DAY 1

Principles of Petroleum Economic Analysis

Overview − Basic Principles for Economic Analysis
Ingredients for an Economic Evaluation - Objectives and recurring themes; generating a cash flow forecast, time value of money, understanding the analysis scope and purpose, project viability.
Economic Analysis Procedure − How to start, what to consider, where to go to get the appropriate information and estimates as inputs.
Developing a Cash Flow Prediction − Investments (such as capital expenditures and operating expenses), revenue (from selling production at a price), timing issues.
Time Value of Money – Defining and understanding the role of discount rate, investigate the effects of varying discount rate.
Economic Metrics – Net present value (NPV), internal rate of return, payout, profit to investment measures, finding and development costs, and other appropriate metrics.
Fiscal Regime (Tax – Royalty)
Examples and Exercises Interspersed Throughout the Day

DAY 2

Petroleum Economics – Applications

Multiple Potential Investments − Ranking projects, considerations of constraints and business objectives, formulating fair-comparison models.
Multiple Potential Investments − Portfolio considerations and complexities.
Probability of Success – Geologic, mechanical, commercial – how to incorporate them in our models.
Incorporating Risk Factors − Chance of success, qualitative risk, how risk affects ranking projects, how risk affects portfolios.
Correlation and Dependency − Recognizing dependency or correlation among ventures, projects, or wells, and why we must consider this in our business economics.
Beyond Deterministic Economics – An introduction to stochastic (probabilistic) economics and the rational for applying this methodology.
Examples and Exercises Interspersed Throughout the Day
Final Comprehensive Exercise - Valuation Case Study