Course Detail

Cash Flow Estimation and Associated Risks in the Oil and Gas Industry Duration: 1 Week/s

Course Information

  • Course Price £4360 Plus VAT
  • Location UK Courses
  • Course Code CFER
  • Course Date 5 Dec - 9 Dec 2022

Course Objectives:

It was recently estimated that the annual global exploration and production expenditure that
the industry requires was in excess of $400 billion. Profit margins, however, are under real
pressure from many factors, including the higher costs of developing new reserves, less oil
found per foot drilled, rising inflationary costs of doing business, oversupply of crude, crude oil
price volatility, competition for oil company investments, competition for acreage/concessions,
competition for funds, and overall business risk and uncertainty. It is therefore crucial to carry
out prudent economic evaluation of any capital investments before resources are committed.
And for every capital project will typically have cash receipts and cash disbursements into or out
of the treasury, respectively. Thus, ‘cash flow is king’ seems to be message for businesses
today and in particular with respect to their capital investment decisions. This course therefore
aims to provide participants with a thorough understanding of the techniques used by entities
engaged in oil and gas exploration and production activities in the estimation of cash flow and
associated risks.

Who Should Attend?

Finance Managers, Executives in the Oil & Gas Industry, etc

Prerequisite Courses


Course Overview

  • Profit planning

  • Basic principles of economics

  • Uncertainty and risk

  • The concept of interest

  • Cash flow diagram

  • The time value of money

  • Funds flow and compounding/discounting

  • Before tax cash flow models

  • Product pricing

  • Capital expenditures, Operating expenditures

  • Types of cost estimates, Variations in actual project costs

  • Severance and ad valorem taxes

  • Cash flow estimation bias, Cash flow analysis and inflation

  • The cost of capital, The cash flow spreadsheet, After tax cash flow model

  • Depreciation, Amortisation and depletion

  • Intangible drilling costs, Spreadsheet application

  • Capital budgeting techniques, Investment selection decision making

  • Course Materials

    By the end of this course, participants should be able to:
  • Identify relevant information in cash flow estimation

  • Understand the financial arithmetic underlying compound interest and discounting

  • Handle inflation in cash flow estimation

  • Understand ways of calculating and interpreting estimates that include uncertainty

  • Appreciate the levels at which risk can viewed

  • Appreciate the main risk-handling techniques and their application to capital budgeting problems

  • Course Materials

    Course notes