4 days EAM/PCM
- Managers and executives involved in Exploration-Production activities who need to acquire a deep understanding of fiscal modeling for project evaluation.
- To provide a practical understanding of the economic modeling of Oil & Gas field development project as well as exploration projects.
- 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:
- explain the critical aspects of taxation and upstream contracts,
- build advanced economic models for the economic evaluation of Exploration-Production projects,
- analyze the economic results and carry out sensitivity analysis,
- incorporate the geological risk and uncertainty in the economic evaluation of E&P projects.
- Participants need to be comfortable with the use of Microsoft Excel.
Ways and means
- Case studies simulated on computers.
CONTRACTUAL & FISCAL FRAMEWORK OF EXPLORATION-PRODUCTION 0.5 day
- Overview of E&P activities, exploration, development and production costs.
- General principles of oil taxation.
- Concession contracts, production sharing contracts and service contracts.
- Principles of rent sharing between States and oil companies.
- Case studies: examples of contracts.
OIL CONTRACT MODELING 2.5 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).
- Equity profitability analysis.
- Case studies: LNG project and gas pipeline project with specific financing.
RISK ANALYSIS OF EXPLORATION-PRODUCTION PROJECTS 1 day
- Introduction to risk analysis and risk discount rate: sensitivity analysis, Spider and Tornado diagrams.
- Probability of success, methodology of decision tree analysis.
- Analysis of economic risk in exploration.
- Typical problems with uncertainties:
- Impact of ringfencing and State participation on the exploration decision process.
- Farm in/farm out, cost and value of information.
- Portfolio management for E&P projects.
- Development of an oil field (under concession and production sharing agreements).
- Acceleration of production project with or without EOR (Enhanced Oil Recovery).
- LNG plant project with specific financing.
- 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.