Intorduction

This course is aimed at professionals from all areas of business who require a better understanding of how finance works. The course offers insights into the main factors that are essential to the successful financial management of Oil and Gas corporations. In an uncertain economic environment managers need to be aware of the power and importance of key stakeholders – shareholders, bankers, customers and suppliers. Managers need to efficiently allocate resources, whilst recognizing environmental and ethical concerns, controlling risks, and effectively communicating strategy and performance.

This course provides professionals from non-finance backgrounds with a fundamental grasp of the important principles of finance. This gives them the confidence to work alongside financial experts, make informed choices and fully participate in the management process.

This course will feature:

• The relevance & importance of accounting & finance to the success of your business.
• The unique features of Oil & Gas accounting that impact on reporting & decision making.
• Budgeting and costing techniques & how to apply them.
• The techniques available to determine the most profitable & worthwhile investments for your business.
• Effective ways to control the financial risks of your business.

Objectives

• Understand and evaluate corporate financial reports.
• Determine sources of capital, and capital structure.
• Identify and appraise wealth-generating investments.
• Recognise, quantify, and control financial risk.
• Understand & apply accounting & financial techniques in an Oil & Gas corporation.

Day One

Finance and Accounting

• The different meanings of ‘Finance’
• Why Finance is important for your business
• Raising finance – you need a Business Plan
• Sources and types of finance
• The financial accounting system
• Recording oil and gas transactions

Day Two

The key elements of Oil and Gas Reporting

• The major differences between US GAAP and IFRS reporting
• The treatment of exploration and evaluation costs – ‘successful efforts’ or ‘full cost’
• Recognition and valuation of oil and gas assets – tangible and intangible
• Revenue recognition – upstream, midstream and downstream
• Financial analysis techniques – common sizing and ratio analysis
• Analysis and interpretation of Oil and Gas company reports

Day Three

Accounting as an Information System

• Management Accounting as an effective tool for communication
• Costing oil and gas operations and processes
• Cost-Volume-Profit and break-even analysis
• Oil and gas budgeting – objectives, methodologies and processes
• How to prepare budgets for oil and gas operations
• Analysing variances between budget and actual results

Day Four

Cost of Capital and Investment Appraisal

• Why you need to know your Cost of Capital
• The cost of equity, cost of debt, and weighted average cost of capital (WACC)
• Identifying new investment opportunities for your oil and gas business
• Basic investment appraisal techniques – ARR and Payback
• Discounted investment appraisal techniques, NPV and IRR
• Capital rationing decisions using the profitability index and Excel solver

Day Five

Financial Risk Management

• The main types of risk and principles for risk management
• New investment risk in oil and gas operations
• Financing risk
• Interest rate risk
• Foreign currency risk
• The corporate governance requirements for effective risk management