Course Outline

Production Forecasting and Project Assessment

Industry Fundamentals and Recent Trends

• Energy business environment
• Oil & gas markets and Commodity trends
• Industry structure and value chains
• Technical, social, market and finance trends affecting projects

Reserves and Production Theory – Oil

• Oil quality and formation
• Flow relationships, production, reservoir fundamentals and material balance theory
• Reserves, ultimate recovery and Reserves Classification

Reserves and Production Theory – Gas

• Gas physics and quality, depletion and volumetric drive mechanisms
• Material balance fundamentals, gas pressure decline and reserves prediction

Practical implementation of Production Forecasting and Reserves Assessment

• Using reserve and production data bases to monitor production performance
• Using depletion and decline rate to describing future oil production
• Overview of reserves reporting requirements
• Interrogating production and cost forecasts for valuing assets and predicting cash flows
• In class exercises demonstrating applications of theory and methods

Asset Planning Considerations and Company Wide Insights

• Utilising Integrated Production Modelling to identify issues, make appropriate decisions in a timely manner and secure an assets potential by maximising reserves, minimising costs and optimising operations. Utilising development and operational planning to meeting capital targets, production targets and capital efficiency objectives

Break Out Sessions – focused on production asset planning.

Oil and Gas Economics

Project Cash Flow Modelling

• Cash flow model development, and project cash flow analysis – Uses & limitations
• Key economic inputs and assumptions and use of reserve and cost distributions
• Summary of common fiscal regimes – effect on project cash flows
• Leasing of facilities – effect on project cash flows and effects of transfer pricing
• Late field life considerations, key economic indicators and valuation measures
• Discount Factor and profitability measures E.g. NPV, IRR, PIR and Payback period

In class exercises and Breakout Sessions – focussed on cash flow modelling and sensitivity analysis

Project Risk and Uncertainty

Economic Risk and Uncertainty

• Probability, statistics and uncertainty concepts
• Use of probability distributions and developing probabilistic estimation skills
• Probabilistic reserves, resource and cost estimation techniques
• Estimating with uncertainty and use of sensitivity analysis
• Probability methods used to estimate risk and vulnerability

Expected Value Concepts

• Expected Monetary Value and Portfolio Management

Project Finance, Loan Structure, Due Diligence and Commercial Arrangements

Loan Modelling

• Oil and gas resource based lending cash flows and loan modelling techniques
• Key elements of project cash flows, debt structures and loan repayment models
• Key loan performance measures such as cover ratios

Commercial and Current Finance Industry Issues

• The role of financial institutions; strategies for bad loan recovery; divestment, mergers and acquisitions (Using local case studies)
• Key contractual arrangements – production sharing contracts , joint venture agreements
• Financing Risk
• Value of commonly used finance, risk templates and criteria for project finaceability
• Risk reward objectives of project sponsors versus providers of funding

Project Financing Due Diligence

• Implementing the right process, understanding project weaknesses and strengths
• Ensuring the right skills are applied to due diligence

Oil and Gas Project Finance Structures

• Past structures, how they evolved and review of commonly used structures in current financings

Project viability in a low oil price environment

• Effects of commodity pricing on project commerciality and risk
• Cost trends in the current environment
• Methods of managing risk through hedging, asset planning and contracting strategies
• Oil and Gas Company behaviours – Project winners and losers