Euromoney Energy Training

The upstream sector comprises operations in exploration, development and production phases. Many leaders of upstream projects focus on short-term objectives such as increasing production levels and revenue streams while paying less attention to longer-term challenges such as those posed by cost inflation, fiscal changes, price volatility and surface or subsurface technical problems. Solutions to meet those challenges are reviewed and analysed through the use of exercises and case studies.

Topics include:

• Identifying value drivers
• The value parameters; valuation as a performance metric decision-making tool
• Cost analysis; control and prediction
• Technologies to optimise value
• Management strategies and techniques to enhance value creation
• Target-setting and analysis

Managing Upstream Oil and Gas Assets Course Overview

Oil and gas assets commonly generate revenues over many years, often over decades. Unfortunately many current analyses focus on short-term performance metrics. This approach fails to match the longer-term overall performance against 'life-of-asset' time periods. Moreover, traditional financial performance measures, such as annual earnings or earnings growth, are not always good proxies for value creation. To focus more directly on creating value, companies should set goals over longer time periods in terms of discounted cash flow value, the most direct measure of value creation.

Oil and gas markets have been volatile since the early 1970s. As an example, more recently crude oil price collapsed by 74% during the seven-month period from July 2008 and January 2009. In this continuing volatile economic climate sustaining value demands close attention to setting threshold economic parameters for commercial viability. Good business planning entails detailed analyses of key parameters; costs, prices, exchange rates, discount rates and assessments of the risks.

This course integrates these facts and concepts to guide delegates by using a format of topic presentations interspersed with example case studies and exercises. This approach will enable you to gain a greater appreciation of the value drivers for upstream assets and the techniques available to ensure value optimisation.

Benefits of Attending Managing Upstream Oil and Gas Assets Course

• Acquiring a greater understanding of real value creation and generation
• The techniques available to ensure sustained value optimisation

Day 1

Value Concept and definitions

• Definitions of value in the upstream oil industry
• The importance of maintaining margins
• Price forecasting, scenario planning and their impact on value
• Costs; capital and operating – fixed and variable
• Incorporating risk analysis into forward planning
• Goal–setting and performance audits

Threats to Value Generation

• Price volatility. Exercise to illustrate value erosion
• Delays. West African case study and exercise to illustrate value erosion
• Unforeseen fiscal changes. U.K case study
• Impacts of D,D&A on value
• Technical problems; “above” and “below” ground

Day 2

Creating value through the exploration phase

• Exploration risk and mitigation
• Exploration cost elements and control
• Pitfalls
• Cost–effective technologies and techniques
• Analysing performance

Exercise to compare /contrast value – adding exploration strategies

Establishing best value development options

• Planning and option choices
• Feasibility, FEED and EPC
• Best Value contractual relationships
• Pitfalls – the dangers of ‘fast track’, ‘gold–plating’
• Synergistic value enhancement
• Case studies; examples from North Sea, West Africa and Algeria

Exercise: Economic value of development options

Day 3

Optimising Value in the Production Phase

• Review of oil, gas and reservoir properties
• The sales contract
• Fixed and variable operating costs
• The field decline curve
• Predicting reservoir performance
• Secondary and enhanced recovery
• Maintaining value by additional drilling
• Surface plant optimisation
• Tariff and transportation cost elements
• Importance of HSE Issues

Exercise: Cost/benefit analyses of infill and extended reach drilling to enhance value

Putting it all together

• The human element and organisational behaviour
• Summarising the value creation mindset
• Group discussion with delegates

• William J. Pyke

  Bill Pyke has over 37 years of experience in the international oil and gas business. He qualified as a petroleum geologist at Imperial College, London and gained upstream operating experience while working for North American oil companies including ARCO, Marathon and latterly Talisman Energy in the U.K.
  
  International assignments included operations in Europe (including UK and Netherlands North Sea), Africa and the Middle East. In more senior management positions he broadened his experience to include all aspects of upstream activities that also included a range of mergers, acquisitions and divestments.
  
  During his time with Talisman he was part of a successful four-man senior management team highly involved in optimising value from ageing North Sea field assets during a period of low oil prices.
  
  Since late 1998 Bill has been an independent oil and gas consultant. Assignments have included projects with a large range of clients involved in the oil industry. He is also actively involved in delivering training and development programmes to delegates actively involved with the upstream oil industry. He is a fellow of the Energy Institute, London.

  Courses run by this instructor

  • Petroleum Sales Contracts - London

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