Financial and Accounting Practices in the Oil and Gas Industry

Introduction:

This training course on finance and accounting strategies in the oil and gas industry focuses on developing essential skills and techniques for making strategic decisions that enhance profitability, reduce expenses, and effectively manage financial risks. Given the high capital requirements, lengthy ROI timelines, and ongoing pressure to replace resources, mastering finance and accounting principles is crucial for success in this sector.

Oil and gas companies operate in a volatile and competitive environment characterized by fluctuating oil prices, shifting demand and supply levels, and the need to minimize operating costs while maintaining quality and safety. Ensuring strong returns for investors and stakeholders is paramount.

This course provides insights into various strategic options for achieving sustainable growth despite these challenges.

Objectives:

By the end of this course, participants will be able to:

• Critique the challenges and opportunities in the oil and gas sector.
• Apply advanced skills and techniques to support strategic planning.
• Make informed financing decisions and capital investments.
• Recommend strategies to mitigate financial risks.
• Manage new projects and initiatives effectively.

Training Methodology:

• Lectures with interactivity
• Case analysis
• Group work
• Financial games
• Training sessions
• Simulations
• Expert panel discussions
• Group discussions

Course Outline:

Unit 1: Strategic Issues Facing the Oil & Gas Sector

• Characteristics of the oil and gas sector
• Current and future challenges, including supply and demand issues
• Fluctuations in consumption, energy tariffs, currencies, and interest rates
• Rationale for development and exploration of deposits and reserves
• Financial constraints impacting strategic development and expansion

Unit 2: Advanced Strategic Decisions

• Strategic planning and decision-making under uncertainty
• Analytical techniques for strategic planning
• Revenue generation approaches
• Integration of upstream, midstream, and downstream activities
• Growth strategies: Exploration, diversification, integration
• Mergers and acquisitions, strategic alliances, and joint ventures

Unit 3: Financing Strategies in the Oil & Gas Sector

• Capital structure and cost analysis
• Capital investment appraisal techniques: NPV, IRR, modified IRR, and payback period
• Forecasting and analyzing financial data using Excel
• Addressing uncertainties in production, prices, capital costs, and construction delays
• Incorporating energy price risk into capital budgeting

Unit 4: Financial Risk Management Strategies

• Formulating an integrated risk management strategy
• Risk evaluation using Excel and other tools
• Sensitivity analysis, scenario analysis, and Monte Carlo analysis
• Hedging energy price risks with financial instruments
• Hedge accounting under IFRS Standards

Unit 5: Project Management for Strategic Goals

• Estimating project duration and cost, including uncertainty
• Managing critical path and resources for successful project delivery
• Earned value management in project scope
• Budget control, performance measures, and variance analysis
• Managing changes, suspensions, and project closures