Exploration & Production Accounting Level 1

Transcription

1 Exploration & Production Accounting Level 1 Course Objectives This introductory-level course provides a comprehensive overview of international accounting and finance practices in the E&P industry. It is particularly suitable for finance personnel who are new to the oil and gas industry, or want to gain a broader understanding of oil and gas financial policy, joint venture and cost-control topic areas. What You Will Learn An overview of accounting policies and practices in the oil and gas industry An introduction to managing project, development and operating costs Understanding the accounting and financial management implications of exploring for and producing oil and gas The background to financial issues like joint ventures that are unique to the E&P industry, and their accounting treatment Who Should Attend Finance staff new to the industry who require a grounding in the various specialist discipline areas that typically comprise an oil and gas company finance function Finance personnel who are being developed for broader accounting and financial management responsibilities Audit and information systems staff who have frequent dealings with financial controls and systems Treasury and tax specialists who require a better understanding of E&P finance and accounting Training Method The course uses a combination of instruction, group discussions and practical examples and exercises to ensure delegates absorb both the theory and the practical application of the topics. MDT/ OES Training Programme E&P Accounting Level 1 Page 1 of 3

2 Exploration & Production Accounting Level 1 Course Content Introduction to the E&P Industry Learn what is different about the exploration and production industry and the impact this has on accounting and financial management. Accounting Policies How accounting policies influence the reporting of financial performance Successful efforts and full-cost accounting The use of reserve data in accounting calculations How to calculate depreciation, depletion and amortisation (DD&A) How to conduct an impairment test or ceiling test How to account for decommissioning costs Joint Venture Accounting Understanding a joint-venture (JV) agreement What a JV agreement states about accounting How to prepare and process a cash call Understanding JV billings - how to process a JV billing statement How to allocate JV costs Cost Control and Analysis Project and development costs o AFEs and cost estimating o how to control capital expenditures How to estimate and control production operating costs o Fixed and variable cost analysis o Activity analysis Drilling costs o how to prepare well cost estimates o how to control drilling expenditure o how to forecast drilling AFE costs o how to review well costs post completion MDT/ OES Training Programme E&P Accounting Level 1 Page 2 of 3

3 Testimonials Exploration & Production Accounting Level 1 It was very good, I am new in oil & gas and it was a good course for understanding the industry and the associated accounting procedures. Noora Al Awadhi The flow of the course makes sense and is easy to absorb. The examples given improved my understanding. Mohd Nur Aizat Sidiq The course is perfect when you have just started in the Oil and Gas Industry. Even though we know all the terms, what they really represent is completely different, that s how the course really achieved on developing knowledge. The different examples/experiences were really helpful. Derdour Lamia The training was really useful and will help me a lot in my career going forward. This was very impressive. Nziza Bgoya Very good course! The instructor is great. In a short time it is possible to have a better view and understanding of this subject. Viviane Alves MDT/ OES Training Programme E&P Accounting Level 1 Page 3 of 3

4 Exploration & Production Accounting Level 2 Course Objectives The aim of this training course is to raise to an intermediate level your knowledge and understanding of international E&P finance and accounting. This is achieved by in- depth examination of international practices and current developments across a broad range of relevant topics. You are encouraged to challenge existing methods as a basis for reviewing procedures and introducing improvements in your own work place. Who Should Attend You will achieve maximum benefit from this course if you have already attended our Level 1 course. We strongly recommend that candidates do this. The Level 2 course is suitable for: those who have attended our Level 1 course and who now feel ready to progress to a more advanced level of knowledge and understanding those with a good foundation knowledge in Exploration & Production Accounting Training Method The course will be delivered using a combination of instruction, facilitation of group discussions and the regular use of practical examples and exercises to offer participants the opportunity to understand both the theory and the practical application of the various E&P Accounting topics. The course will be split into three broad topic headings: (as detailed below). Course Content Financial Accounting (2-days duration) Aims to enhance your knowledge of financial accounting and reporting issues unique to the E&P industry. Particular emphasis is placed on achieving a thorough understanding of industry-specific accounting issues and relevant accounting standards. Comparisons are made between International, UK and US standards, and with widely adopted practices in other countries. You will analyse examples from E&P company accounts and see the impact of adopting different accounting policies. Topics Covered Include: Regulation of Oil & Gas Company Accounting Accounting standards applicable to E&P companies. IASB what might change as a result of the ongoing IASB extractive activities draft discussion paper MDT / OES Training Programme Exploration & Production Accounting Level 2 Page 1 of 5

5 Exploration & Production Accounting Level 2 Accounting for Pre-Development Costs Policy choices and accounting standards on pre-licence, exploration and appraisal costs. Commercial Reserves The nature of commercial reserves and their significance in accounting. The DD&A Calculation Calculating DD&A on a Unit of Production basis. Dealing with changes in costs and reserve estimates. Impairment or Ceiling Tests Testing for impairment of assets. Comparison of IAS 36, FAS 144, and FRS 11 requirements. Accounting for Decommissioning Accounting policy choices on provisions for decommissioning. Comparison of IAS 37, FAS143 and FRS12 requirements. Accounting Disclosures E&P company cash flows, standardised measure and other industry specific accounting disclosures. Accounting for Financing Arrangements Recommended practice on accounting for E&P company financing and risk- sharing arrangements. Accounting for Sales Revenue Recommended practice on accounting for oil and gas sales. The timing of revenue recognition and matching of costs. Accounting for E&P Company Taxes Introduction to types of E&P taxes. Deferred tax accounting. MDT / OES Training Programme Exploration & Production Accounting Level 2 Page 2 of 5

6 Exploration & Production Accounting Level 2 Joint Venture & Production Sharing Accounting (2-days duration) This section of the course aims to enhance your knowledge of joint venture and production sharing accounting issues. Particular emphasis will be placed on understanding the accounting requirements resulting from joint venture (JV) and production sharing contracts (PSC). Reference will be made to sample JV and production sharing contracts from different countries and to attempts in the industry to standardize accounting practice, e.g. COPAS, SOAP. You will be encouraged to challenge traditional methodology in order to develop models of good practice that you can apply back in the workplace. Topics covered include: State Frameworks for the Control & Exploitation of Petroleum Reserves Concessionary v Production Sharing arrangements JV Cash Management Cash calling, invoicing and cash management Unitisation and Redetermination How to account for product and cost sharing changes following an equity redetermination JV Billing Arrangements How to account for JV billing statements Multi-currency accounting Accounting for redetermination adjustments JV Cost Allocation Key issues in allocating JV costs Materials & Inventory Accounting Understanding the accounting for material purchases and inventory movements Production Sharing Contracts Understanding the different types of PSC in use around the world Understanding the differences between a PSC and a Concessionary system Calculating government take and company take Cost Oil and Profit Oil calculations Domestic Market Obligations Understanding R factors and their application Product allocations and pricing conventions Accounting for carried interests Accounting for PSCs How to account for PSCs Understanding some of the key issues of PSC accounting such as double taxation MDT / OES Training Programme Exploration & Production Accounting Level 2 Page 3 of 5

7 Exploration & Production Accounting Level 2 Budgeting & Cost Control (1-day duration) The final section of the course concentrates on budgeting and cost control and aims to improve your ability to prepare departmental and company-wide E&P budgets and to control and analyse the costs incurred within an E&P company. Particular emphasis is placed on understanding the nature of costs unique to an E&P company and how these costs behave under different conditions. Realistic examples are provided to encourage you to develop a model of good budgeting and cost control practice that can be applied back in the workplace. The E&P Budgeting section incorporates a team exercise which simulates the preparation of the annual budget of an E&P company. Topics covered include: Performance Measurement Review of the most commonly used industry key performance indicators Cost Control The nature and behaviour of costs How to report, monitor and control costs Incremental and zero-based budgeting Departmental Budgets How to prepare a departmental budget Financial and Strategic Planning Understanding the context, objectives, principles and processes of financial planning and control E&P Company Corporate Budgeting How to develop and apply a budgeting methodology How to evaluate the output from budget preparation MDT / OES Training Programme Exploration & Production Accounting Level 2 Page 4 of 5

8 Exploration & Production Accounting Level 2 Testimonials Being my first exploration & production accounting class, it has enlightened me very much. I truly now know what exploration & production is all about. Jennifer Muhuruzi, Ministry of Finance (February 2014) The course is brilliant and I would like to join another course with MDT. Rita Yusuf, Total E&P (March 2014) The course was very interesting, experience sharing, and will definitely affect my career development in a good way. Hanna Abebe Worku, Africa Oil Ethiopia B.V (April 2014) I have been auditing O&G companies for the last 13 years but never quite understood certain difficult terminologies and calculations. The training course covered these all and I really appreciate it. Rahim Rajan, KPMG (March 2014) The course was within my expectations; I learnt many new aspects regarding PSC s, Financing Arrangements, JV Accounting and Financial Planning. The course was delivered through a mix of tools which involved/reflected current issues in oil and gas. I was really impressed with that. Nathanael Minja, KPMG (March 2014) Waooh! Course content satisfied my personal learning needs. The presence of students from different continents and companies gave the kind of knowledge that adds value to my understanding of accounting. Ero Isaac Okungbow, Midwestern Oil and Gas Company (May 2014) My first time with MDT was 2 years ago, I was joining the Oil and Gas industry and you helped me to see my challenge as a great opportunity. Now, Level 2, has brought to light the new concepts and different ways of interpreting BG s commitments. Thanks to the knowledge shared I will certainly be a better professional, not only technically but now as an enthusiastic employee. Amanda Rocha, BG Group (May 2014) MDT / OES Training Programme Exploration & Production Accounting Level 2 Page 5 of 5

9 Petroleum Project Economics & Risk Management Course Objectives This highly interactive and scenario based training programme is designed to provide you with the ability to apply a structured approach to project justification, investment appraisal and decision making in the upstream petroleum business. At the end of this course you will be able to: Apply economic and risk management evaluation tools for oil & gas project proposals Identify and quantify key uncertainties during field development and full life cycle economics Calculate the economic and financial viability of expenditure proposals projects under risk conditions Develop a structured approach to measuring, managing and combating commercial risk Assess the ranking of alternative projects Prepare convincing project proposals in a way that will win management, partner and government approval. Improve project and business outcomes Who Should Attend This introductory to intermediate level workshop is aimed at those with little or no previous project investment appraisal experience. Recent attendees who have benefited from this training include: Explorationists and petroleum/reservoir engineers Refinery and petrochemical plant managers Asset managers, project managers and facilities engineers Information systems managers and project leaders Management accountants, finance and contracts specialists Government and advisory executives Service/supplier companies staff Training Method About 40% of the time is devoted to instruction and about 60% is spent on practical exercises, case studies, and industry based scenarios. You will need to bring with you to the course your own laptop PC with MS Excel pre-installed. Prior knowledge of spreadsheet techniques is assumed. At the end of the course, you will be able to retain as electronic copy all project examples created during the course. These are designed to be a helpful reference when you return to the workplace. Course Content Basic Concepts Identifying project cash flows and sources of information MDT / OES Training Programme Petroleum Project Economics & Risk Management Page 1 of 3

10 Petroleum Project Economics & Risk Management How to Calculate Project Benefits and Interpret the Answer Project payback Net Present Value (NPV) Internal Rate of Return (IRR) and the cost of capital Profitability Index (PI) Strengths & limitations of each method Project Ranking How to Choose the Best Alternative How to optimise expenditure How to Deal with Inflation and with Exchange Rates Taking Account of Taxation Accounting Measures vs Economic Measures Understanding other financial criteria for decision making Balancing short term vs long term business objectives Dealing with Risk and Uncertainty How to identify and quantify project risks and uncertainties Sensitivity analysis How to draw and interpret spider and tornado diagrams Calculation of maximum exposure as a risk measure Decision trees and the calculation of Expected Monetary Value (EMV) Economics, Risk & Decisions Decision Points are Risk Points Decision points for oil fields and gas fields Risk & probability definitions and concepts Risk identification, measurement & management Forecasting as risk management Assumptions, sensitivities & risk premia Exploration & Appraisal Decisions, Uncertainty, Risk and Exposure Monte Carlo Simulation Economic Models & Spreadsheet Design Development Decisions Work scope definition and options Decommissioning economics & risks Cost estimating and contingencies Financing options Construction contracts MDT / OES Training Programme Petroleum Project Economics & Risk Management Page 2 of 3

11 Petroleum Project Economics & Risk Management Further Development Decisions & Economic Cut Off Preparing Convincing Project Proposals Post Project Appraisal Testimonials Thorough content. Good presenter with real-life examples. Has given me a broad understanding of project life cycle, evaluation techniques, and will hold me in good stead to make better informed decisions moving forward. Andrew Sellars, Santos (March 2014) The course is very insightful and actually touches on all areas that are critical in making investment decisions in upstream business and beyond. Kwesi O. Amanor, Tema Offshore Mooring Ltd (November 2013) Very good at establishing the economics and risk evaluation frameworks and concepts to non-specialists in the subject. Raphael Reis, BG Group (May 2014) Positive, balanced lectures and presentation. Backed by good anecdotes, comments and business cases Patrick Mamindy, Inpex Corporation (March 2014) Gave a good overview of the project evaluation process. Well run course with a professional presenter. Lots of opportunities to ask questions. Lindsay Ferguson, Dana Petroleum Plc (May 2013) MDT / OES Training Programme Petroleum Project Economics & Risk Management Page 3 of 3