You have recently joined the petroleum industry as a technical expert in engineering, geology or human resource (or have worked in the technical area for a few years) and want to understand the nature of the petroleum business and how you will contribute to the financial success of your company. But what is financial success and how is it measured? What resources are available to the industry and who are the competitors? This course will introduce delegates to key concepts of the petroleum business including its structure, how oil companies are organized and financed and what it takes to be financially successful. Success will be explored through an understanding of the meaning of long-term shareholder value, its measurement at the macro and micro level and the role competitive advantage plays in achieving superior financial goals. Delegates will be introduced to both accounting and economic evaluation as a means to understanding the financial side of the petroleum business. Additionally, delegates will be introduced to risk and its impact on economic evaluation. All common accounting and economic terms and metrics will be reviewed. Delegates will learn through lectures, discussion, and hands on exercises. One personal computer is supplied, at added cost, for every two participants.
Engineers, geologists, geophysicists, landmen, HR and other non-finance and accounting professionals who need an introduction to the business aspects of the petroleum industry including the interplay of finance and economic evaluation in the creation of long-term shareholder value.
You will Learn:
- The overall objective of business
- How the petroleum business is structured and capital is raised
- What is shareholder value and how it is created
- The critical importance of seeking competitive advantage
- Economic and accounting terminology
- How to make an economic valuation of an investment and assess its competitive advantage
- How value creation impacts share price
- How shareholder value is measured
- What is risk and how is it assessed in economic evaluations
Course Content:
- Understanding corporate business
- The importance of creating value for shareholders
- How is value measured and what are the expectations of different stakeholders in the financial framework of corporations
- Introduction to Economic Evaluation (NPV, IRR)
- The importance of discounting for capital intensive industries
- Definition of the Cost of Capital and how it is calculated
- Valuing businesses at the macro level
- Creation of value and competitive advantage
- The competitive environment in the petroleum industry
- How is energy demand growing
- Location and ownership of oil and gas reserves
- Capital requirements and risk
- Oil and gas pricing and drivers for the future
- Examples of competitive advantage and how this has impacted the history of the business
- Introduction to accounting
- The purpose of accounts
- Key financial statements
- Demystification of the annual report
- Introduction risk
- Economic evaluation at the project level (NPV, IRR, CE, Payback)
- Economic impact of projects on book value, market capitalization, share price
- Measuring competitive advantage through net present value, the value of incremental economics
