OVERVIEW
Just like navigating the unpredictable tides of the oil and gas industry, petroleum project economics and risk decision analysis is all about making informed choices that safeguard success in every stage. Are you evaluating a new project, assessing risks, or determining your return on investment? Whatever the case is, this course has all the knowledge and tools you need for tackling the complexities of the petroleum industry’s financial landscape. Get ready to explore key financial concepts, the time value of money, cash-flow management, and decision-making techniques designed to make you a strategic, data-driven professional in petroleum project management.
You’ll Learn How To:
Master the principles of economic evaluation, cash-flow forecasting, and cost estimation.
• Understand key financial concepts like the time value of money, interest rates, and inflation, and apply them to real-world petroleum projects.
• Use advanced decision-making tools, including Net Present Value (NPV), Internal Rate of Return (IRR), and sensitivity analysis.
• Effectively manage capital and operating expenditures, while exploring project financing and cost management techniques.
• With the Petroleum Project Economics, Risk & Decision Analysis course, you won’t be digging through sand to find your knowledge well, you have it right at the palm of your hand.
OBJECTIVES
After finishing the Petroleum Project Economics, Risk & Decision Analysis course, here’s what you’ll be able to do:
• Learn how to assess petroleum project economics using tools like NPV, IRR, and profitability indices.
Gain a deep understanding of financial concepts, including inflation, interest, and the time value of money.
• Master the use of cash-flow management and cost estimation tools to make sound investment decisions.
• Understand how to analyze risk, apply decision trees, and perform sensitivity analysis in project evaluation.
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• Navigate international petroleum agreements and understand their impact on financial decisions.
IDEAL PARTICIPANTS
This Petroleum Project Economics, Risk & Decision Analysis course is perfect for anyone looking to enhance their skills in petroleum project economics and risk decision-making, including:
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Petroleum Engineers: Looking to understand the financial and risk aspects of their projects.
Project Managers: Seeking to make informed decisions that improve project success.
• Financial Analysts in Oil & Gas: Wanting to refine their economic evaluation skills and apply them to real-world projects.
• Energy Economists: Interested in understanding the intricacies of cost estimation and investment analysis.
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• Investment Analysts: Looking to enhance their ability to evaluate petroleum projects with a focus on profitability.
OUTLINE
DAY 1
We begin by laying the foundation of petroleum project economics: Understand why economic evaluation is essential in the oil and gas industry.
• Explore typical objectives and activities of oil and gas companies.
• Learn the basic process of economic evaluation and how capital expenditure plans influence decision-making.
• Inflation:
• Define inflation and understand its different types, including consumer price index.
• Get an introduction to risk factors in economic evaluations through a simple illustration.
• Interest:
• Master simple and compound interest formulas.
• Differentiate between nominal and effective interest rates to understand their impact on decision-making.
• The Time Value of Money:
• Learn the principles of equivalence and how it applies to project financing.
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• Work with Excel’s financial functions for loan amortization and equivalence, and understand how interest tables affect financial analysis.
DAY 2
The second day delves into cash-flow analysis and expenditure management: Before-Tax (BTAX) Cash-Flow:
• Define cash-flow, gross revenue, and learn how to forecast product streams.
• Understand the dependence of capital expenditure on product flow and costs.
• Capital Expenditure (CAPEX):
• Discover the importance of economies of scale in CAPEX during production.
• Explore the breakdown of operating expenditure (OPEX) and its role in financial evaluations.
• Cost Estimation:
• Learn cost estimation techniques, including project cost management tools and various cost levels.
• Understand the importance of cost estimates and their criticality for project success.
• After-Tax (ATAX) Cash-Flow:
• Study additional variables in ATAX cash-flow, including depreciation methods and their impact on profitability.
• Weighted Average Cost of Capital (WACC):
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• Learn the Capital Asset Pricing Model (CAPM) and how to calculate WACC using equity and debt cost models.
DAY 3
The third day covers advanced profitability analysis and decision-making techniques: Cash-Flow and WACC Relationship:
• Learn the relationship between cash-flow and WACC through key profitability indicators.
• Work with discounted and undiscounted cumulative net cash-flow and calculate NPV and IRR.
• Netback Value & Indexed Pricing:
• Study netback value (NBV) and understand how base year approaches and ROR affect pricing.
• Delve into LRMC (Long-Run Marginal Cost) and its implications for pricing strategies.
• Funds Flow and Discounting Frequency:
• Understand the role of funds flow in project evaluation and the impact of discounting frequency on NPV.
• International Petroleum Agreements:
• Explore the need for collaboration in international agreements and understand typical contract terms.
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• Learn how fiscal systems and joint venture contracts affect project economics.
DAY 4
Day four explores investment decisions and probability in project evaluation: Investment Selection Decision-Making:
• Learn to evaluate different types of investment decisions, including revenue and service-producing investments.
• Understand the challenges with IRR and how to rank non-mutually exclusive projects.
• Basic Probability Concepts:
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• Master the basics of probability, including discrete and continuous probability distributions.
DAY 5
The final day focuses on advanced decision analysis techniques: Expected Value Concepts:
• Learn how to use expected value and sensitivity analysis in financial decision-making.
• Explore decision trees and their use in solving complex project scenarios.
• Simulation in Decision Analysis:
• Understand the role of simulation in decision-making and how to apply random observations from probability distributions.
• Management Presentation:
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• Learn how to present your project analysis to management, using sensitivity diagrams, waterfall charts, and profitability regions to communicate your findings effectively.
Will I receive course materials?
Yes, high-quality documentation is provided to all delegates.
Do you issue certificates?
An accredited Certificate of Completion is awarded upon successful completion.
What are the course timings?
09:00–12:45 or 13:00–17:00.
How do I register and pay?
Complete the registration form on the course page and select your preferred payment method.
What is your cancellation policy?
14 days from booking for a full refund or free transfer; exceptions apply on medical grounds.
Do you offer airport transfers?
Yes, airport pick-up and drop-off to/from the hotel can be arranged.
CONSULTING SERVICES
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