Petroleum Project Economics and Risk Analysis

Petroleum Project Economics and Risk Analysis

Monday 24 Aug 2020

  • Duration: One Week
  • City: Paris
  • Fees: 4200 GBP

Introduction

This course provides practical guidance in the application of the techniques of the economic analysis currently used in the Oil & Gas industry.

When executing a petroleum related project, one should be able to choose the best alternative from economic point of view as well as to properly evaluate various investment opportunities by determining economic indicators and sensitivity analysis.

Techniques for predicting profit, production, costs, and cash flow enable the analyst to evaluate decision alternatives for optimum results.

Comprehending economic indicators, risk and uncertainty, different economic structures such as tax regimes and production sharing contracts, enhances the quality and the value of economic analysis.

Objectives

– Comprehend various economic terms used in the Oil & Gas industry.
– Comprehend how to develop economic models of various petroleum fiscal regimes.
– Carry out cash flow analysis, different economic analyses for petroleum related project and determine economic indicators.
– Evaluate and quantify risks and uncertainties.
– Make the right investment decision in the presence of risk.
– Carry out a comprehensive economic evaluation study for any petroleum related project including risk analysis and sensitivity study using spreadsheet.
– Contribute to the petroleum project investment within a solid economic system and do a detailed economic evaluation.
– Contribute to the decision-making process for any petroleum related project.

Course Outline

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.

Day 5

Setting up Oil Field Development Model

– Group activities.
– 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.

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