Petroleum Economics and Risk Analysis

Petroleum Economics and Risk Analysis

Date/Time: Date(s) - 05/12/2022 - 07/12/2022( 8:00 am - 5:00 pm )
Location: Malaysia, Kuala Lumpur


This course provides practical guidance in the application of the techniques of the economic analysis currently used in the oil & gas industry. It covers the techniques which assist in:

  • Making investment decisions under different fiscal structure
  • Carrying out cash flow analysis
  • Determining economic indicators
  • Analyzing and quantifying risk
  • Evaluating uncertainty and sensitivity analysis


By the end of the course, participants will be able to:

  • Analyze the economic viability of various petroleum development projects
  • Evaluate various investment opportunities
  • Carry out a comprehensive cash flow calculation
  • Incorporate inflation and project financing
  • Study the application of different depreciation methods
  • Determine and compare different economic indicators
  • Carry out risk analysis and decision tree analysis for decision makin

Who Should Attend?

  • Petroleum, Reservoir and Senior Engineers
  • Geologists and Geophysicists
  • Technicians
  • Fire Officers
  • Decision makers such as Supervisors & Managers in the Planning, Exploration, Production, Projects, Financing and Technical Departments throughout the Oil & Gas


Cash Flow Analysis

  • Familiarization with Economic terms
  • Feasibility Studies
  • Setting up Cash Flow Calculation
  • Tax & Production Sharing Contracts
  • Depreciation Methods
  • Loss Carry Forwards
  • Inflation
  • Nominal & Real Cash Flow
  • Sunk Costs
  • Project Financing

Economic Indicators/Parameters

  • Economic Indicators Definitions
  • Present Value Concept
  • Discount Factor
  • Net Present Value
  • Internal Rate of Return
  • Effect of Start up Date
  • Payback Period
  • Profit/Investment Ratio
  • Incremental Projects
  • Comparing Economic Indicators

Risks and Uncertainties

  • Risk & Uncertainty
  • Expected Value Concept
  • Decision Tree Analysis
  • Farm-out Decision
  • Probability Analysis
  • Sensitivity Analysis
  • Spider and Tornado Diagrams
  • Reserves & Probability Distribution
  • Monte Carlo Simulation

Setting up Spreadsheet Calculation

  • Introduction to Spreadsheet Calculation
  • Introduction to built-in economic/financial functions
  • Carrying out simple cash flow using Excel
  • Calculating economic indicators
  • Developing cash flow charts
  • Developing mathematical equations for calculating economic parametersv
  • Attempting to develop sensitivity calculation
  • Modifying spreadsheet calculation for different fiscal regimes

Setting up Oil Field Development Model

  • Developing data input/output scheme for the model
  • The use of the built-in functions for calculating different economic parameters
  • Setting up an Integrated Economic Model of a Typical Oil Field Development Project
  • Developing/incorporating sensitivity calculation & analysis to the model
  • The use of the model for other petroleum related projects
  • The use of different techniques of developing mathematical equations to speed up model development
  • The incorporation of different methods of calculating depreciation.
  • Incorporating loss-carry forwards
  • Developing all necessary cash flow chart

Training Methodology

  • Case Studies.
  • Individual and group discussions and exercises.
  • Intensive training by using templates, diagrams, and charts.
  • Planning activities and presentations.
  • Self-assessments.
  • Action plan.

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