Petroleum Projects Economics & Risk Analysis

Why Attend

When executing a petroleum-related project, such as a field development, you should be able to choose the best alternative from an economic point of view. You should be able to properly evaluate various investment opportunities by determining economic indicators and sensitivity analysis. Techniques for predicting profit, production, costs, and cash flow enable the analyst to evaluate decision alternatives for optimum results. Understanding economic indicators, risk, and uncertainty, different economic indicators enhance the quality and the value of economic analysis. The Petroleum Projects Economics & Risk Analysis training course provides practical guidance in the application of the techniques of the economic analysis currently used in the oil & gas industry.

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Course Objectives

  • Attendance to the Petroleum Projects Economics & Risk Analysis training course will enable delegates to:
  • • Understand the importance of project economics used in the oil & gas industry
  • • Carry out cash flow calculations and determine economic indicators
  • • Understand different fiscal regimes applied in the international oil & gas operations
  • • Carry out different economic analyses for petroleum-related projects
  • • Evaluate the economics of incremental projects
  • • Evaluate the economic outcome of accelerating production
  • • Evaluate the economic outcome of delaying oil & gas development projects
  • • Evaluate and quantify risks and uncertainties
  • • Make the right investment decision in the presence of risk including farming out.
  • • Carry out a comprehensive economic evaluation study for any petroleum-related project including risk analysis and sensitivity study using spreadsheet
  • • Get a general feel for conducting economic evaluation on field development projects and risk analysis

Target Audience

The Petroleum Projects Economics & Risk Analysis training course is designed for:
• Petroleum/Reservoir Engineers who want to determine the profitability of producing new discoveries
• Engineers, geologists, economists, accountants, technicians who need to learn how to conduct economic evaluation and to understand the role of petroleum economics in investment decision making
• Supervisors & managers in the Planning, Exploration, Production, Projects, Financing and Projects Departments in Oil & Gas Companies who are involved in making field development decisions.

Module 1 --Cash Flow Analysis

  • Description:

On Day One the course will cover how to develop future cash flow from basic data.

  • KeyTopics:
    • Familiarization with Economic terms
    • Feasibility Studies
    • Setting up Cash Flow Calculation
    • Petroleum Fiscal Regimes
    • Depreciation of Capital Costs
    • Depreciation Methods
    • Loss Carry Forwards
    • Inflation
    • Nominal & Real Cash Flow
    • Sunk Costs
    • Project Financing

Module 2- Economic Indicators

  • Description:

On Day Two the course will cover how to calculate a number of key indicators from the stream of net cash flow.

  • KeyTopics:
    • Economic Indicators Definitions
    • Time Value of Capital
    • Present/Future Value Concept
    • Discounted Net Cash Flow
    • Net Present Value
    • Internal Rate of Return
    • Effect of Accelerating Production
    • Effect of Project Delay
    • Payback Period
    • Profit/Investment Ratio
    • Capital Productivity Index
    • Evaluating Incremental Projects
    • Project Ranking based on Economic Indicators

Module 3 -Risks and Uncertainties

  • Description:

On Day Three the course will cover how to deal with project risk & uncertainty and how to make the right investment decision.

  • KeyTopics:
    • Risk & Uncertainty
    • Expected Value Concept
    • Decision Tree Analysis
    • Farm-out Decision
    • Probability Analysis
    • Sensitivity Analysis
    • Spider and Tornado Diagrams
    • Probability Distribution
    • Monte Carlo Simulation

Module 4 - Developing Economic Model

  • Description:

On Day Four each delegate will develop a Spreadsheet economic model that calculates future cash flow streams.

  • KeyTopics:
    • Introduction to Spreadsheet Calculation
    • Simple Cash Flow Using Excel

Module 5 - Setting up Oil Field Development Model

  • Description:

On Day Five each delegate will develop a Spreadsheet economic model that calculates economic indicators including sensitivity analysis.

  • KeyTopics:
    • Setting up an Integrated Economic Model of a Typical Oil Field Development Project including Sensitivity Analysis

This course has not been scheduled, however you can request for In-House training