Petroleum Project Economics & Risk Analysis
Project Management, Contracts Management & Law
Course
Description
INTRODUCTION
Exploration
and Production companies often must evaluate their potential E&P investment
using proper present value analysis of expected future cashflows. From the
projected cashflows and required investments, the annual rate of return and
other project economic indicators can be extracted to evaluate the significance
of company investment.
This
Petroleum Project 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. When executing a
petroleum related project, one should be able to choose the best alternative
from economic point of view as well as to properly evaluate various investment
opportunities by determining economic indicators and sensitivity analysis.
Techniques for predicting profit, production, costs, and cashflow enable the
analyst to evaluate decision alternatives for optimum results. Understanding
economic indicators, risk and uncertainty, different economic structures such
as tax regimes and production sharing contracts, enhances the quality and the
value of economic analysis.
Objectives
The primary
objectives of this training course are to:
Understand
various economic terms used in the Oil & Gas industry
Understand
how to develop economic models of various petroleum fiscal regimes
Carry out
cashflow analysis, different economic analyses for petroleum related project
and determine economic indicators
Evaluate and
quantify risks and uncertainties
Make the
right investment 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
Contribute
to the petroleum project investment within a solid economic system and do a
detailed economic evaluation
Contribute
to the decision-making process for any petroleum related project
The benefit
of this course
Participants
learn about the application of economic valuation and risk assessment processes
and techniques within the global Oil & Gas industry
Help the
participants to identify and analyse the risk involved in a petroleum related
project
Help the
participants to apply the decision-making procedures to justify the petroleum
projects in term of profitability
Help the
participants to recognize the uses of options in the ranking criteria to select
and execute the high profitable project
Learn to
construct a project cashflow model
Gain the
techniques in project ranking and screening
Gain the
operational decision-making techniques under risk
Course
Outline
DAY 1
Cashflow
Analysis
Familiarization
with Economic terms
Setting up
Cashflow Calculation
Depreciation
Methods
Loss Carry
Forwards
Inflation
Nominal
& Real Cashflow
Sunk Costs
Project
Financing
DAY 2
Economic
Indicators
Economic
Indicators Definitions
Present
Value Concept
Discount
Factor
Net Present
Value
Internal
Rate of Return
Effect of
Project Delay
Payback
Period
Profit /
Investment Ratio
Incremental
Projects
DAY 3
Risk &
Uncertainty
Expected
Value Concept
Decision
Tree Analysis
Farm-out
Decision
Probability
Analysis
Sensitivity
Analysis
Probability
Distribution
DAY 4
Setting up
Spreadsheet Calculation
Introduction
to Spreadsheet Calculation
Simple
Cashflow using Excel
NPV
Calculations
Application
of Economic Indicators
Class
Discussion
DAY 5
Setting up
Oil Field Development Model
Setting up
an Integrated Economic Model of a Typical Oil Field Development
Project
Sensitivity Analysis for the Selected Model
Introduction
to Russell Field Model
Final
Remarks