• Class and Course

    Petroleum Economics with Software

    This course is designed for learning the basics of petroleum economics and project selection. Several key concepts that will be covered are the time value of money, cash flow basics, common economic indicators, fiscal systems and project selection fundamentals.  An introduction to basic risk analysis will also be presented.

    The participants will receive an overview of petroleum economics, including an introduction to basic cash flow and net present value.  The main types and elements of fiscal regimes around the world will be presented.  During this course participants will evaluate and make recommendations on potential oil and gas investments.

    This course mainly uses Excel but can be taught with Merak Peep and Decision Tool Kit.

    Day 1

    Project Economics

    • Methods of evaluation
    • Project lifecycle and who is involved
    • Common types of oil and gas upstream projects
    • Forecasting production, prices and expenses

    Participants will learn why project economics are necessary and the methods for economic evaluation.  They will also learn about the project lifecycle and who is involved.  During the course, common types of oil and gas upstream projects will be presented.  The concepts and methods of forecasting production, prices and operating expenses will also be reviewed.

    Day 2

    Cash Flow and Economic Indicators

    • Defining revenue and operating expenses
    • Capital expenditures
    • Discounting and present value
    • Economic indicators

    On this day the cash flow stream will be constructed in detail, including company revenue, operating, and capital expenditures.  In addition, the concepts of discounting and net present value will be presented and practiced.  Multiple economic indicators will be discussed, including DPI, IRR, hurdle rate, WACC and more.

    Day 3

    Fiscal Regimes

    • The main types and elements of fiscal regimes
    • Cash flows for concessionary systems and production sharing contracts
    • Service agreements
    • Current trends in fiscal systems

    Participants will be introduced to the main types and elements of fiscal regimes around the world.  They will also learn to build cash flows for concessionary systems and simple production sharing contracts.  The different types of service agreements will be reviewed, and then investments under different fiscal regimes will be compared.

    Day 4

    Project Investment Analysis

    • Defining risk, sensitivity analysis, and calculating EMV and ENPV
    • Incremental investment analysis
    • Multiple project investment analysis including project ranking
    • The capital budgeting and project selection process

    During this day participants will discuss and incorporate risk and sensitivity analysis in order to calculate EMV and ENPV.  The purpose of incremental investment analysis will be presented.  They will also review a general capital budgeting and the project selection process.  Participants will then evaluate and make recommendations about potential oil and gas investments.

    Anyone requiring a fundamental knowledge of Petroleum Economics and oil and gas project recommendations.

    Intermediate knowledge of Excel.

    Currently there are no scheduled classes for this course.

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