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Economic Framework of Exploration-Production

5 days EAM/EFEP
Level
Foundation
Audience
  • Engineers and commercial staff who need to extend their understanding of the economic and business aspects of the upstream sector
Purpose
  • To provide a complete overview of the mechanisms of upstream projects and improve the understanding of the economics of Exploration and Production
Learning Objectives
  • Upon completion of the course, participants will be able:
  • to explain the economic, technical and fiscal aspects of E&P activities
  • to evaluate the economic profitability of an E&P project
  • to analyze the main corporate financial statements (Profit/Loss and Balance Sheet) issued by oil companies
Ways and means
  • Case studies simulated on computers:
  • Development of an oil field (under concession and production sharing agreements)
  • Acceleration of production project with or without EOR (Enhanced Oil Recovery)
  • Valuation of a decision to acquire information (seismic or drilling)
  • Pricing of an exploration bloc
  • Analysis and construction of balance sheets, income statements and key financial statements of an oil & gas company
  • Examples of petroleum laws & fiscal regimes around the world (North West Europe, North Africa, West Africa, Middle East, Asia-Pacific, etc.)

Upstream economic environment 0.5 day
  • Economic development of the upstream sector
  • Various actors in Exploration-Production and their strategies. Oil markets and prices
  • Current exploration and production activities
  • Levels of investment
  • Examples of finding, development and production costs
Contractual and fiscal environment 0.5 day
  • General principles of oil tax systems
  • Legal framework: concessions agreements, production sharing contracts, service contracts
  • Impact of various contractual and technical parameters
  • Sharing of the economic rent between the State and Oil Companies. Economic flexibility
  • Legal aspects of joint ventures
  • Main legal provisions in a Joint Operating Agreement (JOA)
Economic evaluation of e&p projects 2 days
  • Cost of capital and discount rate, value creation
  • Economic criteria for project evaluation: net present value (NPV), internal rate of return (IRR), payback period, etc.
  • Global profitability analysis, the impact of taxation and inflation on economic indicators
  • Specific method to Exploration and Production: shadow interest
  • Case studies: development of an oil field (under concession and production sharing agreements)
  • Introduction to risk analysis and risk discount rate: sensitivity analysis, Spider and Tornado diagrams
  • Probability of success, economic risk analysis in oil exploration
  • Economic study of an exploration project using Min, Mode and Max scenarios
  • Case studies: valuation of a decision to acquire information (seismic or drilling) and pricing of an exploration bloc
Upstream accounting and finance 2 days
  • Financing of oil and gas projects. Basic aspects of accounting and financial analysis
  • Special mandatory reporting for oil companies
  • Accounting of exploration expenditures, full cost, successful efforts
  • Amortization and depreciation methods, special provisions (depletion allowance...), residual costs
  • Funds from operations, cash flows, financial equilibrium, working capital
  • Financial statement, return on capital employed, return on equity, financial leverage
  • Cost analysis and budgeting
  • Exploration costs, finding costs, development costs, replacement costs, production costs
  • Capital budgeting, authorizations for expenditure, planning and scheduling, budgeting exploration activities
  • Principles and methodology of cost control
  • Budget content and breakdown, selection of a cost control method
  • Standard costs, fixed and flexible budgets, analysis of variations
  • Budgets, principles of joint venture accounting, accounting procedures, cash calls, joint venture audit
2016 course calendar
Language Dates Location Tuition Register
Apr 11 - 15 Rueil €3,530 Online By email
Sep 19 - 23 Rueil €3,530 Online By email