Description

ABOUT THE COURSE

Economic evaluation in the oil and gas industry is an encompassing activity. It involves the bringing together of the principal technical and commercial dimensions of a project into a forecast of future performance, that allows different projects to be compared and ranked according to economic and/or other criteria. At its heart, economics is an organizing and quantification exercise. Increasingly, its boundaries are expanding to include a quantification of risk. Risk analysis is a rapidly growing discipline that can take many different forms. It is best understood and applied one step at a time – for professionals and for organizations.

This course provides practical guidance in the application of the techniques of the economic analysis currently used in the oil & gas industry. It covers the techniques which assist in making investment decisions. It also covers cash flow analysis, economic indicators, risk and uncertainty

Course Objectives:

At the end of the course, will be able to:  

• Introduce the fundamentals of economic evaluation and of risk analysis in the oil and gas industry.
•  Focus on basic, simple and pragmatic solutions.
• Understand fundamentals; learn to take a practical approach.
• Build understanding, apply concepts, use software tools, and increase sophistication one step at a time.
• Understand various economic terms used in the oil & gas industry 
• Understand different economic models 
•  Carry out cash flow analysis and determine economic indicators
•  Carry out different economic analyses for petroleum related projects.
•  Put economics and risk into perspective
•  Understand alternative approaches – advantages and disadvantages.
•  Evaluate and quantify risk and uncertainty 
•  Make the right decision in the presence of risk 
• Carry out a comprehensive economic evaluation study for any petroleum related project including risk analysis and sensitivity study using spreadsheet.
• Use real life examples and situations.

TARGET PARTICIPANTS

• Engineers; senior supervisors; managers; strategic planners and project leaders; accountants and analysts; related industry personnel involved in project economics; and anyone seeking a comprehensive understanding of the economics of the oil and gas industry.
• This course is beneficial to anyone who needs to learn how to conduct economic evaluation and to understand the role of petroleum economics in investment decision making.
• This course takes a building block approach to understanding what economic and risk analysis is about. It is designed to become as sophisticated as its participants are comfortable. It will initially be a refresher course for those who are economics professionals and provide a framework for those who are not. We will advance our understanding as a group – learning from real examples and from each other – and we will take a hands-on approach at every opportunity. This is a course for anyone who has an interest in this field.

 COURSE CONTENT

Day 1: Introductions-Cash Flow Analysis

• Familiarization with Economic terms 
• Feasibility Studies 
• Setting up Cash Flow Calculation 
• Depreciation
• Depreciation Methods 
• Loss Carry Forwards
• Inflation 
•  Nominal & Real Cash Flow   

Day 2: Economics

• What is economics, where does it fit in an oil & gas company, who are the economists, when do they become activated, why is their work important?
• Exploration versus development versus acquisitions & divestitures.
• The many faces of the economist – economist as expert, organizer, innovator, motivator, communicator.
• The many facets of economics – quantify, optimize, compare and combine projects.
• Beyond economics – financing, financial impact.

Day 3: The Economic Model

• The framework for economic analysis.
• It’s about cash – cash flow versus income, integrated financial statements, value creation.
• It’s about the future – point forward versus full-cycle evaluations.
• The fundamentals of cash flow projection – revenues and costs. 

Day 4: Economic Indicators

• Economic Indicators Definitions 
•  Pr