Financial Modeling, Petroleum Project Economics, and Risk Analysis Training Course

Why Select this Training Course?

Companies in the Oil and Gas industry that engage in production and exploration must first analyze their investment and production by valuing future cash flows. From the valuation of supposed cash flows, financial personnel in the Oil and Gas industry can obtain vital economic indicators. For example, the yearly return rate can be deciphered to evaluate the significance of a company’s investment, and this is where Financial Modeling and Petroleum Project Economics become relevant. Also, the execution of petroleum projects in the Oil and Gas industry cannot be done without due diligence. Therefore, it is vital to consider several techniques like predicting profit, cash flow, and production cost and select the best alternative from an economic angle.

What is the scope of financial modeling?

The scope of Financial Modeling covers various areas like mergers, acquisitions, budgeting, investments, valuation, and forecasting. However, in the Oil and Gas industry specifically, the scope of Financial Modeling covers the invention of a Net Asset Value (NAV) to forecast cash flow and estimate the value of the upstream sector in the Oil and Gas industry. Generally, Financial Modeling in the Oil and Gas industry covers financial statement modeling, valuation, funding mechanics, mergers and acquisitions, and investment and operational metrics.

What is the relevance of petroleum economics?

Petroleum Economics provides insights to professionals and personnel in the Oil and Gas industry on the principles and practices in the local and global Oil and Gas market. It also highlights crucial policies governing energy markets, taxation, deregulation, and price regulation.

The Rcademy Financial Modeling, Petroleum Project Economics, and Risk Analysis Training Courses are designed to broaden the horizon of knowledge of participants in the Oil and Gas industry. This course entails an in-depth, practical process of understanding the rudiments of employing financial analysis tools in the Oil and Gas industry for project and risk analysis and learning the various financial analysis methods in this sector. This Rcademy course comprises fundamental aspects of economic research that would improve an analyst’s ability to grasp economic indicators, risks, and shortcomings associated with an Oil and Gas project, highlight several economic structures like taxation and production sharing contracts, and improve the depth and quality of financial analysis.

Who Should Attend?

The Financial Modeling, Petroleum Project Economics, and Risk Analysis Training Course by Rcademy is an excellent fit for personnel in the Oil and Gas industry, especially those that deal with the exploration and production of petroleum products and those in charge of financial operations in this sector. The following personnel should undertake this course:

• Energy managers: responsible for managing and coordinating energy conservation by enforcing policies for the conservation of energy and energy consumption
• Project development officer: responsible for supervising project execution, assigning tasks to team members, and reporting progress to senior management
• Financial analysts: responsible for analyzing and monitoring stocks and investments of a company and providing advisory services on the company’s decision to expend money and obtain profit
• Oil and Gas field engineers: responsible for monitoring and supervising all processes that involve the production of petroleum products
• Oil and Gas auditors: responsible for reviewing the system controls set in place and for managing and addressing key business risks in the company
• Oil and Gas planners: responsible for scheduling plans, project management of oil wells and rigs of a company
• Professionals: interested in learning the rudiments of Financial Modeling and petroleum product economics and the risk it presents

What are the Course Objectives?

The Financial Modeling, Petroleum Project Economics, and Risk Analysis Training Course by Rcademy is designed to equip participants with practical knowledge and skillset regarding Financial Modeling practices and metrics of petroleum project economics and highlight the probable risks attached to these processes. At the end of this course, participants would obtain the following objectives:

• Learn the economics terminology used in the Oil and Gas industry
• Understand the process of building economic models for various petroleum fiscal regimes
• Analyse cash flow, different economic projects, and economic indicators
• Identify risks and uncertainties and forecast plans to mitigate risks
• Recognize and apply the best investment decision when faced with a risk
• Develop an in-depth economic evaluation for any petroleum-related project
• Learn the rudiments of financial planning, valuation, and models
• Invest in a healthy petroleum project in a solid economic system and engage in economic evaluation
• Demonstrate a clear understanding of petroleum projects and Financial Modeling, and contribute to the decision-making process revolving around these areas

How will this Course be Presented?

The Rcademy Financial Modeling, Petroleum Project Economics, and Risk Analysts Training Courses are participant-based. It is curated to meet the learning needs of participants and ensure improvement in their skillset on the subject matter. This course will be approached solely using Microsoft Excel-designed economics modules and explanations of these modules will be done using top-notch and in-depth quality PowerPoint slides.

What are the Topics Covered in this Course?

Module 1: Background to Financial Modeling in the Oil and Gas Industry

• Definition of Financial Modeling
• Scope of Financial Modeling in the Oil and Gas Industry
• Microsoft Excel for Financial Modeling
  – Description of data sets employing statistics
  – Graphic representation of data sets
  – Analysis of normal distribution
  – Trend analysis
  – Times series analysis
• Statistical analysis
  – Descriptive statistics
  – Evaluation of equity returns in the Oil and Gas industry
  – Regression mechanisms for the cost of equity financing
  – Application of histogram, scatter diagrams, and frequency distribution
  – Mean, median, mode, and standard deviation
• Investment appraisal
  – Investment appraisal with net present value and internal rate of return
  – Modified Internal Rate of Return (MIRR)
  – Scenario analysis
  – Forecasting financial distress and stress testing

Module 2: Financial Analysis of the Upstream and Downstream Oil and Gas Industry

• Concept of financial statements
• Ratio
  – Ratio analysis
  – Ratio pyramids
• Financial Modeling
  – Cash flow
  – Case studies
• Spreads of oil product
  – Evaluating the synergy between energy products
  – Dissimilarities between data sets
  – Analysis of correlation
  – Confidence intervals
  – Analysis of variance (ANOVA)

Module 3: Background to Petroleum Project Economics

• Overview of the petroleum industry
• Analysis of the petroleum value chain
  – Oil and Gas industry in key regional markets
  – Market opportunities
  – Pricing formulations
• Energy project economics and performance measurement
  – Project cash flow analysis
  – Cash flow discounting
  – Capital cost
  – Debt financing and its effects
  – Changes in key variables
• Probability theory and quantitative analysis
  – Probability density functions
  – Probability distributions
  – Concept of expected value

Module 4: Concept of Risk Analysis

• Expected value concept
• Monte Carlo simulation
• Decision tree analysis
• Sensitivity analysis
• Risk and uncertainty

Module 5: Analysis of Cashflow

• Calculation of cashflow
• Techniques of depreciation
• Inflation
• Project financing
• Real and nominal cashflow
• Carryover of loss
• Economic indicators
  – Concept of present value
  – Net present value
  – Internal rate of return\
  – Project delay effects
  – Period of payback
  – Profit
  – Incremental projects

Module 6: Economic Metrics in the Oil and Gas Industry

• Capital structure
  – Evaluation of capital structure in the upstream and downstream sector
  – Analysis of IPO and bond issuance
  – Calculation of cost of debt financing
• Energy derivatives
  – Derivatives market
  – Analysis of petroleum-based derivatives
  – Modeling of upstream and downstream energy products

Module 7: Oil Field Development Model

• Russell field model
• Project sensitivity model for various model
• Preparation of an integrated economic model for a typical oil field development

Module 8: Expected Value Concepts

• The expected value of random variables
• Expected monetary value
• Sensitivity analysis
• Decision trees
  – Terms used in decision trees
  – Solving a decision tree
• Simulation in decision analysis
  – Application in simulation
  – Simulation in decision making
• Management presentation
  – Profitability indicators
  – Sensitivity diagrams
  – Feasible profitability region

Module 9: Investment Selection Decision-Making

• Types of investments
• Investment selection decision-making
• Revenue producing investments
• Inherent problems with IRR
• Service producing investments
• Ranking projects

Module 10: International Petroleum Agreements

• Concept of an international agreement
• Contractual agreements
• Fiscal systems
• Joint venture and risk service contracts