two-day course provides an
introduction to the theories and practices of upstream petroleum
economics. Delegates will learn how to value oil and gas fields on
a standalone basis using the discounted cash flow methodology.
Additionally delegates will see some more advanced economic and
risk analysis techniques in operation. International petroleum
fiscal terms are discussed to enable the delegates to apply the
valuation techniques globally.Content:This course will cover the
following: Develop knowledge of upstream petroleum economic
discounted cash flow evaluation methodologies Become familiar with
the derivation, calculation and application of economic metrics
such as NPV, EMV, IRR, Payback and PIR Learn about the components
of an oil or gas cash flow Evaluate investment opportunities in
exploration, development and production Incremental and project
consolidation analysis Learn about international fiscal systems
Understand government and oil company perspectives Understand the
financial structure and mechanisms of production sharing contracts
including the calculation of cost recovery and profit oil splits
Understand practices to quantify uncertainty and risk in
exploration, reserves, costs and economic evaluationPetroleum
Project Management Duration: 5 days Overview:This course will cover
the fundamentals of project management within the context of the
Petroleum Industry through a combination of presentations and
software-based project management exercises.The course will be
divided into two main parts: Project Definition: The specification
of the project. Project Implementation: The launch, management and
closure of the projectProject definitionThe project definition
comprises the following main components:The Project ProposalThe
project Proposal is the starting point for any project management
process. It is the document within which the background to the
project is outlined, the needs identified, the aims and objectives
specified, the methods and deliverables defined and the resource
requirements and timescales set.The WorkflowThe fundamental
framework of the project definition is the workflow, which
comprises a series of interlinked tasks, each of which must be
clearly defined. This project definition provides the project
baseline against which the success or failure of the project will
be measured. Task Descriptions: What is the task and why are we
doing it? Task Precedence - PERT Charts - defining the order of the
tasks.The TimelineOnce the project workflow model has been defined,
durations can be assigned and the timing of the project can be
modelled. Assigning Task Durations Modelling the timeline - GANNT
Charts Identifying the Critical Path (resource and deadline
critical) Optimising without compromisingResource AllocationOnce
the timeframe is set, the resources can be allocated. This is
typically a balancing act with only finite resources available and
deadlines pressing. E.g. Staff, Materials, Software Licences
Analysing resource allocations - resolving resource conflicts
Provision for on-the-job trainingUncertainties and RisksThe primary
purpose of the project management method is to foresee the
unforeseen and plan for it. The risks can be defined and the
impacts evaluated to understand the potential impact on the
critical path and the project deadlineProject ApprovalThe final
step prior to project implementation is the approval process
whereby the project owners and sponsors approve the plan and give
the go ahead for project launch.Project implementationThere are
four main elements to the project implementation cycle. These will
be covered in turn, as outlined below.Pre LaunchSeveral issue may
need to be covered pre-launch, for example, are their any training
needs for staff to prepare them for the upcoming projects? Other
possibilities will be discussed.Project LaunchThis section will
look at the key issues that should accompany the project launch,
for example: Team introductions Data requests Establishing
reporting proceduresProject ManagementThe project management
process entails continual updates to the project model. Various
real life scenarios will be considered and various methods for
managing changes considered.Project ClosureThe final delivery of
the project objectives should be followed by a project evaluation
session, which ensures that lessons are learned, both positive and
negative, and captured for future projects.Exercises and software
solutionsThe entire process of project definition through to
project closure will be followed using a software-based project
example, undertaken in teams. This will provide the maximum
opportunity to experiment with scenarios and evaluate sensitivities
to different project parameters.
Economic Aspects of Upstream Petroleum Taxation and Royalty
SystemsWho should attend:The course is designed for those working
in the upstream industry who are not familiar with taxation and
royalty systems and require either a working or practical knowledge
of the financial mechanics and economic aspects of the contracts.
Whilst it is suitable for delegates from all technical and
commercial disciplines, some background knowledge in upstream
economics would be an advantage.Overview:The mission of this two
day course is to provide an understanding of: How taxation and
royalty systems operate and their differences to production sharing
contracts The range and diversity of fiscal terms applied globally
in taxation and royalty systems How to model and calculate the
participant cash flows and economic metrics for a taxation and
royalty system How technical and commercial personnel can
contribute to better economic analysis and decision making in
countries operating with taxes and royaltiesContent:This course
will cover the following: An Introduction to Upstream Petroleum
Fiscal Systems Royalties Field and Profit Taxes Corporate Income
Taxes Capital Allowances Tax Ring Fences Sliding Scale Fiscal
Mechanisms Other Taxes, Burdens & Bonuses The Economics of
Taxation & Royalty Systems Taxation & Royalty Economics
WorkshopPetroleum Economics Integrated with Decision and
Uncertainty Analysis This unique course combines the fundamentals
of petroleum economics and fiscal modelling with deterministic and
probabilistic risk techniques. It draws on the strengths of two
consultancies, Fugro Robertson based in Wallingford, UK and
Decision Frameworks based in Houston, USA. These companies have
been training delegates worldwide for a combined 20+ years.The
primary aim of this course is to equip the 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, engineering and pricing inputs to the cashflow model
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 Discover
the benefits of tornados, decision trees and cumulative
probabilities plots Gain new insights and confidence from your use
of uncertainty data Identify key risks and uncertainties for your
projects Develop an appreciation for the value of information Make
better recommendations and improve the quality of your decision
makingThe course is unique in its field: delegates will gain
tangible skills to take back to their workplaces; economic model
building integrated with practical decision and uncertainty
analysis . This will be achieved over the five days with a mixture
of theory, question and answer, case studies and hand-on practical
workshop sessions.At the end of the course, delegates will be
provided with fully functioning economic models which, as well as
being useful valuation tools, will act as a memory jogger in future
economic analyses or commercial negotiations in which the delegates
are involved. In addition, delegates will be given 30-day
evaluation licenses to TreeTop and DTrio software so they can
continue to work their problems and prove utility of these concepts
within their workplace.The course is suitable for delegates of all
technical and commercial disciplines from oil and gas companies,
governments, banks, legal and accounting organisations.Petroleum
Systems ModellingThis module forms part of the Postgraduate Diploma
in Applied Petroleum Geoscience course that is jointly run by Fugro
Robertson and Royal Holloway, University of London. The module is
5-10 days in duration and can be taken along with 5 others over a 3
year period to count towards the validated programme.For further
information about the programme view the website:
[email protected] or telephone: +44 (0) 1492
581811.Aims:Petroleum systems modelling is a technique that allows
you to reconstruct the burial and temperature history of a
sedimentary basin through time and to understand source rock
maturation and subsequently hydrocarbon expulsion and migration.
Various factors influence the petroleum system and it is imperative
to understand their evolution through time. With this knowledge the
burial and thermal histories can be calculated and used to assess
generated and migrated hydrocarbons as well as migration pathways
and reservoir properties.Learning Outcomes:By the end of the course
students will have a thorough understanding of: The principles of
reservoir and basin modelling The factors that control petroleum
systems in basins Data required to construct models Fluid flow in
the subsurface Heat flow within basins The main approaches to
modelling and the differences between 1D, 2D and 3D modelsStudents
will also have the ability to: Construct burial and thermal
histories of basins Determine fluid migration pathways Determine
source rock maturity Carry out 1D modelling Construct 2D, 2D and 3D
models of basinsCourse Content: Modelling requirements Petroleum
system elements Conceptual model Calibration data Heat flow Source
rock definition and kinetics Fluid flow 1D modelling Model building
Burial history Heat flow history Temperature calibration
Development of source rock maturity Sensitivity analysis 2D &
3D modelling Model building Model calibration Hydrocarbon migration
2D modelling Drainage area analysis Closure size and identification
Fill and spill history
ENERGY TRADEFive core modules (30 hours each)International
Economics (For STF and SCTF students only)Explores the economic
relationships between nations; international trade relations and
benefits; the effects of barriers to trade and income distribution;
trade policy; and international monetary relations. The
significance of external influences on fiscal and monetary policy,
the balance of payments and the theory and evidence of exchange
rate determination all form part of this module, which also looks
at the response of the exchange rate to monetary and other shocks,
and examines the case for fixed exchange rates.Energy Economics
(For ETF students only)This module provides the fundamental
knowledge of energymarket economics, upon which the rest of the
degree is built. The aim is toprovide the studentwith an
energy-specific toolkit, which will allow him/herto understand the
broader economic concepts and issues in this sector, beforedealing
with thedetailed business and finance issues which are covered in
theother three energy-specific modules.
Topics covered include: hydrocarbon supply and demand;
microeconomicorganisation of oil, natural gas, coal and electricity
markets; renewableenergy;climate change and other energy policy
issues.Managerial AccountingIntroduces the principles of accounting
and finance in business and the main techniques in management
accounting, planning and control. Covers the interpretation and use
of annual reports and accounts, financial and ratio analysis, and
their use for managerial decision-making, and budgetary control
systems.Principles of FinanceAs a first course in finance,
addresses the key issues involved in valuing assets and liabilities
on the basis of their future earning power. Students are introduced
to the problems involved in specifying risky future earnings and
the appropriate rate at which to capitalise them. Payoff asymmetry
is examined, and options are valued with the help of both the
binomial and Black-Scholes models.Quantitative MethodsFollowing the
induction course, it covers descriptive and inferential statistics,
as well as regression analysis techniques. Develops skills that are
essential for other modules and the dissertation and is designed to
ensure relevance to everyday business problems.Shipping Economics*
(For STF students only)Focuses on the operational environment of
the bulk-shipping sector. Subsequently discusses extensively the
microeconomic structure of the four main markets (freight,
second-hand, shipbuilding and demolition) in dry bulk and tanker
shipping, together with the operational characteristics,
international regulations and policies which affect these highly
competitive, volatile, but nevertheless exciting industries.
Continues with an introduction to liner and container shipping
economics and concludes with a discussion of the principles of
modern supply chain logistics, of which bulk shipping forms an
integral part.Supply Chain Economics (For SCTF students only)Sets
the foundations for understanding the industry by outlining its
basic economic structure and organisation in a series of lectures.
Topics for discussion include the significance and role of
transportation in society; transport demand parameters; |the
regulatory framework and transport policies; transport geography
and physical location; and the issues raised by vehicle and
infrastructure provision. In the spirit of the international scope
of this course, examples will be drawn from several regions around
the world, with particular emphasis on Britain, Europe and
developing countries. Concludes with a series of lectures
introducing the concepts of logistics and supply chain
management.Oil & Energy Transportation & Logistics (For ETF
students only)This module will equip students with the tools
necessary to think skilfully and maturely, but also independently
on matters relating to the oil and energy transportation business
and industry. Students will develop an understanding of the
economic structure of the tanker shipping industry, LNG and LPG
shipping, and pipeline and land transportation networks. Students
will also develop an understanding of the industry's cost structure
and how prices are set and revenue is earned by tanker, LNG, LPG
and pipeline companies.*Sponsored by Thanassis and Marina
Martinos
Five core modules (30 hours each)Advanced Quantitative
MethodsBuilds on the knowledge acquired in Quantitative Methods in
Part one and focuses on skills required for advanced analysis in
areas such as risk management and forecasting.Corporate
FinanceBuilds on the subject matter learned in Principles of
Finance in Part one and focuses on the decisions undertaken by the
modern industrial corporation, with respect to such areas as
expansion, restructuring, capital formation and acquisitions.
Applying theoretical concepts to case studies, the student will
extend his or her ability to formalise, structure and analyse
capital expenditures and investments, including how they are
financed and how the risks thereby arising are managed. Topics
include mergers and acquisitions; restructuring; investment
banking; cost of capital; and the use of futures and options to
manage risk.Financial MarketsCovers the global economic and
financial environment within which business corporations operate.
Globalisation and integration of markets for debt, equity and risk
management have created new opportunities in the capital formation
process, but pose great difficulties in navigating successfully.
Where should capital be raised? How does one manage the risks from
certain currencies and certain sovereign regions? In the context of
the globalisation of capital markets, considers the structure,
functions and performance of financial markets on an international
basis and how they facilitate real economic activity; and the role
of institutions operating as global intermediaries within these
same markets.International Commodity Trade (for STF & SCTF
students only)Discusses the theory and practice behind the
development of modern patterns of trade, focusing on the world's
major bulk commodities, such as grains, petroleum, and ferrous and
non-ferrous ores. Considers in depth the distinctive microeconomic
characteristics of key commodities, such as storability,
perishability and seasonalities; pricing mechanisms and methods of
adjustment; the role of key producers and key markets in shaping
market conditions.Global Supply Chain Management (for SCTF students
only)Building on the knowledge gained in Supply Chain Economics,
this module studies the process of planning, implementing and
controlling the efficient, effective flow and storage of goods from
point of origin to point of consumption.Using, inter alia,
computer-based simulation exercises, discusses such topics as
supply chain management, inventory control, multimodal transport
management, global distribution, and quality and value in
logistics. Case studies are used throughout to illustrate the
planning of integrated transport systems, and also to strengthen an
appreciation of logistics as a strategic tool. Visits by industry
leaders illustrate best practice, affording the opportunity for
discussion of timely issues.Shipping Investment and Finance* (for
STF students only)The skills developed in both Principles of
Finance and Corporate Finance are applied to the shipping industry
while introducing several new and important concepts to develop the
ability and the analytical tools to make rational shipping
investment and finance decisions. Making extensive use of case
studies, areas covered include the fundamental principles of
shipping investment and finance; vessel investment and disposal
markets; investment feasibility studies; bank credit policy, bank
credit analysis and proposals; other sources of shipping finance
such as shipyards and capital markets; and risk management in
shipping.Oil & Energy Trading and Economics (for ETF students
only)This module prepares you for a career in the oil and energy
industries. It consists of a combination of the following key
aspects of the energy industry. Petroleum - Exploration, production
history and cost; Basic hydrocarbon chemistry; Refining economics;
Effect of product quality and the environmental issues. Energy -
Geopolitcal role of oil, gas and coal; Supply and trading patterns
and economics; Demand structure and inter relationship of the
energy markets; The role of finance, Price risk management and
controls.You will progress from an understanding of the exploration
and development of oilfields to the economic exploitation of the
energy markets through refining, gas distribution and power
generation, to marketing and trading and the role of finance
throughout the supply chain. The integration with the other aspects
of the course will lead to an understanding of short term trading,
project financing, shipping economics and the use of systems and
instruments to risk manage the process both in the short and long
term contextPower Markets (for ETF students only)This module covers
in some detail the power generation sector and supplements (and
expands) the material covered in the Oil & Energy Trading
module. The aim is to provide the student with a deeper
understanding of the power markets, from generation, to pricing and
all other pertinent issues. It also aims to put renewables in
context, as their output feeds directly into these markets and
supplements (or perhaps competes with) conventional
hydrocarbons.Topics covered include: power generation from
exhaustible and renewable sources; transmission, distribution,
metering; regulation, liberalisation and climate change issues;
market structures for electricity; pricing, risks and their
management.Five electives (18 hours each)OROne elective and a
Business Research ProjectElectivesYou may choose from a wide
variety of electives. For example: 6 Sigma for Managers Air
Transport Chartering Commodity Derivatives & Trading Container
and Intermodal Transport Dry Cargo Chartering E-commerce and IT
Empirical Finance Energy & Weather Derivatives Equity
Investment Management Finance in Emerging Markets Fixed Income
Analysis Forecasting Investment Markets Futures International
Banking Marine Insurance Mergers, Acquisitions and Divestments
Options Project Finance Retail Supply Chain Management Risk
Management Shipping Innovation* Shipping Law Shipping Risk
Management Supply Chain Finance Supply Chain Modelling*Module
sponsored by the American Bureau of Shipping (ABS)Research Methods
moduleThis compulsory module trains students to undertake
independent research either in the context of a single organisation
or by using third-party sources. It provides the necessary tools
and skills to initiate, research and write up a business project
and includes training in research methodology, availability of data
sources, project writing, time-management and presentation skills.
These skills will be invaluable to students in their future career
whether or not they choose to complete a project.
Introduction to Energy Trading and Hedging
Course OutlineI. The StageLet's set the stage by reviewing the
basics of energy trading markets, players, tools and techniques. Is
it a good business? We'll look at the history of energy trading,
starting with the pre-futures market days to today's world.
Significant differences; significant opportunities.
II. Energy Market StructureWe'll discuss the three main energy
sectors: oil, natural gas and electricity. As we try to understand
the risk and reward for trading in each sector, we'll look at and
discuss why each of these sectors is at different levels of
commoditization and the types of trading that occur in each area.
Which players dominate which sector and why? Which sector has the
most profitable trading opportunities? How does the international
market play into the three US sectors? Why should you select one
trading sector over the other?
III. Behavior of the Market and Participants Philosophy and
PsychologyBefore moving into other technical tools and techniques,
let's pause to get a better understanding of market behavior.
Following trends, contrarian theory, interpreting the news, waves,
fear and greed are just a few of the things that make traders
react. We'll discuss the philosophy and psychology of traders, and
point out some no-nonsense rules that should be a part of
everyone's trading repertoire to successfully compete in
fast-moving and highly volatile markets.
IV. Money ManagementWe all know the three most important things
about the real estate market are location, location, location. The
three most important things about trading are money management,
money management, and money management, topped with discipline. We
will end the first day with a litany of the rules and approaches
that work when trading any commodity in any market. The key to
successful trading is longevity. One needs to be in to win it.
V. A Few Approaches That Work for EnergyThis session will
continue where the previous session left off and discuss some of
the major techniques that work well for the various energy markets.
Some trading tools and techniques work better than others for the
various energy markets. We'll look at each one by one using real
energy examples showing successes and failures. We will explore the
various timeframes normally traded day trading, overnight trading,
and medium to long-term trading.
VI. Time to Create Some Trading SystemsIs it possible to improve
your results by combining indicators/techniques? The answer is
yesin a carefully and objectively designed and tested system.
Several excellent software programs exist on the market that allow
the user to develop and back-test any combination of classical
indicators and indicators currently used in the market, as well as
allowing users to develop their own market indicators. This session
will look at a few basic systems and discuss how they performed in
various energy trading situations.
VII. A Walk Down the Risk Management PathThe session will detail
the design of a typical risk management program covering the
corporate policies, procedures, board resolutions, FASB 133
requirements and checks and balances required that meet the most
diligent auditor's requirements. These steps are a pre-requisite to
understanding the various tools and techniques that are normally
employed to manage risk. We will also discuss the three big
questions of risk management: What is the company's risk profile?
What percentage of the business do we hedge? How far forward into
the future do we go? These questions are difficult, but not
impossible.
VlII. Understanding the Terminology, Tools and Techniques of
Energy HedgingThe journey will start with a historical overview of
the development and characteristics of all of the markets and tools
used for energy hedging the what, why, who and how. There are three
toolbags in the risk management arsenal: physical purchasing
methods, regulated futures markets, self-regulated over-the-counter
markets. This session sets the stage and presents a macro view of
all of the tools available to your risk manager.
IX. Identifying Energy Price/Margin RiskTo effectively manage
risk you have to identify and quantify the risk. Using typical
fictional companies that operate at each level of the
infrastructure, this session will identify and quantify their risk.
Each attendee will fall into one or more of the categories
providing them with the knowledge to now identify and quantify
their own risk. This is absolutely the first step in building an
effective and long lasting risk management strategy.
X. Self-Regulated Instruments OTC Derivatives Tool BagThis is
the third tool bag in the hedger's arsenal, and it is growing by
leaps and bounds. The individual instruments, size of the contracts
and electronic exchanges are making these customized instruments
very cost-effective tools for hedging. This session will discuss
hedging examples using various types of swaps, who the players are,
and how to get started.
XI. Keeping All Your Options OpenIf you originally thought
options were not a viable tool, you will be surprised to see how
functional and easy it is to incorporate them into your risk
management portfolio. There are only two types of options, and two
things you can do with each. There are four elements that go into
the cost of an option. This session will bring it all together and
provide effective option strategies using both options on futures
and OTC swaptions to hedge your price and margin risk.
XII. Let's Put It All TogetherUsing a techno fundamental model,
this session will describe a non-discretionary method to answer the
main risk management questions. How much do I hedge? How far
forward do I hedge? What instruments do I use? What techniques do I
use? In addition to presenting the workings of the model, this
session will also go over various hedging examples using the
results of the model.
Oil Industry Economics From Wellhead to Gas PumpUnderstand the
economic principles necessary to navigate the volatile waters of
the international and domestic oil complex.The oil industry is
complex and international, with economics driving every aspect and
every decision. This course delves into the detailed economics of
oil, from the moment the first drop of crude is extracted, to its
final consumption by end customers around the world. You will leave
this course able to understand the myriad normal everyday economic
decisions from both strategic and tactical perspectives, allowing
you to immediately bring larger context to your decision-making
skills as soon as you return to work. Here are some of the areas
given focus in the course. What you will learn in Oil Industry
Economics Exploration and producing economics The economics of
gathering and/or temporarily shutting in oil Economics of gathering
oil Economics of moving oil to the manufacturing sector from all
major methods: truck, rail, pipeline and ever-increasing waterborne
Economics of the new freight markets Basic refining economics of
various types of refiners and refineries.Refinery economic
optimization Economics of various crudes Netback analysis Cracks
and beyond Economics of various export refiners Economics of moving
refined products to spot markets by various methods: truck, rail,
pipeline, barges and ocean-going vessels Economics of moving
products to wholesale & retail levels How the economics relate
to various pricing methods at each level Economics of storing crude
oil Economics of storing refined products All about the economics
of crude oil arbitrage trading Macro economics of worldwide energy
complex Current geopolitical factors and internal determinants
impacting priceImmediate Benefits of Attending This CourseOil
Industry Economics is the fastest and most comprehensive path for
getting up to speed on the oil landsape. From manufacture and
distribution to market factors and retail use, our training is
guaranteed to deliver the industry knowledge you need quickly.
These following benefits are valuable as soon as you return to
work: Get a complete birds-eye view of the global oil market
Understand market and cost factors that impact oil price throughout
every step of its life cycle Get comfortable discussing trading and
hedging topics Learn to spot opportunities for profit that exist
throughout each phase of oil production and delivery Go back to
work with the competence and confidence to operate knowing you have
the most up-to-date knowledge available in the field Upstream Oil
and GasLearn the fundamentals of planning, developing and
optimizing the production of an oil or gas reservoir.This training
course leads attendees through thirteen sessions of material
covering exploration through appraisal, reserves recognition,
development and production to the sales transaction point. Key
terminologies and concepts are developed using numerous examples.
Attendees will learn fundamental petroleum geology and exploration
principles which provide the foundation for drilling, reservoir
development and production concepts. At each step we will consider
the differences between on and offshore activities and conventional
and unconventional resources.The course is taught in a format that
reveals the economics and risk management decisions that are
inherent in the industry. Actual examples from the oil and gas
industry are used to illustrate decision processes. A high-level
view of the technologies employed by the industry gives even the
non-technical attendee a feel for the business. Ample time is
provided for Q&A and interaction with the instructor with
30-plus years of industry experience.What You Will LearnLearn
about: crude oil and natural gas formation; petroleum geology;
geoscience tools that image the subsurface and measure rock
properties; managing exploration risk and the economics of
exploration; how geologists and engineers estimate the size of the
discovery; why appraisal drilling and petrophysics saves investment
dollars; what proven, probable and possible mean to the oil and gas
professional; how the industry develops a field for production;
what techniques are used to optimize recovery from the reservoir
over its lifetime; and finally what must be done to oil and gas
before it leaves the surface facilities.Special focus on: The four
requirements for an oil and gas reservoir Land lease acquisition
and obligations of the operator Exploration program planning and
goals Geologic risk and how it is quantified Drilling and how a
well is planned Vertical vs. directional vs. horizontal drilling
choices The importance of appraisal work What are the key issues in
determining how a field is developed Definitions of proven,
probable and possible volumes Reservoir engineering to optimize the
recovery Special techniques to recovery more oil, i.e.,
waterflooding, miscible gas injection, polymer-surfactant injection
and thermal processes Where petroleum economics impacts the
discovery-appraisal-development-production stages The theory of
peak oil production why prices are going upwardFundamentals of
PetroleumLearn the entire petroleum process from crude production
to refinery in order to better understand its impact on cost and
eventual pricing at the pump.In this petroleum industry training
course, you will explore the entire petroleum complex, from crude
production to the refinery down to the pump. You'll understand the
complexities of one of the world's most exciting and dynamic
industries.
What You Will Learn:Crude Oil:Exploration to production, and the
refining process from basic distillation to complex
hydro-cracking.Pipeline Transports and U.S. Spot Markets: We'll
cover trading in the intermediary markets and the critical role
these components play in the downstream infrastructure.Wholesale
Markets and Exchanges:We'll highlight everything from proprietary
additives to the exchange agreements between oil suppliers used to
keep our nation supplied.The Retail Landscape:We'll examine the
players, trends, brand value, and margins -- all of the pricing
components that make up a street price in any given market.Special
focus on: The key elements of downstream oil supply, wholesale, and
retail Flow from the refinery to the street Refinery basics
Critical price benchmarks Basics of trading and risk management
Major U.S. energy policy Valuation of refined products Spot market;
Wholesale rack market, Retail landscape Deal strategy, structure,
traditional and non-tradition purchasing Key players Fundamental
pressure on price and supply Technical pressures on price Political
pressure on price Latest analytical tools, analysis, data and
software systems Terminology Pipeline transport and U.S. spot
markets in the intermediary markets and the critical role these
downstream components play in the infrastructure Wholesale markets
and exchanges, from proprietary additives to the exchange
agreements between oil suppliers used to keep our nation supplied
Retail landscape. Examine the players, trends, brand value,
margins, and pricing components that make up a street price in any
given market Branded vs. unbranded trends, plus the emerging role
of hyper-marketers New boutique and alternative fuel trends