Upstream Economics and Management

EAM-EN-P

Who should attend?

  • This training aims to provide participants with a clear view of the contractual and economic framework of Exploration & Production in order to apprehend the tools for decision making financial management and auditing.
Public :
  • Managers from the upstream sector who require a global picture of all the economic, financial and contractual aspects of exploration and production activities.

Level :Knowledge

Prerequisite :
  • No prerequisites are necessary to follow this course.

Course Content

    MODULE 1: UPSTREAM PROJECT ECONOMICS (5 days)
  • UPSTREAM ECONOMIC ENVIRONMENT

      • 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 & FISCAL ENVIRONMENT

      • 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

      • 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.
      • Case studies: development of an oil field (under concession and production sharing agreements).
  • IMPACT OF FINANCING ON PROJECT ECONOMICS

      • 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: development of an oil field under concession with specific financing.
  • RISK ANALYSIS OF E&P PROJECTS

      • 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.
      • Impact of “ringfencing” and the state participation in the decision-making process.
      • Case studies: valuation of a decision to acquire information (seismic or drilling) and pricing of an exploration block.
    MODULE 2: UPSTREAM ACCOUNTING & FINANCE (5 days)
  • FINANCIAL MANAGEMENT OBJECTIVES

      • Shareholder expectations.
      • The different aspects of financial management.
      • Reporting requirements.
  • GENERAL ACCOUNTING, THE FOUNDATION OF FINANCIAL MANAGEMENT

      • Accounting principles and standards.
      • Financial statements and consolidated accounts.
  • SPECIFICS OF UPSTREAM OIL ACCOUNTING

      • Mining rights, exploration, depreciation (UOP).
      • Impairment of assets, provision for decommissioning and site restoration.
  • ANALYSIS OF ORGANISATIONAL PERFORMANCE: FINANCIAL ANALYSIS

      • Financial analysis plan.
      • Analysis of margins, investments, Working Capital, financial structure and profitability.
  • DAY-TO-DAY FINANCIAL MANAGEMENT: COST ACCOUNTING

      • Objectives and methods. Cost allocation.
      • Management charts and variance analysis.

Learning Objectives

  • Upon completion of this course, participants working in the upstream sector will be able to:
  • Evaluate all aspects of taxation and the contracts used,
  • Build advanced economic models for the economic evaluation of projects,
  • Analyze the economic results and conduct sensitivity analysis,
  • Incorporate the geological risks and uncertainties in the economic evaluation of projects,
  • Analyze the main corporate financial statements (profit/loss and balance sheets) issued by oil companies.

Ways & Means

  • Case studies simulated on computers.
  • Development of an oil field (under concession and production sharing agreements).
  • Acceleration of a production project with or without EOR.
  • 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 block.
  • 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 (Northwestern Europe, North Africa, West Africa, Middle East, Asia-Pacific, etc.).

Learning assessment

  • Participants will be evaluated during the training through quizzes and case studies.

More

Coordinator :IFP Training instructors, with expertise in the field and trained in modern teaching methods adapted to the specific needs of learners from the professional world.

To French entities : IFP Training is referenced to DataDock ; you may contact your OPCO about potential funding. Please contact our disabled persons referent to check the accessibility of this training program : referent.handicap@ifptraining.com