Audience

Managers, Engineers, Explorationists, Field and Accounting Supervisors, and other personnel who need to develop or improve their skill and understanding of basic economic analysis and profitability of petroleum exploration and production.

Objectives

Upon completion of this course, participants will be able to develop or improve their skill and understanding of basic economic analysis and the profitability of petroleum exploration and production.

Course Content

• Forecasting:
  • Oil production using decline equations
  • Understanding what a ‘reserve’ is
  • Operating expenses and capital expenditures
  • Inflation
  • What determines the price of oil and gas
• Cash Flow: Techniques, principles, construction of spreadsheets, examples of various projects
• Economic Criteria: Interest and hurdle rate, time value of money, selection and ranking criteria
• Risk and Uncertainty:
  • Definitions and types of risk
  • Mathematical techniques for including risk and uncertainty in economic analysis
  • Financing and ownership in the oil and gas industry
  • Business arrangements between operators and mineral owners
  • Typical oil company capital structure and cost of capital
• Accounting vs. Cash Flow: Accounting principles and definitions, difference between accounting and cash numbers, depreciation, depletion, and amortization
• Budgeting: Types and processes, selection of projects for the budget
• Economic Analysis Operations: Examples of economic evaluations and economic analysis techniques