Real Options Valuation for

Transcription

1 Comprehensive course notes plus a CDwith an extensive collection of templates and worked examples included. Real Options Valuation for Oil & Gas Investments Go beyond simple DCF analysis with a more sophisticated valuation framework 20th October nd October 2014, Kuala Lumpur, Malaysia Petrosync Distinguished Lecturer Principal Analyst Access Analytic Solutions Masters (Applied Finance), B.Com (Accounting & Information Systems), FAIM, F Fin, MAICD, CISA, Microsoft Excel Expert Over 15 years experience in chartered accounting, business management and consulting, with extensive experience in financial modelling, forecasting, valuation, model auditing, and management reporting for clients throughout the world Highlighted previous oil & gas experience include auditing and developing various financial models for major Chevron s assets Author of a number of white papers on financial modelling on subjects such as Financial Modelling Best Practices and Financial Model Auditing What leading organizations have said about Excellent course content, very relevant to my work. Very well-taught and extremely relevant to practical job application. Very good course with very knowledgeable presenter. Excellent CD with good live examples. Very worthwhile, informative course. Very relevant in terms of my day-to-day work. Very good course with great mix of Excel and finance methodology. Supported by

2 Course Overview Discounted cash flow is a well-established method for valuing projects. Yet despite its success, it can omit significant value that exists in oil & gas projects because it doesn t realise the value of the inherent flexibility management has in projects of this nature. This can lead some companies to reject projects that are highly uncertain with significant upside potential because they don t realise the value that exists within the project. The Real Options valuation methodology provides a very useful alternative approach in situations where traditional discounted cash flow analysis is inadequate or too rigid. Real Options is often underutilised since it is not well understood. This practical course is focused on showing participants how Real Options can be used to add value to real-life projects, not explaining complex mathematical concepts. This 3 day course is a mixture of case studies, discussions, group exercises, and individual hands-on exercises that will enable you to gain a thorough knowledge of the real options valuation context, tools and techniques. Course Objectives ACQUIRE a working knowledge and application of Option theory UNDERSTAND the significance of value and how to MAXIMIZE the value of assets OVERCOME the short-comings of DCF analysis with a better working valuation framework IDENTIFY situations where the application of Real Options valuation will be most useful UTILISE binomial trees in real options evaluation effectively MINIMIZE risk and uncertainty in projects using Monte Carlo simulation in real options application ADD value to real-life oil & gas projects with the use of real options application Specially Designed for This course is designed for staff involved in Project Evaluation, Feasibility Studies or Company Valuations including Business & Finance Analysts, Executives & Managers Corporate Finance Executives & Managers Budgeting/Forecasting Managers Finance Managers & Financial Controllers Economists Prerequisites Petrosync Quality Limited Attendees The course has limited seats to ensure maximum learning and experience for all delegates. Financial Advisors & Managers Project Investment Executives & Managers Investment & Corporate Bankers Investment and Credit Analysts Participants are not required to have advanced mathematical or finance skills in order to benefit from this course however they should be familiar with : Basic statistical concepts such as normal distribution, standard deviation etc Discounted cash flow concepts Micosoft Excel to at least an Intermediate level Certificate of Attendance You will receive a Certificate of Attendance bearing the signatures of the Trainer upon successful completion of the course. This certificate is proof of your continuing professional development. Interactive Training You will be attending training designed to share both the latest knowledge and practical experience through interactive sessions. This will provide you with a deeper and more long-term understanding of your current issues. High Quality Course Materials Printed course manual will provide you with working materials throughout the course and will be an invaluable source of reference for you and your colleagues afterward. You can follow course progress on your laptop with soft copies provided.

3 Real Options Valuation for Oil & Gas Investments 20th Oct nd Oct 2014, KL, MALAYSIA DAY 1 Asset Value & Valuation What is value? Why do assets have value? How is it created and maximised? [Case Study] : Maximising value in a company sources of generating value in a multi-function company Value of flexibility. Discounted Cash flow (DCF) valuation frameworks Weighted average cost of capital (WACC) [Case Study] : The Changing cost of Capital over the life of a business. Participants will discuss a sample company and see how its cost of capital changes as the business matures Internal rate of return (IRR) [Case Study] : The 4 IRR cases Participants will examine 4 different investment profiles to understand and explain the different IRR situations that can arise Relationship between WACC, net present value (NPV), and IRR [Case Study] : Using the NPV valuation framework In this series of hands-on exercises, participants will construct a financial model for a O&G project to forecast cash flows then combine this with discount factors to calculate a net present value (NPV) for the project. Short-comings of DCF DAY 2 Real Options Review of options theory Call & put options - Premium - Strike price - Options style a.) American, European & Asian Style, and more b.) Plain vanilla versus Exotic options Options - Outright options - Embedded options - Real options Flexibility as option - 1-sided right vs. 2-sided obligation - The real options approach [Case Study] : Applying option theory This includes a series of exercises in charting financial options for a variety of scenarios Application of this to project valuation through Real Options DAY 3 Real Options Application Identification of situations where Real Options valuation is most useful [Case Study] : Introduction to Real Options This includes a series of exercises in applying Option Theory to real options in a variety of scenarios, including identifying and framing the real option Application of Real Options to investment decisions in oil & gas situations such as: - Abandonment/Closure - High-risk, high uncertainty projects - Deferred investment - Contraction& expansion options in projects Sensitivity analysis Using Monte Carlo analysis to allow for uncertainty in inputs [Case Study] : Introduction to Monte Carlo simulation & the application of this to real options. Participants will work through a series of Excel examples designed to illustrate how to calculate real options using a variety of methods including Monte Carlo Simulation and the Black-Scholes method Use of binomial trees to illustrate the valuation calculations to management. [Case Study] : Utilising binomial trees in real options evaluation Participants will learn the binomial trees and then apply this to a variety of O&G situations using a series of Excel exercises [Case Study] : Applying real options to a variety of real-life situations and projects. Participants will apply real options theory to firstly frame the options, then calculate valuations for a variety of real-life projects and opportunities. Participants may also suggest their own scenarios. Presentation of results Summary & Conclusion IN-HOUSE SOLUTIONS SAVE COST IMPROVE PERFORMANCE REDUCE RISK PetroSync understands that in current economic climate, getting an excellent return on your training investment is critical for all our clients. This excellent training can be conducted exclusively for your organization. The training can be tailored to meet your specific needs at your preferred location and time. We will meet you anywhere around the globe. If you like to know more about this excellent program, please contact Jerry Tay (Conference Director) on or jerry.t@petrosync.com

4 Real Options Valuation for Oil & Gas Investments 20th Oct nd Oct 2014, KL, MALAYSIA Petrosync Distinguished Lecturer Principal Analyst Access Analytic Solutions B.Comm (Accounting & Information Systems), Masters (Applied Finance & Investment) current, CISA, AIMM, A Fin, Microsoft Certified Excel Expert has extensive experience in financial modelling, forecasting, valuation, model auditing, and management reporting for clients throughout the world. He is skilled in the development and maintenance of analytical tools and financial models for middle-market companies to large corporates, at all levels of complexity, in both domestic and international settings. He has worked with extensively with Chevron plus a variety of mid-size producers. He provides training in financial modelling for companies throughout the Asia-Pacific region. Before Access Analytic, Jeff spent 6 years working in the Corporate and IT Consulting divisions of a large, multinational Chartered Accounting firm. Jeff is the author of a number of white papers on financial modelling on subjects such as Financial Modelling Best Practices and Financial Model Auditing. Earlier in his career, he spent five years in banking and finance. HIGHLIGHTS FROM HIS OIL AND GAS EXPERIENCE INCLUDE : Development of economic models to assist Decision Analysts modelling for a wide range of scenarios for major Chevron assets. Auditing and further development of 20-year models developed by Chevron s Strategic Planning Division for their North West Shelf assets. Development of business plan and budgeting models for Chevron s North West Shelf assets. Development of cash flow and taxation models for Chevron s Australasian Business Unit. Consulting on Sarbanes Oxley spreadsheet remediation and risk assessment. HIS INTERNATIONAL OIL & GAS CLIENTS INCLUDE Petronas Chevron Carigali Hess Carigali-PTTEPI Operating Company Petrofac Malaysia PetroVietnam Hoang Long Hoan Vu JOC JX Nippon Oil & Gas Woodside Technip Strike Energy Otto Energy Leighton Contractors Petroleum Finance, Economic & Business Training Courses (JANUARY - DECEMBER 2014) DATE COURSE TITLE INSTRUCTOR 23rd 25th Apr Upstream Petroleum Economics, Risk & Fiscal Analysis Guy Allinson 25th 27th Aug Practical Accounting in JV and PSC Ahmed Badawy 3rd 7th Nov Advanced Financial Modelling for Oil & Gas Michael Rees 16th 19th June IFRS in Oil & Gas Accounting Tariq Zia 20th 22nd Oct Real Options Valuation for Oil & Gas Investments 26th 28th Nov Upstream Petroleum Economics, Risk & Fiscal Analysis Guy Allinson 22nd 26th Sep Crude Oil & Trading & Price Risk Management David Ford For a copy of PetroSync s Training Calendar for 2014, please visit :

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