Overview

Prospects and Producing Properties Economic Evaluation 

About the Course

 The petroleum sector is rife with lending, joint investments, and sales and purchases of real estate. The worth of the relevant asset must be known in order to make decisions. Understanding a project and valuing the interests of each party depend heavily on the evaluation model. The model serves as the framework for communication between partners, managers, and members of the project team. Participants in this course gain knowledge of the decision-analysis process and excellent assessment modeling practices. In this practical course, appraisal modeling techniques for upstream investments and operating decisions are addressed and shown. A process for providing a reliable and well-documented evaluation of reserves (or resource) and economic worth is the learning objective. Techniques for risk and decision analysis are essential. Spreadsheets on personal computers and other software are explored. In this class, computers with spreadsheet software are optional. Evaluations of geology, engineering, and economics are model inputs. Examples of computations demonstrate common engineering formulas used in the assessment of properties. In addition, deal structure, the drilling schedule, the beginning production rate and decline, the product price and cost escalations, the fixed and variable operational costs, and the simple taxes are included. The physical and economic project/asset description is converted into resource/reserves, production and cash flow projections, and a number of decision criteria via the forecasting model. It is suggested for participants to bring examples from their own work for discussion. If you would like to submit a problem in advance that could be used as a class exercise, please get in touch with us. The success of decision analysis in an organization depends on management support and participation. Managers and executives who are not enrolled in the course will be happy to hear a brief executive briefing from the course teacher. If you would like to schedule a briefing session during the training week, kindly get in touch with us.

Target Audience

 Managers, planners, engineers, geologists, geophysicists, and those who are new to the duties of analysis and evaluation

Course Objectives

 Participants will pick up skills in:

•  Describe the steps in the decision analysis process as well as the management and analysis team's separate roles.
• Describe the influence diagramming and decision framing phases.
• Describe and analyze risk and uncertainty judgements as probability distributions.
• Describe common prejudices and how to reduce them.
• Talk about common errors and statistics.
•  Use joint probability tables, probability trees, and Venn diagrams to represent discrete risk events. Calculate or extrapolate the joint and marginal probability.
• Describe expected value and its crucial position in a sensible, consistent decision-making process. Describe the operation of the Monte Carlo simulation, reward tables, and decision trees as alternate calculating methods.
• Create and solve decision models to serve as the foundation for assessing alternatives.
• Utilize decision tree analysis to evaluate investments and create alternative designs.
• Recognize and use sound cash flow modeling techniques.
• Understanding the principles of accounting and finance is important for cash flow modeling.
• Calculate present value and increased cashflow estimates accurately.

 Course Outlines

• Decision Models, Project Threats and Opportunities, Value of Information Overview, Benefits and Limitations, Decision Tree Analysis
• Monte Carlo Simulation: Traditional and Latin Hypercube Sampling, Portfolio Issues, Overview of Optimization, Benefits and Drawbacks
• Value metrics, numerous objective decisions, HSE considerations, capital constraints, risk aversion, and reliable analysis are among the criteria for making decisions.
• Modeling the Decision entails the decision-making process, problem framing, influence diagrams, common petroleum risks, sensitivity analysis, modeling correlations, components of good evaluation practice, accounting concepts useful in modeling, avoiding common errors in modeling cost and price escalations, and calculating present value; basic models for portfolios
• Three basic probability rules, Venn diagrams, calibration and eliciting judgments, selecting distribution types, common misconceptions about probability, judgments, and avoiding estimate biases are all part of basic probability and statistics. random variation
• The Expected Value Concept: its base, features, and potential hazards Evaluation of an expansion well placement using probabilistic reserves ideas as a team exercise
• Problem framing, recommendations for sound analysis, team analyses, computer tools (discussion and demonstrations), risk mitigation