Course Details

This 3-day workshop will provide a comprehensive understanding on the nature of costs and cost drivers in the E&P industry providing in-depth understanding on the budgeting process, proactive management, effective control and optimization of costs together with focused and relevant performance reporting.

What You Will Learn        

• Understanding the nature of costs and cost drivers in the E&P industry through the Field Life Cycle
• Purpose of the Budget. Planning and Budgeting models. The Strategic and Medium-term plan
• Using budgets to make effective decisions. Prepare and understand costs in planning, budgeting & forecasting processes e.g. fixed / variable, capex / opex and routine / non-routine
• Cost Accounting. Importance of timely cost capture and accurate recording e.g. VOWD / accruals, consistency of coding and clarity on accountability
• Strategic solutions in delivering cost optimization – “do more for less”
• Management of costs in PSC and JV environments. Avoiding cost leakage and ensuring audit preparedness
• Cost Control Framework - budgets, AFEs, progress reports and variance analysis. Understanding key components and ensuring seamless interaction
• Cost Performance Reporting - use of KPI’s, variance analysis and trend analysis. Tracking and monitoring cost optimization initiatives and targets

Training Method

The course uses a combination of instruction, group discussions, practical examples and exercises to ensure attendees absorb both the theory and the practical application of the topics.

 

 

Overview of E&P Industry Cost

• Features of E&P industry and nature of costs
• Costs and cost drivers through the Field Life Cycle
• The cost curve and relationship to the oil market
• Significance of management and reporting of costs in the context of the Oil & Gas Industry

The Planning and Budgeting process

• Company vision and strategy.  Long-term and Medium-term planning
• Work Programmes and Budget.  Purpose of a Budget and various Budget models
• The role of Corporate Departments and Geographical Business Units in the budgeting and forecasting process

Cost Planning, Budgets and Forecasting

• Preparing budgets & forecasts in a volatile oil & gas industry
• Capture and understanding of costs in the planning and budget processes
• Preparation of Capex (facilities / wells), Opex and G&A budgets
• Understanding the importance of classifying cost: fixed / variable; routine / non routine; core / discretionary activities
• Use budgets to make effective decisions
• The importance of Forecasting – the “how & why” and the need to proactively capture different outcomes
• Budgeting and Forecasting as a non-operator in a JV

Cost Capture & Accountability

• Importance of principles & processes in accurate and timely capture of costs
• Cost Accounting models. Understanding cost structures, accountability and coding principles
• Principles on what and when to capture e.g. VOWD and Accruals
• Capturing costs e.g. completion of full well costs and allocation of costs

Strategic Solutions to Cost Management

• Understanding “doing more for less”principle on cost optimization
• Getting behind cost drivers and understanding requisite actions
• Understanding how different costs impact profit - break even analysis
• Benchmarking and how it can drive improvements
• Managing working capital and cash flow

Cost Control and Management in a PSC & JOA Environment

• Overview on principles of cost recovery in a PSC environment
• Importance of adhering to key processes to avoid cost leakage
• Understanding principles of a JOA and Accounting procedures
• Importance of preparedness for Cost Audits and key areas of contention

Cost Control Framework

• Overview of a Cost Control Framework
• Mechanisms for controlling costs: well costs and features of an AFE
• Project costs reporting – key elements of progress reports
• Cost control reports – approved, invoiced, committed and incurred cost
• Controlling costs (fixed and variable) against budgets and forecasts

Cost Performance Reporting

• Reporting of Capex and Opex costs highlighting key drivers
• Variance analysis providing root cause analysis and early warning
• Performance review reporting on cost initiatives and optimization targets
• Overview of KPIs and performance reporting

• Finance staff with accounting and financial management responsibilities
• Those responsible for devising budgets, managing and controlling budgets
• Professionals engaged in planning, budgeting and management reporting
• Finance & Audit staff engaged on cost and financial controls
• Business unit managers and personnel whose responsibilities include cost management, controlling budgets and performance reporting

"It was well organised, proper sequencing of the topic as a result finished on time. Matilde is so engaging and sharing real examples like myself who has been in the oil and gas industry for quite a long time could really relate. I will bring home new ways and strategy for planning & budgeting. "Russel Tomas, Prime Energy

"The training met and exceeded my expectations especially regarding cost estimation and contractual activities with vendors. "Emmanuel Williams, TotalEnergies

"Very informative, good for learning about cost control. As new to this area/ have increased my knowledge by attending."Nicola Howie, Dana Petroleum

"Very enjoyable course, lots of information gone through in the 3 days but a very enjoyable pace and not information overload"Claire Yeoman, CNR International