An Introduction to Upstream Petroleum Economics & Risk Analysis

4 days 3-6 Apr 2017, Dubai UAE £3,795.00 Download brochure Add to basket
4 days 5-8 Dec 2017, London UK £3,995.00 + VAT* Download brochure Add to basket

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Overview

We are currently in the midst of one of the deepest downturns in the upstream industry in recent years. Challenging times are ahead for those looking to invest capital and grow their companies in this environment.


Petroleum Economics is all about the allocation of scarce resources….investment capital is certainly that scarce resource at the moment. In this environment, have you been asking the following questions in your organisation?

  • Which are my most profitable upstream assets?
  • Which regions of the world offer the best returns?
  • Which are the most fiscally attractive parts of the world?
  • How can we compare upstream projects to ensure capital is optimally utilised?
  • What is the breakeven oil price and minimum economic threshold?
  • If we could negotiate a 20% cost cut from our suppliers how does that impact the overall economics of the project?


This course will provide a through insight into the world of upstream petroleum economics and risk analysis to address these questions and many more.

By attending this highly interactive and practical course you will:

  • Understand the theory of upstream 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 and forecasting
  • Appreciate the diversity of fiscal systems worldwide
  • Build Excel-based economic models in both tax/royalty and production sharing contract fiscal systems
  • Interpret the economic results and quantify the risks so as to put values to prospects, fields and companies
  • Select the optimum projects and development options for you company

Course overview:
This practical training course will enable delegates from all technical and commercial disciplines to understand the theories and methods used to value oil and gas projects. The four-days will reveal the fundamental aspects of upstream petroleum economics and risk analysis. Through computer-based exercises, participants will construct economic models, incorporating relevant cash flow data for case study projects and scenarios.
Delegates will be provided with electronic copies of all workshop solutions and examples, and a comprehensive hard copy course manual
No prior knowledge of petroleum economics or the upstream industry is required. Delegates should ideally have some knowledge of Microsoft Excel ™ and bring a laptop loaded with Microsoft Office™ to the course.

Instructors

We work with a series of expert instructors, please select the course location of interest to review the credentials of who will be delivering the programme.

Dubai
Tim James

Tim has extensive oil and gas industry knowledge having worked in various economic, finance and commercial roles over nearly 20 years.

Tim, a qualified Chartered Management Accountant, is currently Principal Economist in Robertson’s Petroleum and Reservoir Engineering Group based in Wallingford, Oxfordshire, UK. He has experience of fiscal jurisdictions and the commercial environment globally having undertaken numerous economic assignments ranging from the evaluation of farm in opportunities, licence round fiscal bidding advice and Competent Persons Reporting through to full corporate acquisition valuations.

He is an experienced economics trainer to the oil industry, national oil companies and governments running regular petroleum economics, fiscal and risk courses globally.

Prior to joining Robertson, Tim worked for Premier Oil in both their Pakistan and UK offices for nine years. A variety of project, commercial, asset management and finance roles covered areas such as field valuation for development, acquisitions and disposals, building economic models in both Microsoft® Excel and Merak PEEP®, management of budgets, statutory financial reporting and crude sales and marketing. 

 

London
Tim James

Tim has extensive oil and gas industry knowledge having worked in various economic, finance and commercial roles over nearly 20 years.

Tim, a qualified Chartered Management Accountant, is currently Principal Economist in Robertson’s Petroleum and Reservoir Engineering Group based in Wallingford, Oxfordshire, UK. He has experience of fiscal jurisdictions and the commercial environment globally having undertaken numerous economic assignments ranging from the evaluation of farm in opportunities, licence round fiscal bidding advice and Competent Persons Reporting through to full corporate acquisition valuations.

He is an experienced economics trainer to the oil industry, national oil companies and governments running regular petroleum economics, fiscal and risk courses globally.

Prior to joining Robertson, Tim worked for Premier Oil in both their Pakistan and UK offices for nine years. A variety of project, commercial, asset management and finance roles covered areas such as field valuation for development, acquisitions and disposals, building economic models in both Microsoft® Excel and Merak PEEP®, management of budgets, statutory financial reporting and crude sales and marketing. 

 

Venue

Dubai

Dubai Hotel

This programme takes place on a non-residential basis at a central Dubai hotel. Non-residential course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.

Dubai has an incredible number of hotels. Courses held here are mainly held at the J.W. Marriot hotel, Sheraton Dubai Creek and Le Meridien all in central Dubai.
 
J.W. Marriott Hotel – Abu Baker Al Siddique Road, PO Box 16590, Dubai, U.A.E
Phone +971 4 607 7811; Fax +971 4 607 7011
www.marriott.com
 
At the JW Marriott Dubai you will enjoy luxury on your terms; impeccable service and elegant surroundings allow you to relax and focus on your own agenda. With 344 luxuriously appointed rooms and suites the J.W. Marriott provides an oasis of calm in a busy city while the award-winning restaurants have the recipe for satisfying a taste for international flavour.        
 
Sheraton Dubai Creek – Baniyas Street, PO Box 4250, Dubai, U.A.E
Phone +971 4 228 1111; Fax +971 4 221 3468
www.starwoodhotels.com
 
After undergoing a complete renovation, the Sheraton Dubai Creek Hotel& Towers reopened October 10th, 2002 with a fully refurbished interior and exterior. The 255 room hotel now offers more creek-view rooms, redesigned atrium lobby, outstanding food and beverage facilities, upgraded rooms with state-of-the-art data connectivity, and Dubai's newest conference facilities. 

Le Meridien – PO Box 10001, Airport Road, Dubai, U.A.E
Phone +971 4 282 4040; Fax +971 4 282 5540
www.lemeridien-dubai.com
 
Le Meridien Dubai is a five star deluxe hotel built on two floors and surrounded by 38 acres of landscaped gardens. The hotel is elegantly furnished with a french accent that incorporates the individual character and flair of the local culture. The hotel is minutes away from the commercial districts and shopping centres and a short distance from Dubai International Airport. Facilities include a choice of 15 restaurants and bars, 24-hour room and laundry service, two fully equipped business centres and a state-of-the-art Spa and fitness club.

 
 

London

Central London Hotel Venue

All courses are held at four or five star venues in Central London, Zone 1. We strive to provide you with a training environment of the highest quality, to ensure that the whole learning experience exceeds your expectations.

Your training venue will be confirmed by one of our course administrators approximately 3-4 weeks before the course start date.

Related Courses

Inhouse


 

Do you have five or more people interested in attending this course? Do you want to tailor it to meet your company's exact requirements? If you'd like to do either of these, we can bring this course to your company's office. You could even save up to 50% on the cost of sending delegates to a public course.

To find out more about running this course in-house:





Our Tailored Learning Offering

If you want to run this course at a location convenient to you or if you want a completely customised learning solution, we can help.

We produce learning solutions that are completely unique to your business. We'll guide you through the whole process, from the initial consultancy to evaluating the success of the full learning experience. Our learning specialists ensure you get the maximum return on your training investment.



We can offer any of our public courses delivered at your office or we can devise completely tailored solutions:


Read more about our offering or complete a call back request to speak to a learning specialist.

 

Agenda

Agendas are localised, please select your preferred location.

Day 1

Introduction

  • Objectives of undertaking an economic analysis
  • What makes the oil and gas industry different?

Discounted cashflow

  • The time value of money, compounding and discounting
  • Discount rate, discount factor and discount method
  • The cost of capital and the hurdle discount rate

Capital budgeting techniques

  • Undiscounted methods (PIR, payback, exposure)
  • Discounted methods (e.g. NPV, IRR, DPIR)
  • Valuing an asset, making development and investment decisions

Oil and gas asset net cashflow – project components

  • Reserves, production and sales profiles
  • Tariff income
  • Capital, operating, transportation and abandonment costs
  • Working interests, carried interests, ORR’s & NPI’s


Day 2

Oil and gas asset net cashflow – economic components

  • Inflation, cost escalation, real versus nominal cash flows
  • Oil and gas prices
  • Interest rates and exchange rates

Oil and gas asset net cashflow - taxation and government take ccomponents

  • Production sharing contracts
  • Royalty and taxation systems
  • Risk service and other systems
  • Calculating royalties, taxes, cost recovery and profit oil splits

Oil and gas asset net cashflow determination

  • Oil company (investor) net cash flow
  • State oil company net cash flow
  • Government net cash flow

Upstream economics workshop: the taxation case study

  • Introduction to the European gas field, taxation based case study
  • Establishing the economic model framework, structure and calculation flows
  • Understanding the taxation structure and algorithms
  • Determining the field, economic and fiscal data and building the input decks
  • Step by step construction and audit of the taxation model
  • Running the economic cases and evaluating the results
  • Summary and closing remarks


Day 3

Upstream economics workshop: The PSC case study

  • Introduction to the West African oil discovery, PSC based case study
  • Establishing the economic model framework, structure and calculation flows
  • Understanding the PSC fiscal structure and algorithms
  • Determining the field, economic and fiscal data and building the input decks
  • Step by step construction and audit of the PSC model
  • Running the economic cases and evaluating the results
  • Summary and closing remarks


Day 4

Advanced petroleum economic techniques

  • Aggregation and consolidation analysis
  • Ring-fences
  • Incremental analysis

Discrete economic ssolutions

  • Sensitivity analysis
  • Spider and tornado diagrams

Probabilistic economic solutions

  • Expected value and decision tree analysis
  • Farm-in and farm-out analysis
  • Exploration prospect portfolio management

Continuous economic solutions

  • Risk versus uncertainty
  • Distributions and central limit theory
  • Monte Carlo simulation

Exploration prospect valuation workshop

  • Calculation of the prospect minimum economic reserve
  • Establishment of the prospect commercial reserves distribution
  • Construction of the risk tree of all outcomes
  • Determination of the geological and commercial chance of success factors
  • Calculation of the success case expected value and the prospect EMV
  • Drill or no-drill decision?

Course summary and close

Day 1

Introduction

  • Objectives of undertaking an economic analysis
  • What makes the oil and gas industry different?

Discounted cashflow

  • The time value of money, compounding and discounting
  • Discount rate, discount factor and discount method
  • The cost of capital and the hurdle discount rate

Capital budgeting techniques

  • Undiscounted methods (PIR, payback, exposure)
  • Discounted methods (e.g. NPV, IRR, DPIR)
  • Valuing an asset, making development and investment decisions

Oil and gas asset net cashflow – project components

  • Reserves, production and sales profiles
  • Tariff income
  • Capital, operating, transportation and abandonment costs
  • Working interests, carried interests, ORR’s & NPI’s


Day 2

Oil and gas asset net cashflow – economic components

  • Inflation, cost escalation, real versus nominal cash flows
  • Oil and gas prices
  • Interest rates and exchange rates

Oil and gas asset net cashflow - taxation and government take ccomponents

  • Production sharing contracts
  • Royalty and taxation systems
  • Risk service and other systems
  • Calculating royalties, taxes, cost recovery and profit oil splits

Oil and gas asset net cashflow determination

  • Oil company (investor) net cash flow
  • State oil company net cash flow
  • Government net cash flow

Upstream economics workshop: the taxation case study

  • Introduction to the European gas field, taxation based case study
  • Establishing the economic model framework, structure and calculation flows
  • Understanding the taxation structure and algorithms
  • Determining the field, economic and fiscal data and building the input decks
  • Step by step construction and audit of the taxation model
  • Running the economic cases and evaluating the results
  • Summary and closing remarks


Day 3

Upstream economics workshop: The PSC case study

  • Introduction to the West African oil discovery, PSC based case study
  • Establishing the economic model framework, structure and calculation flows
  • Understanding the PSC fiscal structure and algorithms
  • Determining the field, economic and fiscal data and building the input decks
  • Step by step construction and audit of the PSC model
  • Running the economic cases and evaluating the results
  • Summary and closing remarks


Day 4

Advanced petroleum economic techniques

  • Aggregation and consolidation analysis
  • Ring-fences
  • Incremental analysis

Discrete economic ssolutions

  • Sensitivity analysis
  • Spider and tornado diagrams

Probabilistic economic solutions

  • Expected value and decision tree analysis
  • Farm-in and farm-out analysis
  • Exploration prospect portfolio management

Continuous economic solutions

  • Risk versus uncertainty
  • Distributions and central limit theory
  • Monte Carlo simulation

Exploration prospect valuation workshop

  • Calculation of the prospect minimum economic reserve
  • Establishment of the prospect commercial reserves distribution
  • Construction of the risk tree of all outcomes
  • Determination of the geological and commercial chance of success factors
  • Calculation of the success case expected value and the prospect EMV
  • Drill or no-drill decision?

Course summary and close

Why us


We have a combined experience of over 60 years providing learning solutions to the world’s major organisations and are privileged to have contributed to their success. We view our clients as partners and focus on understanding the needs of each organisation we work with to tailor learning solutions to specific requirements.

We are proud of our record of customer satisfaction. Here is why you should choose us to help you achieve your goals and accelerate your career:

  • Quality – our clients consistently rate our performance ‘excellent’ or ‘outstanding’. Our average overall score awarded to us by our clients is nine out of ten.
  • Track record – we have delivered training solutions for 95% of worlds’ top 100 banks and have trained over 250,000 professionals.
  • Knowledge – our 150 strong team of industry specialist trainers are world leading financial leaders and commentators, ensuring our knowledge base is second to none.
  • Reliability – if we promise it, we deliver it. We have delivered over 20,000 events both in person and online, using simultaneous translation to delegates from over 180 countries.
  • Recognition – we are accredited by the British Accreditation Council and the CPD Certification Service. In an independent review by Feefo we scored 96% on service and 95% on product