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Course Outline

Cash flow revenues and physical systems
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  • Cash flow vs. profits
  • Revenue concepts - cash flow, revenue vs. costs
  • Fiscal systems and petroleum agreements

Financial parameters

  • Input requirements for an economic analysis
  • Revenues
  • Capital costs
  • Fixed vs. variable operating costs
  • Taxes and royalties
  • Depreciation
  • Inflation

Case study: Setting up a project cashflow


Cash flow analysis

  • The Discounted Cashflow (DCF) technique
  • Net Present Value (NPV) and discount rates
  • Cost of Capital
  • Company financing

Case study: NPV and discount factors


Profitability and project performance indicators

  • Profitability
  • NPV
  • Rate of Return (IRR, RRoR)
  • Payback time and maximum exposure
  • Profitability Index
  • Unit Technical Cost (UTC - finding, development and lifting costs)
  • Breakeven analysis

Case study: Performance indicators


Risk and uncertainty in decision making

  • A logical method for defining uncertainties and risks
  • Technical risks (volumetric and production forecast uncertainty)
  • Project risks (cost estimates and project timings)
  • Economic risks (fiscal system, oil price)
  • Mitigating risks - sensitivity analysis

Case study: Sensitivity analysis


Probability concepts

  • Probabilistic volumetric estimates
  • Probability of success
  • Expected monetary value
  • Decision Tree Analysis (DTA)

Case study: DTA in the context of field appraisal


Accelerated and increased reserves

  • Accelerated reserves - economics
  • Increased or new reserves - economics
  • Review of performance indicators for ranking mature projects

Case study: Analysis of an acceleration project

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