E&P CONTRACTS, ECONOMY APPLIED TO E&P and RISK ANALYSIS

Discipline: E&P Contracts and Economy Applied

Duration: 5 days

Instructor: Gerardo González

Purpose

As in any other activity not only, but mainly, the economic reasons are the most effective way of allocating the scarce resources that companies have in the E & P industry, as well as the most efficient way to identify the projects that generate enough funds to recover what has been spent, plus a surplus to finance future exploration, that will provide the replacement of reserves securing the company’s future.

The design of the course seeks to approximate the Economy to the Exploration of hydrocarbons by identifying, analysing and explaining all the economic variables necessary to perform an economic evaluation of a project, as well as the theoretical and conceptual justification of them.

The contracts are the framework that defines the distribution of the “oil rent” and the cash flow of the projects. and therefore, one of the key elements that are necessary to know to determine the economic value of the projects.

But the course would not be complete if a practical application of the concepts is not shown, including an economic evaluation of a project and the final report with the recommendation of approval, or rejection, of the proposed project.

Designed

The profile of the attendees ranges from young professionals: geologists, geophysicists and engineers, management control, purchasing, etc., with not less than 5 years of experience, to very senior technicians/experts, who evolve to managers and lack specific training, and managers who need an update or they are interested in changes in their professional path.

And those who need to develop an understanding of how technical aspects impact upon projects economic results. Or to deepen the knowledge of the E&P contracts and improves the skills for their negotiation.

As well as other groups that interrelates with E & P activity, and need to know aspects of this industry: auditors, accounts, tax, legal, engineering, financial management, contract negotiators, etc.

You will learn

To:

  • Know the characteristics of E&P industry
  • Understand the main targets of the E&P companies.
  • Know the ways of land acquisition and their economic consequences
  • Know portfolio management. The double industry requirement: grow and replace
  • Know the main management indicators in a E&P company
  • Know and understands the E&P contracts features.
  • Know and understands the most important common clauses in all contract types.
  • Understand why some ways of collect economic rent are regressive.
  • Identify the economic risks
  • Know and understand the fundamental of decision analysis
  • Know expected value concept
  • Know the E&P accounts standards.
  • Know Standards for booking reserves
  • Know discounted net cash flow method. Build the cash flow
  • Know how to perform an economic evaluation of E&P project.
  • Know to communicate the final conclusion in economic evaluation.

Content

  • Characteristics of E&P industry
  • E&P industry. Organization. Integrated vs. no integrated companies.
  • Why economics? Resources and reserves.
  • Where the money come from? Value chains. Cash flow stability
  • Double requirement: growth and offset declining. Business indicators.
  • Geological success vs. economic success
  • E&P cycle, phases and portfolio management
  • Acreage acquisition and economic consequences
  • Most important E&P Contracts: main features and terms. Gross and Net reserves
  • E&P economics.
  • Measures of profitability: definition, calculation, meaning and weakness
  • Inflation, interest rate, country risk. Discount rate estimation: approaches
  • E&P accounting. Full cost and Successful Effort. Unit-of-Production depreciation
  • Booking barrels.
  • Decision analysis. Expect value concept. Decision trees. Maximum tolerable risk
  • Oil and Gas prices.
  • How to run an economic evaluation: inputs, results, sensitivities and final conclusion.

E&P CONTRACTS, ECONOMY APPLIED TO E&P and RISK ANALYSIS

General:

Discipline: E&P Contracts and Economy Applied

Duration: 5 days

Instructor: Gerardo González

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