Hotel Golden Flower Bandung

 9 – 11 Desember 2014  | 08.00-16.00 WIB


This program teaches participants how to analyze, in a practical and realistic manner, the financial performance of oil and gas investments from both project and corporate perspectives. Attendees are asked to build financial models for typical oil and gas projects, calculate the standard measures of project performance (PV, IRR), and incorporate all project risks into the analysis using such processes as tornado diagrams, decision trees, scenario analysis, portfolio analysis, and Monte Carlo simulation

During this one-week program participants will learn, in a practical and realistic manner, how to analyze the financial performance of oil and gas investments from both the project and corporate reporting perspectives. They will be asked to build financial models for typical oil and gas projects and then identify and incorporate all major risks into the analysis. A major part of the learning is achieved through team participation in a challenging “business game” where they must present their team’s recommendations to the Board.



1. Petroleum Economics and Cash Flow Analysis

Petroleum Macro Economics

  • The petroleum industry value chain and identification ofbusiness opportunities along these chains
  • Supply and demand
  • Energy economics
  • Impact of economic growth on energy
  • Affects of fiscal and monetary policy
  • International and national impacts

Petroleum Micro Economics

  • Theory of the firm in the petroleum sector
  • Revenue concepts – cash flow and revenue
  • Cash flow vs. profits
  • Fixed costs vs variable costs
  • Marginal costs
  • How costs, revenues and profits vary with output

Investments, Revenues & CostsProject Economics

  • Revenues
  • Capital and operating costs
  • Taxes and royalties
  • Depreciation
  • Inflation

Depreciation, Taxes & Taxable IncomeCapital Markets & Finance

  • Company financing
  • Investment alternatives
  • Cost of capital
  • Market assessment of oil and gas stocks
  • Times earnings

Capital Budgeting in the Petroleum Industry

  • Building blocks: reserves, resources and production forecasts
  • Estimating project revenues over time
  • Estimating costs and cash outlays over time
  • Looking at net cash flow

Net Cash Flows over TimeDecision Criteria & Cash Flow Analysis

  • Profitability
  • Payback
  • Introduction to Net Present Value
  • Discount Rates

Net Present Value & Discount Factors

  • Internal Rate of Return
  • Break Even Analysis

Inflation & Break Even Analysis

2. Economic Models & Spreadsheet Design

Economic Indicators

  • Economic indicators definitions
  • Present value concept
  • Discount factor
  • Net present value
  • Internal rate of return
  • Effect of project delay
  • Payback period
  • Profit/investment ratio
  • Incremental projects
  • Comparing economic indicators

Economic Models and Spreadsheet Design

  • Structuring an economic model
  • Useful functions: IF, MIN, Match, Scenarios
  • Building in checks to avoid errors

Practical Use of Excel to Model Corporate Financials

Learn how the full capabilities of Excel can be used to model financial statements.

External Factors Affecting Project Analysis

  • Economic growth of economies
  • Oil prices
  • Inflation rates
  • Interest rates
  • Interest rate yield curves
  • Government takes

Calculation of Margins

  • Cash margin
  • Full cost margin

Fiscal Regimes

  • The concept of economic rent
  • Royalty/Excise regimes
  • Production Sharing Contracts (PSC)
  • Contractor Take vs. Government Take

Evaluate an Upstream Project under a PSC Regimeand a Royalty Regime

3. Risk, Uncertainty & Decision Analysis

Dealing with Energy Project Risk and Uncertainty in DecisionMaking

  • Identifying project risks in:
  • Revenues
  • Production flows
  • Oil prices
  • Costs
  • Interest rates

Probability Concepts

  • Expected outcomes
  • Best and worst case scenarios
  • Psychology of decision making in uncertainty

Managing Price Risk Using Financial Derivatives

  • Examining alternatives and their costs
  • Abandonment
  • Flexibility
  • Key price risk management instruments: futures, hedges,swaps and options

Sensitivity Analysis

  • Identifying likely outcomes
  • Weighted average cost of capital
  • Examining rates of return under various scenarios

Decision Tree Analysis

  • Apply a structured method for investment decision analysis
  • Understand the implications of different sets of decisions
  • Identify areas to reduce risk and understand economicopportunity cost of capital
  • Identify implications of various forms of contracts
  • Analyze implications of incremental project decisions

Monte Carlo Simulation

  • Extend the decision tree analysis framework for situations thatinclude continuous probability scenarios
  • Identify power and limitations of simulations
  • Emphasis on relevance of expected value

Corporate Analysis of Risk & Return

  • Sensitivity analysis
  • Identify likely outcomes
  • Portfolio theory
  • Investment alternatives

Payback of Initial Investment Beyond the NumbersAnalysis, Risks & Sensitivity

Participants will critically assess a real world project proposal, developing revenue and cost flows, and performing financial analysis. This will be finished with a prepared outline.

4. Building Financial Models and Project Evaluation

Documenting and Incorporating Key Project Variables intoFinancial Models

  • Specification of all project costs and revenues:
  • Pre-development costs
  • Financing options
  • Revenues
  • OPEX
  • Taxes
  • Net income
  • Cash flow

Setting Up Oil Field Development Model

Setting up an integrated economic model of a typical oil fielddevelopment project including sensitivity analysis

Asset Management

  • Components and determinants of asset valuation at variousstages of maturity: exploration and appraisal, development,production
  • Review of methodologies and processes, probabilisticanalysis
  • Asset aggregation and portfolio optimization, tools of choicefor comparing expected results and budget efficiencies
  • Conclusions, what works and what doesn’t

Profitability Indicators

  • Typical profitability indicators
  • Cumulative net cash flow (discounted and undiscounted)
  • Discounted payback period
  • Internal rate of return (IRR)
  • Net present value (NPV)
  • Profitability index (PI)
  • Long-run marginal cost (LRMC)
  • Funds flow and discounting
  • Excel’s financial functions

Investment Profitability Studies

  • Financing of oil and gas projects, cost of capital and discountrate
  • Global profitability of invested capital
  • Specific method for Exploration-Production: shadow interest
  • Risk analysis, risk and discount rate and sensitivity analysis.

Final Case Study

Participants will critically assess a real world project proposal,develope revenue and cost flows and perform financial analysis. This will be finished with a prepared outline for presentation to

senior management.



Ir.Edy Purwaka.,M.Eng


Presentation, Discussion, Case Study, Evaluation


This course is ideal for Managers, Supervisors, Engineers, Geologist, Economist, Finance, Legal, Asset and Project Manager who want to learn from conventional to advance Production Sharing Contract Agreement, processes and procedures of POD, WP&B, and AFE


Certificate, Training Module (Hard and Soft copy (USB Flash Disk), Stationeries: NoteBook and Ballpoint, Souvenir (Jacket or waistcoat or T-Shirt), Bag or backpackers,  Training Photo, Training room with full AC facilities and multimedia, Once lunch and twice coffeebreak every day of training, Qualified instructor,



Jl.Anggun Utara Blok P-25, Graha Estetika

Pedalangan, Banyumanik – Semarang

Phone : 024-70196308

Email  :


In House Training: Depend on request

Yopi : 085 225 899 555

Pin BB: 76877A7D

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