Valuing Hydrocarbon Assets: Petroleum Economics and Investment Analysis Training Course

Introduction

In the highly capital-intensive and inherently risky petroleum industry, robust economic evaluation and astute investment analysis are paramount for making sound business decisions. From the initial stages of exploration to the long-term production and decommissioning of assets, every decision carries significant financial implications. The ability to accurately assess project viability, quantify potential returns, and understand the impact of various economic and fiscal factors is crucial for maximizing shareholder value and ensuring sustainable growth in a volatile global market.

This intensive training course is meticulously designed to equip participants with a comprehensive and practical understanding of petroleum economics and advanced investment analysis techniques. From exploring fundamental economic principles and various fiscal regimes to mastering discounted cash flow (DCF) analysis, risk assessment, valuation methodologies, and sensitivity analysis, you will gain the expertise to make data-driven investment decisions. This empowers you to optimize project portfolios, secure financing, manage financial risks, and strategically contribute to the economic success and long-term sustainability of oil and gas ventures.

Target Audience

  • Petroleum Economists and Financial Analysts.
  • Business Development Managers.
  • Project Managers and Project Engineers.
  • Investment Professionals and Portfolio Managers.
  • Commercial Managers.
  • Government Officials from Ministries of Energy and Finance.
  • Geoscientists and Reservoir Engineers (seeking economic insights).
  • Legal Counsel involved in Petroleum Agreements.

Duration: 10 days

Course Objectives

Upon completion of this training course, participants will be able to:

  • Understand the fundamental economic principles applied in the petroleum industry.
  • Grasp various investment appraisal methodologies and their application.
  • Analyze different petroleum fiscal regimes and their impact on project economics.
  • Comprehend the concepts of risk and uncertainty in petroleum investment.
  • Evaluate different valuation techniques for oil and gas assets.
  • Develop practical skills in building and interpreting financial models for oil projects.
  • Navigate the complexities of crude oil and natural gas pricing and market dynamics.
  • Formulate robust strategies for making sound investment decisions and optimizing project value.

Course Content

  1. Introduction to Petroleum Economics
  • Overview of the oil and gas value chain from an economic perspective.
  • Key economic drivers and challenges in the petroleum industry.
  • The concept of value creation and profitability.
  • Time value of money: present value, future value, discounting.
  • Introduction to economic evaluation metrics.
  1. Investment Appraisal Methodologies
  • Net Present Value (NPV): Calculation, interpretation, decision rule, advantages, and disadvantages.
  • Internal Rate of Return (IRR): Calculation, interpretation, limitations (multiple IRRs, reinvestment assumption).
  • Payback Period and Discounted Payback Period: Calculation and use.
  • Profitability Index (PI): Calculation and interpretation.
  • Comparing and ranking investment opportunities.
  1. Project Revenues and Costs
  • Revenue Forecasting: Production profiles, crude oil and natural gas pricing assumptions, price forecasts.
  • Capital Expenditure (CAPEX) Modeling: Exploration, development, infrastructure, abandonment costs.
  • Operating Expenditure (OPEX) Modeling: Lifting costs, transportation, G&A.
  • Cost estimation techniques and cost control.
  • Escalation and inflation.
  1. Petroleum Fiscal Regimes
  • Definition of fiscal regime and its objectives for governments and companies.
  • Royalty/Tax Systems: Principles, types of royalties, corporate income tax, depreciation, depletion.
  • Production Sharing Contracts (PSCs): Cost oil/gas, profit oil/gas, R-factor, progressivity.
  • Service Contracts: Technical service agreements, risk service agreements.
  • Hybrid fiscal regimes.
  • Impact of fiscal terms on project cash flows and profitability.
  1. Risk and Uncertainty in Investment Analysis
  • Types of risks in petroleum projects: geological, technical, commercial, political, environmental.
  • Probabilistic analysis: expected value, probability distributions.
  • Sensitivity analysis: identifying key value drivers (price, volume, CAPEX, OPEX).
  • Scenario analysis: modeling different future outcomes.
  • Decision trees for evaluating sequential decisions under uncertainty.
  1. Economic Modeling for Oil Projects
  • Building a comprehensive financial model in spreadsheets.
  • Linking inputs, calculations, and outputs.
  • Modeling production, revenues, costs, and taxes.
  • Calculating key economic indicators (NPV, IRR, etc.).
  • Best practices in financial model design and auditing.
  1. Valuation of Oil and Gas Assets
  • Discounted Cash Flow (DCF) valuation for reserves and resources.
  • Net Asset Value (NAV) approach.
  • Comparative valuation (multiples analysis).
  • Economic limit determination.
  • Valuing exploration acreage and undeveloped reserves.
  1. Crude Oil and Natural Gas Market Dynamics
  • Global crude oil benchmarks (Brent, WTI) and their drivers.
  • Natural gas pricing mechanisms (hub-based, oil-indexed, LNG spot).
  • Factors influencing price volatility: supply-demand, geopolitics, storage.
  • Understanding futures and forward curves.
  • Impact of market structure on investment decisions.
  1. Project Financing and Capital Allocation
  • Sources of capital for oil and gas projects: equity, debt, project finance.
  • Debt sizing and repayment structures.
  • Capital allocation strategies within a portfolio.
  • Investment criteria and hurdle rates.
  • Managing financial risk and hedging.
  1. Advanced Topics and Case Studies
  • Impact of energy transition on petroleum economics and investment.
  • Economic evaluation of carbon capture, utilization, and storage (CCUS) projects.
  • Valuation of renewable energy assets (solar, wind).
  • Portfolio optimization techniques.
  • Real options analysis in petroleum investments.
  • Case studies of complex investment decisions.

CERTIFICATION

  • Upon successful completion of this training, participants will be issued with Macskills Training and Development Institute Certificate

TRAINING VENUE

  • Training will be held at Macskills Training Centre. We also tailor make the training upon request at different locations across the world.

AIRPORT PICK UP AND ACCOMMODATION

  • Airport pick up and accommodation is arranged upon request

TERMS OF PAYMENT

Payment should be made to Macskills Development Institute bank account before the start of the training and receipts sent to info@macskillsdevelopment.com

For More Details call: +254-114-087-180

 

Valuing Hydrocarbon Assets: Petroleum Economics And Investment Analysis Training Course in Nicaragua
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