Course Objectives

The course will enable participants to apply a structured approach to project justification, investment appraisal and decision making in the upstream petroleum business


Who Should Attend?

Those with little or no previous project investment appraisal experience


Prerequisite Course

None


Course Overview


• Basic concepts
Identifying project cash flows and sources of information
• How to calculate the Accounting Rate of Return (ARR)
Project payback. Net present value (NPV). Internal rate of return (IRR) and the cost of
Capital. Profitability index (PI). Strengths & limitations of each method
• Project ranking - how to choose the best alternative
How to optimise expenditure
• How to deal with inflation
Taking account of taxation
• Accounting measures vs. Economic measures
Understanding other financial criteria for decision making. Balancing short term vs. long term business objectives
• Economics, risk and decisions - decision to points are risk points
Decision points for oil fields and gas fields. Risk & probability definitions and concepts. Risk identification, measurement & management. Forecasting as risk management. Assumptions, sensitivities & risk premia
• Exploration and appraisal decisions, uncertainty, risk and exposure Monte Carlo Simulation
• Economic models and spreadsheet design
• Development decisions
Work scope definition and options. Decommissioning economics & risks. Cost estimating and
Contingencies. Financing options. Construction contracts
• Further development decisions and economic cut off
• Preparing convincing project proposals
• Post project appraisal



Learning Goal


Upon completion of the course, participants should be able to:

• apply economic and risk management evaluation tools for the oil & gas project proposals
• identify and quantify key uncertainties during field development and full life cycle economics
• calculate the economic and financial viability of expenditure proposals projects under risk conditions
• develop a structured approach to measuring, managing and combating commercial risk
• assess the ranking of alternative projects
• prepare convincing project proposals in a way that will win management, partner and government approval
• improve project and business outcomes


Course Materials

Course notes