By the end of the programme, participants will be able to:
- Understand the core principles of petroleum economics and how they apply to the selection and evaluation of oil and gas projects.
- Apply cash flow techniques for conducting thorough economic evaluations of projects.
- Evaluate the economic viability of investments and assess their competitive advantage within the market.
- Utilize models to assess and manage risk and uncertainty in petroleum projects.
- Develop strategies for optimizing the financial performance of oil and gas projects throughout their lifecycle.
DAY 1
Cash Flow Components and Economic Indicators
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- Importance of petroleum economics in investment decisions
- Distinguishing cash flow from income and profit
- Sources of revenue, cost, and treatment of capital expenditures (capex)
- Depreciation methods, operating expenditures (opex), and time-value considerations
- Discounting, WACC, and inflation impact on cash flow analysis
- Economic indicators: NPV, IRR, MIRR, and project lifecycle costing
- Hurdle rates, discounted payback, breakeven analysis, and lifecycle costing
DAY 2
Midstream and Downstream Petroleum Economics
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- Oil and gas transportation economics: pipelines, LNG shipping, and storage
- Tariff calculations, LNG and UGS economics, and refinery margin analysis
- Gas-to-liquids (GTL) economics and gas-to-power (CCGT) analysis
- Retail fuel margins and the impact of convenience store revenues
- Petroleum product distribution logistics and refining economics
DAY 3
Managing and Mitigating Uncertainty and Risk
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- Definitions of risk and uncertainty and their impact on petroleum projects
- Evaluating upside opportunities and applying probabilities to quantify uncertainty
- Sub-surface, geopolitical, and environmental risks
- Holistic risk analysis and the quadruple bottom line approach
- Hedging strategies, valuation of derivatives, and financial risk management
DAY 4
Sensitivities, Simulations, and Decision Analysis
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- Deterministic vs. probabilistic methodologies, decision trees, and game theory
- Sensitivity analysis: spider diagrams, tornado charts, and Monte Carlo simulations
- Real options valuation and decision models to address uncertainty
- Valuing petroleum assets, portfolios, and companies
- M&A valuation, corporate valuation methods, and competitive bidding
