A 5-day programme featuring:
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Overview of the modern petroleum industry
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Recent developments in upstream oil and gas lending
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Overview of the credit process
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Identifying credit risks
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Financial modelling, including incorporating credit risks into the financial model
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Credit structuring, including covenants and pricing
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Legally documenting the credit transaction
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High Leverage Situations
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Mezzanine debt product for oil and gas companies
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Featuring separately bookable module: Equity valuation of an upstream oil and gas company – where is the value for investors?
Includes case studies on:
Course Overview
The principal aim of the course is to enable participants to identify and analyse prospective borrowers, structure credit facilities, and prepare credit applications for formal presentation and approval by bank credit committees. These skills can be used by the origination teams and credit teams of lenders and to support organisations which run or sponsor projects. This will be done by reviewing best practice in originating new credit transactions, identifying and mitigating credit risk, financial modelling including sensitivity analysis, credit structuring and legally documenting credit transactions.
Course Methodology
The learning methods used are practical, as practice of newly-learned techniques enables a deeper and more effective building of skills. Each section will be covered briefly as a module in a traditional class style, but the real learning experience will be found in the exercises within each module. Suggested solutions to each exercise will be provided and discussed, and participants will be encouraged to review their work independently. As the time available is limited, and the needs of the participants will vary, each section will not be covered in depth, but supporting materials will be available for further in-depth learning according to participants' own needs.
DAY 1 - Module 1
Overview of the oil and gas sector; the lending markets; recent developments in lending; overview of the credit process
Overview of the oil and gas sector
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Brief history of the modern petroleum industry
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Oil: 20th century superpower
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World oil and gas reserves and consumption
The bank lending markets
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Understanding the origins of the established oil & gas lenders and opportunities for new lenders
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Common types of lending: reserve based lending, mezzanine debt, bonds
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Credit risk vs. equity risk
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Recent developments in lending
Overview of the credit process
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Initial deal review
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Proposal
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Due diligence
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Credit approval
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Term sheet
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Legal documentation
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Deal closing
- Deal monitoring
Case study: initial deal review of an independent oil & gas company
DAY 2 - Module 1
Technical review; gualitative analysis; identifying and mitigating credit risks
Technical review
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What can the financial analyst do before calling a technical engineer?
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Reviewing the reserve report
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Assessing the development plan
Company specific
Identifying and mitigating risks
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Development risk, including government approvals
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Reserve risk
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Commodity price risk
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Environmental risk
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Insurance risk
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Lender’s ability to perfect security over borrowing base assets
- Corporate structure of borrower
Case study: onshore development project; offshore development projection
DAY 3 - Module 1
Modelling in excel; credit structuring including covenants and pricing; legally documenting the transaction
Modelling in Excel
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Creating an upstream oil & gas projection model
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Earnings vs. cash flow
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Debt amortisation schedule
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Assumptions
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Using derivative products to hedge price risk and enhance debt capacity
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Ratio analysis
Credit structuring
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Security over borrowing base assets and non-borrowing base assets
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covenants, including cover ratios
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lending to an operating company vs. SPV
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Syndication considerations
Legally documenting the transaction
Case study: onshore development project; offshore development projection
DAY 4 - Module 1
High leverage situations; mezzanine debt product; overview of oil & gas finance: downstream project financing
High leverage situations
Mezzanine debt product
Overview of oil & gas finance: downstream project finance
Case studies: Tullow Oil Plc, Premier Oil Plc
Day 5 - Module 2
Equity valuation of an upstream oil and gas company – where is the value for investors?
Overview of valuation methodologies for upstream oil & gas investments; upstream oil & gas company comparables table; the term sheet and the culmination of your hard work; overview of an investment committee memorandum for an upstream oil & gas investment and presentation to the investment committee
- Equity valuation of an upstream oil and gas company – where is the value for investors?
- Review of an upstream company’s assets and where is the value for investors
- How are the assets valued?
- Qualitative analysis and how it impacts a valuation decision
Overview of valuation methodologies
- EV/BOE reserves multiple
- EV/daily output multiple
- DCF valuation
Case Study: Initial investment review - Each team will analyse a group of African and international upstream
companies and based on their respective investment merits rank them.
Upstream oil & gas company comparables table
- Comparable valuation table: a good way to assess the value of your prospective investment
- The term sheet and the culmination of your hard work
- The form of the investment: preferred stock or common stock?
- Determining the appropriate amount of the investment
- Post financing capitalisation
- Rights preferences and privileges of a preferred stock investment
- Registration rights
- Other provisions
Case Study: Each team will prepare a draft term sheet for their proposed investment in an upstream oil & gas company.
Overview of an investment committee memorandum and presentation for the investment committee
- Qualitative analysis
- Quantitative analysis
- The term sheet
- Investment recommendation
Case Study: Each team will prepare an investment committee memorandum for their proposed
investment in an upstream oil and gas company and present their findings to the investment committee.
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John Aggelakos
John Aggelakos has over 20 years banking experience in the oil and gas sector. John has an Honours BA degree from University of Toronto. John qualified as a Chartered Accountant at KPMG in Canada and Ireland before moving into Banking, where he has held key positions at BMO Nesbitt Burns, GMAC Commercial Finance, West LB and Bank of Scotland.
John’s assignments have included providing finance or acting as financial advisor to: ExxonMobil in Nigeria, Essar Global, and Qatar Gas II and Qatar Gas IV LNG projects. John now works as an independent consultant and advises banks and industry on energy issues.
Courses run by this instructor
Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.
10-13 Jul 2012 (London, UK)
This intensive four-day course will shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques.
Each session focuses on a particular aspect of modelling and applies it to the case model.
11-14 Sep 2012 (Singapore, Singapore)
This intensive four-day Financial Modelling in Excel for the Power Sector course will shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques. Each session focuses on a particular aspect of modelling and applies it to the case model.
22-25 May 2012 (New York, United States)
This intensive four-day will shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques. Each session focuses on a particular aspect of modelling and applies it to the case model.
21-24 Aug 2012 (Lagos, Nigeria)
Many business models fail due to poor planning,
haphazard development, inherent errors and lack
the ability to provide clear financial analysis. This course shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques.
8-11 May 2012 (Rio de Janeiro, Brazil)
Many business models fail due to poor planning, haphazard development, inherent errors and lack the ability to provide clear financial analysis. This course shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques.
19-21 Mar 2012 (Singapore, Singapore)
This in-depth and practical three day course will demystify finance and cover best practices in financial analysis. By the conclusion of the course, delegates will be able to communicate easily in financial terms. They will
be able to comprehend and interpret financial information, understand the importance of cashflow, match their capital budgets to realistic targets, and accurately analyse capital investments. Most importantly, delegates will learn best practices in all of these areas.
14-18 May 2012 (Singapore, Singapore)
This five-day course will give participants expertise to
assist in achieving long-term success to enhance your
company’s competitive performance.
3-7 Sep 2012 (London, UK)
This five-day course will give participants expertise to
assist in achieving long-term success to enhance your
company’s competitive performance.
25-29 Jun 2012 (New York, United States)
This five-day course will give participants expertise to
assist in achieving long-term success to enhance your
company’s competitive performance.
16-18 Jul 2012 (London, UK)
This in-depth and practical three day course will demystify finance and cover best practices in financial analysis. By the conclusion of the course, delegates will be able to communicate easily in financial terms. They will
be able to comprehend and interpret financial information, understand the importance of cashflow, match their capital budgets to realistic targets, and accurately analyse capital investments. Most importantly, delegates will learn best practices in all of these areas.
17-19 Dec 2012 (New York, United States)
This in-depth and practical three day course will demystify finance and cover best practices in financial analysis. By the conclusion of the course, delegates will be able to communicate easily in financial terms. They will
This course has now expired please email us to find out when the course will next be running.