Economic Evaluation of Prospects and Producing Properties - EPP

Property sales and acquisitions, lending, and investment joint ventures abound in the petroleum industry. What is most important for decision-making is to know the value of the subject asset. The evaluation model is central to understanding a project and valuing each party's interest. The model is the basis for communicating among project team members, managers, and partners. In this course participants learn good evaluation modeling practice and the decision analysis process. Appraisal modeling methods for upstream investments and operating decisions are discussed and experienced in this hands-on workshop. The learning objective is a process for delivering a credible and well-documented evaluation of reserves (or resource) and economic worth. Risk and decision analysis techniques are integral. Personal computer spreadsheets and other software are discussed. Optionally, computers with spreadsheet software may be used in this class. Model inputs include assessments about geologic, engineering and economics. Example calculations show typical engineering formulas employed in property evaluation. Drilling schedule, initial production rate and decline, product price and cost escalations, fixed and variable operating costs, simple taxes, and deal structure are added. The forecasting model translates the physical and economic project/asset description into resource/reserves, production and cash flow forecasts, and several decision criteria. Participants are encouraged to bring examples from their work for discussion. Please contact us if you wish to submit a problem in advance for possible use as a class exercise. Management buy-in and participation are essential to the success of decision analysis in an organization. The course instructor will be pleased to present a short executive briefing to managers and executives not attending the course. Please contact us if you would like to arrange a briefing session at some point during the training week.