Upstream Economics and Management Training Course

Course Introduction

The business of upstream oil & gas industry is a complex process that involves multidisciplinary participation. The process of upstream oil and gas costs several hundreds of millions of dollars to the companies. Because of the capital-intensive nature of upstream investments, every required process is challenged by its economic impact or benefits to the company and stakeholders. The techniques applied in upstream business and processes in their selection criteria are challenging and require considerations of economic environment.

This 10-day training course provides the delegates with insights related to the upstream oil & gas business including the assessment of risk and uncertainty and relevant accounting standards based on International Financial Reporting Standards (IFRS). The course will equip the delegates with necessary skills and knowledge of exploration and production projects and financing and investments. The delegates will learn modern techniques relevant when choosing the best alternative project from economic point of view and evaluating various investment opportunities.

This Oxford Management Centre training course will highlight:

Application techniques/approach of the economics analysis in the Oil & Gas industry
Petroleum related project evaluation methods
Assessment of the uncertainties and risk of the project
Preparation of Financial Statements consistent with IFRS
Relevant skills of evaluation and performance measurement
Efficient Planning, Controlling, and Recording of an audit assignment

Modules

This course is split in two modules:

Module 1: Petroleum Project Economics & Risk Analysis
Module 2: Upstream Petroleum Accounting

Each module is structured and can be taken as a stand-alone training course; however, delegates will maximise their benefits by taking Module 1 and 2 back-to-back as a 2-week training course.

Objectives

By the end of this training course, participants will be able to:

Understand various economic terms used in the Oil & Gas industry
Develop economic models of various petroleum fiscal regimes
Evaluating and quantifying risks and uncertainties
Carrying out a comprehensive economic evaluation for petroleum related project including risk and sensitivity analysis.
Contribute to the decision-making process for any petroleum related project
Understanding of the accounting and auditing standards, policies and practices used by Upstream Petroleum companies
Improve relevance and reliability of financial reports to better meet the needs of users
Review, evaluate, and use publicly available information for benchmarking the business performance

Training Methodology

This Upstream Economic and Management training course will be delivered using various proven learning and teaching techniques. The Training methodology includes the use of case studies, group work and interactive exercises and videos relevant to the training. The training is designed to ensure delegates leave with transferable skills as well as up-to-date knowledge of Upstream Economic and Management.

Organisational Impact

By sending delegates on this course, your organization will benefit by:

Participants will learn about the application/implementation of economic valuation and risk assessment processes in the global Oil & Gas industry
Identify and analyse the risk involved in a petroleum related project
Recognize the uses of options in the ranking criteria to select and execute the high profitable projects
Insights of the influencing parameters for oil and gas field developments
Providing effective finance support for front-line departments
Relevance and reliability of management and financial information
Effective use of financial statements of the company

Personal Impact

By attending this training course, you will:

Learn to construct a project cashflow model
Gain the operational decision-making techniques under risks and uncertainties
Identifying the uncertainties in petroleum related project and how to manage them effectively
Awareness and ins-sight about influential parameters in an oil and gas field development plan
Greater insight or awareness of industry practices, problems, and solutions
Increased self-confidence and motivation at work
Greater job satisfaction in providing quality and excellent support to management

Who Should Attend?

This training course is suitable to a wide range of professionals but will greatly benefit:

Oil & Gas Field Engineers
Oil & Gas Managers
Oil & Gas Auditors
Oil & Gas Planners
Financial Analysts
Project Management Professionals
Corporate Accountants, Financial Controllers, Treasury Officers, Management Accountants
Finance Staff in General Accounting, Payables, Receivables, Inventory, Fixed Assets, etc.
Joint Venture Accountants and Auditors
Government Regulators and Auditors

Course Outline

Module 1: Petroleum Project Economics & Risk Analysis

Day 1

Cash-flow Analysis

Familiarization with Economic terms
Setting up Cash-flow Calculation
Depreciation Methods
Loss Carry Forwards
Inflation
Nominal & Real Cash-flow
Sunk Costs
Project Financing

Day 2

Economic Indicators

Economic Indicators Definitions
Present Value Concept
Discount Factor
Net Present Value
Internal Rate of Return
Effect of Project Delay
Payback Period
Profit / Investment Ratio
Incremental Projects

Day 3

Risks and Uncertainties

Risk & Uncertainty
Expected Value Concept
Decision Tree Analysis
Farm-out Decision
Probability Analysis
Sensitivity Analysis
Probability Distribution
Monte Carlo Simulation

Day 4

Setting up Spreadsheet Calculation

Introduction to Spreadsheet Calculation
Simple Cash-flow using Excel
NPV Calculations
Application of Economic Indicators
Class Discussion

Day 5

Setting up Oil Field Development Model

Setting up an Integrated Economic Model of a Typical Oil Field Development
Project Sensitivity Analysis for the Selected Model
Introduction to Russell Field Model
Final Remarks

Module 2: Upstream Petroleum Accounting

Day 6

Major Accounting & Auditing Issues in the Upstream Petroleum Sector

The latest Accounting & Auditing Issues facing the sector
The impact of commodity prices, currency & interest rate fluctuations and political and environmental developments
The impact of financial and accounting issues on Strategic Development and Growth within the sector
The Annual Reports & Financial Statements of leading international Petroleum companies
An Overview of IFRS in relation to Upstream Oil & Gas Accounting
The Role of Auditing

Day 7

Accounting for Revenue & Costs in the Upstream Petroleum Sector

Revenue Recognition & IFRS 15: Revenue from Contracts with Customers
Costs in Acquisition, Exploration, Development and Production
IFRS 6: Exploration for and Evaluation of Mineral Assets
Accounting Approaches - The "Successful Efforts" (SE) Method or the "Full Cost" (FC) Method
Break Even Oil, Cost Oil & Profit Oil
Evaluating Profitability of leading international Oil & Gas companies

Day 8

Accounting for Assets in the Upstream Petroleum Sector

Reserves & Resources
IAS 16: Property, Plant and Equipment
Depletion, Depreciation & Amortization (“DD&A”)
IAS 36: Impairment of Assets
IAS 37 – 39 Provisions, Contingent Liabilities and Contingent Assets; Intangible Assets and Financial Instruments
Evaluating the Assets & Reserves of leading international Petroleum companies

Day 9

Creative Accounting, Corporate Governance & Auditing

Creative Accounting
Corporate Governance
Published Financial Statements
The Role of the Board & Audit Committee
External Auditing - Reporting to investors in the Oil & Gas industry
Internal Auditing - Defining and Developing the Internal Audit Process

Day 10

The Internal Audit Function

Establishing the Roles & Staff within the Internal Audit Department
The Various Types of Audits
Planning & Commencing Internal Audit Examinations
Controls & Substantive Tests
Communicating Audit Findings
The Audit Exit Conference Meeting & Post-Audit Reviews

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An Intensive 10-day Training Course

Upstream Economics and Management

Risk and Uncertainty Assessment,Valuations, Oil & Gas Accounting