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    Petroleum Economics Online

    This eLearning course presents the concepts of petroleum economics and risk analysis. Topics covered include cash-flow basics, revenue, expenditure, fiscal systems, risk analysis and investment analysis.

    Cash Flow Basics

    In the Cash Flow Basics module you will cover the following topics:

    • Calculating cash flow
    • Identifying the components necessary to compute cash flow
    • Possible methods to determine production volume
    • Price and price variances
    • Defining royalties
    • Common operating expenses
    • Identifying tangible and intangible capital investments


    In the Revenue module you will cover the following topics:

    • Factors involved in calculating the revenue portion of net cash flow
    • Calculating oil and gas reserves
    • Offset well information used in determining reserves
    • Volumetric Equation Analysis
    • The use of decline curves for forecasting production and revenue
    • Projecting a production schedule for a reservoir and predicting the economic limits of profitable production
    • How the physical properties and market price of oil determine its value


    In the Expenditure module you will cover the following topics:

    • Factors involved in calculating the expenditure portion of net cash flow projections
    • How responsibilities for expenditures are assigned
    • Accounting for capital expenditures
    • Common costs associated with start-up and operating oil and gas fields
    • Taxes that must be paid by oil and gas producers

    Fiscal Systems

    In the Fiscal Systems module you will cover the following topics:

    • The concept of Mineral Ownership
    • The concept Economic Rent
    • Differentiating between Concessionary and Contractual Fiscal Systems
    • Differentiating between Service and Production Sharing Contracts
    • Differentiating between Regressive and Progressive Fiscal Systems
    • How fiscal systems can affect economic decision-making in the petroleum industry

    Risk Analysis

    In the Risk Analysis module you will cover the following topics:

    • The concepts of Risk, Uncertainty and Probability
    • Common sources of risk in the petroleum industry
    • Uncertainty associated with petroleum development
    • Assigning probabilities to possible outcomes
    • Accounting for risk and uncertainty in economic analysis

    Investment Analysis

    In the Investment Analysis module you will cover the following topics:

    • The concept of Time Value of Money
    • Calculating Present Values from estimated future cash flows
    • Identifying economic indicators typically involved in investment analysis
    • The concept of Opportunity Cost
    • How these factors can influence economic decision-making

    Petroleum Economics Challenge

    Engineering technicians, production and drilling personnel, new hires and supervisors with no prior economics experience.

    Module 1 discusses cash flow basics, including revenue and expenditures.  Before tax and after tax cash flow are then calculated. 

    Module 2 presents revenue, including production volume, scheduling and decline.  Product prices, net profitability and economic limits are presented. 

    Module 3 discusses expenditures, including capital and operating expenses.  The usual taxes that must be paid by oil and gas producers are described.

    Module 4 presents an overview of fiscal systems, including the different types of contracts. 

    Module 5 discusses incorporating risk and uncertainty into economic evaluations. 

    Module 6 presents investment analysis, including the time value of money, economic indicators and opportunity costs. 

    Module 7 is the economics challenge, including the simulated board meeting and project selection. 

    There are no prerequisites for this course.


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