Finance & Accounting for the Oil & Gas Industry

OBJECTIVES

• appreciate the financial impact of your day-to-day decisions and actions
• work more confidently and effectively with colleagues on financial matters
• improve the quality of information you receive from and provide to Finance
• increase the success rate of requests for authorization of expenditure and make more effective use of funds allocated
• use departmental budgets and monthly management reports to help you exercise financial control of your area of operations
• understand the financial information disclosed in your company’s annual report and accounts
• Learning throughout the program will be reinforced by case studies, worked examples, and illustrative extracts from oil and gas company annual reports

WHO SHOULD ATTEND?

• The program is specifically intended for those who have had little or no previous exposure to company finance and accounting and is also designed for people working in all functional areas of an organization who need a better understanding of accounting and finance in the industry
• It is especially relevant to those who have some financial responsibility within their area of activity and those whose career development involves progression

COURSE OUTLINE

The E&P Business and Project Economics

The Business Environment

• Business objectives
• Stakeholders
• Corporate governance

The E&P Business

• Risk and reward
• Commercial arrangements
• The field life cycle

Project Economics

• Project cash flows
• The time value of money
• Discounting and the cost of capital
• Project economic models
• Decision criteria

Accounting, Exploration and Development Costs

The Accounting System

• Capturing and recording data
• Cash and accruals
• The balance sheet
• The income statement and profit measurement
• Accounting principles and standards

Capital and Operating Expenditure

• Matching costs and benefits
• Assets and expenses

Exploration and Appraisal Costs

• Full cost and successful efforts
• Intangible assets

Development costs

• Commitments
• Tangible assets

Reserves, Production and Cost of Sales

Reserves of Oil & Gas

• Classification of reserves
• Reserve quantity disclosures

Production Costs

• Lifting costs
• Maintenance costs
• Royalties

Depreciation, Depletion and Amortization (DD&A)

• Unit of Production (UOP) method
• Changes in costs and reserves

Ceiling or Impairment Tests

• Test requirement and process
• Accounting for test results

Decommissioning, Removal and Restoration

• Obligations to remove and restore
• Reporting of decommissioning liabilities and costs

Risk and Cost Sharing Arrangements

Joint Ventures

• Cash calls
• Billing statements
• Entitlements and lifting

Transfers of interests or risks

• Farm outs
• Carried interests

Production sharing contracts

• Cash flow implications
• Reserve implications

Long-term gas contracts

• Pricing mechanisms
• Take or pay

Financial Analysis, Budgets and Management Reports

Analysis of Financial statements

• Profitability, liquidity and solvency
• Investment measures

Budgets

• Authorization of expenditure
• The budget process

Management reports

• Responsibility reporting
• Analysis of variances