Petroleum Project Economics & Risk Analysis Training Course

Course Overview

Learning Objectives

• Explain the upstream project life cycle and identify the economic decisions made at exploration, appraisal, development, production, and abandonment.
• Build an upstream cash-flow model that links production profiles, prices, capital expenditure, operating expenditure, and abandonment costs.
• Incorporate working capital, timing conventions, and consistent units into petroleum project cash-flow models.
• Assess, at concept level, how royalty, taxes, cost recovery, and profit sharing affect contractor and government cash flows.
• Calculate and interpret net present value, internal rate of return, payback, profitability index, unit costs, and breakeven price.
• Recognize the common pitfalls of each economic indicator and select the right measure for each type of decision.
• Apply real and nominal terms, inflation and escalation assumptions, and discount rates consistently in project evaluation.
• Identify the main sources of uncertainty in reserves, prices, costs, and schedule and assess their effect on project value.
• Apply deterministic sensitivity analysis using spider and tornado diagrams and build internally consistent project scenarios.
• Use expected monetary value and decision trees to structure exploration, appraisal, and development decisions.
• Perform practical Monte Carlo analysis on project economics and interpret probabilistic results for management.
• Estimate the value of information and apply portfolio thinking to rank competing upstream projects under capital constraints.
• Prepare and present a clear, evidence-based investment recommendation to management and investment committees.

Who Should Attend

Learning Outcomes

• By the end of the course, participants will be able to:
• Describe the upstream life cycle and the economic decision made at each stage.
• Build and check an upstream cash-flow model from production, price, and cost inputs.
• Explain how royalty, taxes, cost recovery, and profit sharing change project cash flows.
• Calculate net present value, internal rate of return, payback, and profitability index correctly.
• Estimate unit costs and breakeven prices and explain what they reveal about a project.
• Avoid common errors in economic indicators, inflation treatment, and discounting.
• Identify the uncertainties in reserves, prices, costs, and schedule that drive project value.
• Prepare spider and tornado diagrams and internally consistent project scenarios.
• Apply expected monetary value and decision trees to exploration and appraisal choices.
• Interpret Monte Carlo results and judge the value of acquiring additional information.
• Rank competing upstream projects within a portfolio and under capital constraints.
• Present a clear, risk-informed investment recommendation to management.

Course Outline