Course Objectives

This highly practical course has been specifically tailored to the needs of professionals operating in the oil and gas, banking, finance, legal and accounting industries who wish to expand dramatically and extend their knowledge of limited-recourse financing techniques used in the various branches of the oil and gas industry. The remarkable growth of the worldwide energy sector presents unique financing challenges and pressures for today’s practitioners working in the oil and gas sector and financial industry.

Who Should Attend?
This course is intended for Engineers, Project & Process Managers, Technical Managers, Team Leaders, Finance Managers & Professionals.

Course Overview

Limited Recourse Financings

The principle features of a project financing

the due diligences required

the choice of entity

the role of contract

the role of the project cashflow model

the rationale for selecting project finance

The Particular Financing Issues to be Confronted in Energy Projects

the challenges of upstream oil and gas

reserves estimation
extraction dynamics
development finance
reserve-based lending
determining the borrowing base for a basket
perfection of security
abandonment

the challenges of Pipelines

throughput agreements
rights of way
social and security implications

the challenges of LNG

the traditional contractual lock-in structure
the effect of the emergence of a spot market
vertical integration
the cycle

the challenges of Petrochemicals

feedstock
agency and licensing

Legal Issues

alternative dispute resolution procedures

reversal of the plaintiff / defendant positions through contract structuring

ADR conditions precedent for financing

Pre-Completion Risks

liquidated damages

policing the liquidated damages – performance bonds and retentions

fixed price, lump sum, liquidity

the implication of change orders, cost overruns

turnkey EPC structures

standard form contracts

completion guarantees, refinancing risk

the assigned insurances relevant as lender security

completion testing, retentions, latent defects and warranties

Offtake Agreements

classification of different cashflow profiles within the energy sector

the security implications of take-or-pay

availability risk versus market risk

foreign exchange issues

hidden recourse

Financing Structures

risk and its relationship to cashflow

the central importance of FCF

the origins of cashflow volatility – the dynamics of project cashflow

LLCR and ADSCR covenants

when to apply a cash sweep

providing liquidity ‘suspension’ for the special purpose vehicle

different structures to control and capture the cashflow- sector by sector

cashflow waterfall

the different types of control accounts

the syndication process

tailoring the structure to the project cashflow

consequences of default

The Role of the Model in Project Finance

the cashflow adequacy and the cashflow volatility

the ‘problem’ with predictive modelling

purpose of model – initial

feasibility, financing choice, post-completion monitoring, etc

the layout and flow of the model

the importance of the drivers and the profiles

treatment of currency issues and escalation

interface of risk quantification and risk allocation

methods for processing sensitivities, break-even analysis, and scenarios

Model Reviewing

procedures on receiving a model

the use of audit software

model flow

building a trace diagram

Capital Markets

Rule 144A bond financings – origins and implications

the bond rating and its importance

the effect and implications of the sovereign debt rating

bond financing in domestic infrastructure projects

enhancing the credit and the rating

the advantages of bond financing compared to bank syndication

The Analysis by Project Sponsors

how investment appraisal differs between normal investment and project-financed investment

frequent encountered errors in calculating the rate of return

project IRR contrasted with the total return to sponsors

the implementation of the return calculation in excel

the contractual negotiation with financiers – what clauses impact the equity IRR

Political Risk

insurers of political risk and the forms of cover available

the various roles that can be performed by export credit agencies

typical lending structures of ECAs

multilaterals and the typical lending structures encountered

Summary of the Essential Ingredients of Oil & Gas Project Financing

Learning Goals

By the end of the training, participants will be able to:

Outline the specific nature and financial implications of Oil, Gas, and energy Projects

Recommend methods of financing Oil, Gas and energy Projects

Calculate the costs of finance

Undertake Financial Evaluation of Projects to determine their Financial & Economic Viability and sustainability

Recommend ways to improve the financial position of the company