4 days GIP/IPS
- Managers and staff concerned with decisions affecting medium and long term cash flows, such as investment, disinvestment, acquisitions or leasing, who need to improve their understanding of the theory and practice of investment analysis.
- This course provides a better understanding of the concepts behind the theory of capital budgeting, thus helps improving the analysis in investment profitability studies.
- A number of computer case studies will be treated all along the course to apply the principles that are presented succinctly, which makes this course a very practical one.
- Upon completion of the course, participants will be able to:
- develop advanced computer models for the economic evaluation of Oil & Gas projects,
- incorporate specific financing plan through equity profitability analysis,
- analyze the economic results and carry out sensitivity analysis,
- incorporate the risk and uncertainty in the economic evaluation of Oil & Gas projects.
- Participants need to be comfortable with the use of Microsoft Excel.
Ways and means
- Case studies simulated on computers.
Financial environment 0.5 day
- Value creation and management.
- Basic principles of corporate finance and accounting.
- Projects and sources of financing.
- Risks and cost of financing.
Economic evaluation criteria 0.5 day
- Corporate finance, capital costs and discount rate of the company.
- Construction of project cash flows schedule.
- Economic criteria for project evaluation: net present value (NPV), internal rate of return (IRR), payback period, etc.
- Case studies: development of an oil field under concession.
Global profitability analysis 1 day
- Methodology for assessing the global profitability of capital invested.
- Impact of taxation and inflation in profitability investment studies.
- Choosing an investment program with a limited budget, Scarcity cost of capital.
- Case studies: accelerating production project (EOR) project of upgrading a refinery (Hydrocracking unit).
Economic cost analysis 0.5 day
- Accounting cost vs economic cost, after-tax cash outflows.
- Total discounted cost, annual economic cost.
- Economic depreciation, Unit economic cost, optimal economic lifetime.
- Cases studies: issues related to purchasing of equipment and definition of an optimal economic lifetime.
Equity profitability analysis 0.5 day
- Financing Oil & Gas projects, project finance and B.O.T. structures.
- Various financing plans and debt repayment.
- Analysis of equity cash flows, return on equity capital, financial leverage.
- Case studies: construction of LNG plant and gas pipeline projects with specific financing.
Risk analysis 1 day
- 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.
- Oil field development project.
- Acceleration of production project with or without EOR (Enhanced Oil Recovery).
- Isomerization vs alkylation project.
- FCC project (Fluid Catalytic Cracking).
- Project of upgrading a refinery.
- Hydrocracking unit project.
- Polypropylene Plant Project.
- LNG plant project with specific financing.
- Gas pipeline project with specific financing.
- Service station modernization project.
- Gas-fired power plant project.
- Valuation of a decision to acquire information (seismic or drilling).
- Pricing of an exploration bloc.