Financial Modelling and Petroleum Project Economics

Introduction

Many senior and middle managers do not utilize Excel to its maximum potential. Instead, they use it as they would a calculator. If you fall into this category then this course is for you. Having completed this ten-day course you will have the requisite tools to utilize Excel to its fullest and be better equipped to challenge decisions. In addition, if you work in the upstream or downstream and your career progression is being restricted by outdated knowledge of modeling techniques then this course will help you move your career forward.

Highlights of the course include:

• A course that takes delegates from Excel basics to the most advanced use of Excel.
• A real-world approach to discipline.
• Numerous examples based around the oil and gas industry.
• The dual approach that not only develops modeling skills but also financial management skills.

Objectives

The course provides delegates with the tools required to find better answers to questions such as:

• How to improve the quality of the quantitative analysis of my corporate presentations
• How to model and advise on hedging price changes in the oil and gas industry
• How to model investment appraisal techniques and utilise decision trees to model the option to abandon

Training Methodology

This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practice. Participants will have the opportunity to share with the facilitator and other participants on what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS-Teams/ClickMeeting.

Who Should Attend?

All financial professionals, financial management, department heads, internal auditors, project managers, and those responsible for ensuring the effective use and management of corporate resources. Also, sales and marketing professionals, R&D professionals, and anyone who needs to understand the short and long-term financial impact of key decisions. Participants should have a basic understanding of financial statements and may bring their own laptop computer with a full install of Excel®, including the complete “Toolbox.” Access to a desktop PC will be made available to all participants.

Course Outline

An introduction to the Excel Environment, with Petroleum based examples

• Background to the Petroleum industry
• Cell referencing, using formula’s, formatting
• Advanced charting within Excel
• Data manipulation and management

Financial Analysis in the up and down stream Oil and Gas industry I

• Introduction to financial statements
• Ratio analysis applied to the Oil and Gas Industry

Financial Analysis in the up and down stream Oil and Gas industry II

• Trend analysis using Excel
• Projecting financial statements using forecasting techniques available within Excel

Statistical analysis (applied to the Oil and Gas industry) using Excel

• Analysis of equity returns of oil and gas industry companies
• Use of Excel functions for statistical analysis
• Use of scatter diagrams and regression techniques to calculate cost of equity financing.

Capital Structure in the Oil and Gas industry

• Analysis of capital structure throughout the up-stream and down-stream oil and gas industry.
• Examination of bond issues and IPO’s by oil and gas industry participants.
• Examination and calculation of the cost of debt financing.

Investment Appraisal using Excel I

• Investment appraisal using NPV, IRR and payback as applied to the oil and gas industry.
• Use of Excel functions for investment appraisal: IRR, PV and NPV
• Use of solver in scenario analysis and stress testing

Investment Appraisal using Excel II

• Using Excel to model decision trees
• Using Excel to calculate the value of a real option and the abandonment decision

An introduction to energy derivatives

• An introduction to the derivatives market
• Examination of petroleum based derivatives, including futures and options.
• Modelling up-stream downstream energy products using Excel

Hedging risk using energy derivatives

• Hedging against price decreases and increases using petroleum futures
• Using VBA to create functions to value energy derivatives
• Hedging against price changes using petroleum based options

Oil product spreads

• Examining the relationship between energy products
• Using futures spreads to speculate and to hedge against profit margin risk