Target Audience

Managers, engineers, explorationists, field accounting supervisors and other personnel who need to develop or improve their skill and understanding of basic economic analysis and profitability of petroleum exploration and production. Due to similarity in content, PetroSkills recommends that participants take this course if they have no previous experience in this subject. For participants with more exposure to the subject, please review the Economics of Worldwide Petroleum Production description as its course content is more advanced than Expanded Basic Petroleum Economics. Take one or the other, but not both courses.

You Will Learn

• How to evaluate the economic viability of a project
• Cash flow techniques applicable in economic evaluations
• Models to weigh risk and uncertainty
• Techniques to determine expected value
• The effect finance, budgeting, and contractual agreements have on a project
• The basic principles of accounting

Course Content

• Forecasting oil production
• Defining: reserves, operating expenses, capital expenditures, inflation, factors effecting oil and gas prices
• Cash flow techniques
• Economic criteria: interest, hurdle rate, time value of money, selection, ranking criteria
• Risk, uncertainty: types of risk, mathematical techniques, probabilistic models, uncertainty in economic analysis
• Financing, ownership in the oil and gas industry: business arrangements between operators, between mineral owners
• Accounting versus cash flow: accounting principles and definitions, differences between accounting cash numbers, depreciation, depletion, amortization
• Budgeting: types, processes, selecting of projects for the budget
• Economic analysis of operations
• Computer economics software
• Tips on economic factors in computer spreadsheet analysis
• Ethics in economic analyses