This scenario based training programme will enable you to apply a structured approach to project justification, investment appraisal and decision making in the upstream petroleum business. At the end of this course you will be able to: apply economic and risk managment evaulation tools for the oil & gas project proposals identify and quantify key uncertainties during field development and full life cycle economics calculate the economic and financila viability of expenditure proposals projects under risk conditions develop a structured approach to measuring, managing and combating commerical risk assess the ranking of alternative projects prepare convincing project proposals in a way that will win management, partner and government approval improve project and business outcomes

This introductory to intermediate level workshop is aimed at those with little of no previous project investment appraisal experience. Recent attendees who have benefited from this training include:

• explorationists and petroleum/reservoir engineers
• refinery and petrochemical plant managers
• asset managers, project managers and facilities engineers
• information systems managers and project leaders
• management accountants, finance and contracts specialists
• government and advisory executives
• service/supplier companies staff

This course achieves its learning outcomes by using a PC with realistic economic and risk models. About 40% of the time is devoted to instruction and about 60% spent on practical exercises and case studies. You will need to bring with you to the course your own laptop PC with MS Excel pre-installed. Prior knowledge of spreadsheet techniques is assumed.

Basic concepts
• identifying project cash flows and sources of information

How to calculate the Accounting Rate of Return (ARR)

• project payback

• net present value (NPV)

• internal rate of retunr (IRR) and the cost of capital

• profitability index (PI)

• strengths & limitations of each method

Project ranking - how to choose the best alternative
• How to optimise expenditure

How to deal with inflation and with exchange rates

Taking account of taxation

Accounting measures vs economic measures
• understanding other financial criteria for decision making

• balancing short term vs long term business objectives

Economics, risk & decisions - decision points are risk points

• Decision points for oil fields and gas fields

• risk & probability definitions and concepts

• risk identification, measurement & management

• forecasting as risk management

• assumptions, sensitivities & risk premia

Exploration & appraisal decisions, uncertainty, risk and exposure Monte Carlo Simulation

Economic models & spreadsheet design

Development decisions
• work scope definition and options
• decommissioning economics & risks

• cost estimating and contingencies

• financing options

• construction contracts

Further development decisions & economic cut off

Preparing convincing project proposals

Post project appraisal

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