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Economics & Risk Analysis of Upstream Projects

5 days EAM/ERA
Level
Proficiency
Audience
  • Engineers, economists and project managers who need to extend their understanding of the specific methods used to evaluate Exploration-Production projects.
Purpose
  • To provide participants with an in-depth understanding of the tools used in economic analysis and decision making tools within the upstream industry.
Learning Objectives
  • Upon completion of the course, participants will be able to:
  • carry out investment profitability studies including all aspects of complex fiscal terms, inflation, and financing,
  • analyze the economic results and carry out sensitivity analysis,
  • incorporate the geological risk and uncertainty in the economic evaluation of Exploration & Production projects,
  • develop advanced computer models for the study of Oil & Gas development projects.
Prerequisite
  • Participants need to be comfortable with the use of Microsoft excel.
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).
  • Impact of “ringfencing” and the state participation in the decision-making process.
  • Valuation of a decision to acquire information (seismic or drilling).
  • Pricing of an exploration bloc.

ECONOMIC & CONTRACTUAL FRAMEWORK OF E&P 0.5 day
  • Various phases of Exploration-Production.
  • Technical cost, evolution of the economic environment.
  • Petroleum Exploration and Production contracts.
  • Concessions, production sharing contracts, service contracts.
  • Sharing of the economic rent, economic flexibility in petroleum contracts.
  • Economic clauses.
INVESTMENT PROFITABILITY STUDIES 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.
  • Impact of “ringfencing” and the state participation in the decision-making process.
RISK ANALYSIS OF E&P PROJECTS 1.5 days
  • Probability of success, analysis of economic risk in oil exploration.
  • Evaluation of exploration projects and decision trees.
  • Farm in/Farm out.
  • Risked and unrisked economics.
  • Case study: economic study of an oil project including Min, Mode and Max scenarios.
  • Evaluation of development projects.
  • Economic risk associated with a marginal development.
  • Decision trees and subjective probabilities, decision theory.
PORTFOLIO MANAGEMENT 1 day
  • Components and determinants of asset valuation at various stages of maturity: exploration and appraisal, development, production.
  • Review of methodologies and processes, probabilistic analysis.
  • Asset aggregation and portfolio optimization, tools of choice for comparing expected results and budget efficiencies.
  • Conclusions, what works and what doesn't.
  • Contribution of risk analysis and management to successful exploration.
2017 course calendar
Language Dates Location Tuition Register
Oct 02 - 06 Rueil €3,700 Online
Dec 04 - 08 Rueil €3,700 Online