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Economics & Risk Analysis of Upstream Projects

5 days EAM/ERA
  • Engineers, economists and project managers who need to extend their understanding of the specific methods used to evaluate Exploration-Production projects
  • 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
  • to analyze the economic results and carry out sensitivity analysis
  • to incorporate the geological risk and uncertainty in the economic evaluation of Exploration-production projects
  • to develop advanced computer models for the study of oil and gas development projects
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 and 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
2016 course calendar
Language Dates Location Tuition Register
Oct 03 - 07 Rueil €3,640 Online By email
Nov 28 - Dec 02 Rueil €3,640 Online