AFC-101 EXPLORATION ACCOUNTING

Cost control and lean management philosophy are the economic reality of today's companies operating in petroleum upstream industry. The ability to prudently manage exploration costs is paramount in a company's success during the current climate of widespread public/regulatory scrutiny. This seminar is an introduction to exploration accounting techniques designed to help the participants better understand the underlying dynamics of cost accounting.  

 

Topics:

1. Understand financial reporting requirements for petroleum companies under IFRS and U.S. GAAP

2. Apply basic concepts and terminology for exploration accounting and finance in oil & gas

3. Develop accounting statements, including a cash flow statement from pro-forma or audited financial statements

4. Distinguish between the different financial statements and their roles

5. Distinguish between financial, managerial, and contract (joint operations) accounting

6. Recognize the different oil & gas accounting methods for petroleum exploration

7. Determine the difference between profits and cash flow

8. Apply capitalization rules and depreciation methods

9. Recognize accounting treatments of joint ventures such as PSC-Production Sharing Contracts or RSA-Risk Services Agreements

10. Recognize how accounting decisions can affect earnings, cash flows, and operational decisions

11. Calculate, understand, and analyze accounting/financial reports and key ratios for exploration

 

 

AFC-102 PRODUCTION SHARING CONTRACT (PSC) ACCOUNTING AND REPORTING

The fiscal relationship between the government and the contracting company is specified in a production sharing contract (PSC). With respect to the right to pursue a petroleum production project in a country, a contracting company typically agrees to pay the government a royalty on production. This royalty payment is computed on gross production volume or revenue before any costs are deducted. In return, the contracting company is entitled to recover the costs it incurs on the venture. The amounts the company can recover during any accounting period for various types of costs are stated as a percentage of either total production or production after deduction of the government’s royalty. This course provides an overview of PSC accounting and reporting requirements for government royalty and contracting company cost recovery of petroleum exploration, development and production projects. 

 

Topics:

1. Accounting principles and practices in upstream oil & gas industry

2. PSC accounting

3. Other PSC Considerations (First Tranche Petroleum, Domestic Market Obligation, Investment Credit, Cost Recovery) 

4. PSC Accounting vs. US GAAP vs. IFRS (International Financial Reporting Systems)

5. Recording of PSC Accounting, US GAAP and IFRS for operator and non-operator

 

 

AFC-103 PSC TAXATION REGIME AND FISCAL SYSTEM

The aim of this course is to understand the local fiscal regime and tax treatment of various PSCs. The intent is to improve participants' job performance by augmenting their comprehension of current practices in PSC taxation and fiscal system within the petroleum industry.

 

Topics:

1. Corporate income tax

2. Branch profit tax

3. Royalties on production

4. Bonuses

5. Resource rent tax

6. Surface rent tax

7. Withholding taxes (capital allowances, dividends, branch remittance, and other incentives)

 

 

AFC-104 PETROLEUM PROJECT ACCOUNTING

This is achieved through an examination of (a) accounting compliance and standards, policies, and practices in the petroleum industry, and (b) the accounting and financial management implications of exploring for and producing oil & gas. An understanding of project accounting also allows a company to trace its financial disbursements and to plan businesses accordingly.

 

Topics:

1. Financial accounting terms and definitions

2. The language of petroleum business

3. Project accounting rules, compliances, standards, and policies

4. Construct the basic accounting statements for project finance

5. Classify revenues, assets, liabilities, and equity

6. Compare different project accounting elements

7. Joint venture accounting (JVA) and reporting

 

 

AFC-105 INTRODUCTION TO ENERGY CONTRACT FRAMEWORK

The course is aimed at orienting participants to beter decision making concerning various exploration, development and production contracts' principles and practices. It offers an understanding of energy contracts' principles and conceptual frameworks using an interactive classroom format; participants will have the opportunity to learn from presentations, exercises, and interactive discussions. Course instructors are experienced commercial advisors and PSCs/RSAs management practitioners, who have delivered services and projects to energy companies, from NOCs (national oil companies) to IOCs (Independent oil companies) to oilfield services company.

 

Topics:

1. Assessment of the energy contracts

2. Practical application of the best practices in reducing the financial transactions costs (i.e.: contracting costs), interest paid, administrative burdens while optimize energy savings

3. Utilization of economic criteria to choose value-accretive investments

4. How to weigh/avoid/mitigate risk and uncertainty

 

 

AFC-106 BUSINESS PLANNING AND FINANCIAL PROJECTION

This course is intended at helping engineerings and technical professionals plan and forecast the business through developing fact-based financial scenarios. The key is through proper understanding of the commercial/economic drivers and how the businesses decisions were implemented that lead to optimal resource allocation while still meeting the petroleum production, development or exploration goals.

 

Topics:

1. Forecasting oil production

2. Defining: reserves, operating expenses, capital expenditures, inflation, factors effecting oil and gas prices

3. Cash flow techniques

4. Economic criteria: interest, hurdle rate, time value of money, selection, ranking criteria

5. Risk, uncertainty: types of risk, mathematical techniques, probabilistic models, uncertainty in economic analysis

6. Financing, ownership in the oil and gas industry: business arrangements between operators, between mineral owners

7. Accounting versus cash flow: accounting principles and definitions, differences between accounting cash numbers, depreciation, depletion, and amortization (DD&A)

8. Budgeting and Forecasting: types, processes, selecting of projects for the budget

9. Economic analysis of operations & maintenance (O&Ms)

10. Business ethics in technology/economic analyses

 

 

AFC-107 OPERATIONAL BUDGETING AND FINANCIAL COST CONTROLLING

Operational budgeting and financial cost controlling covers the theoretical principles and pragmatic application of budgeting and controlling to the petroleum businesses. Participants may choose a case study from a number of real-life exploration, production, facilities, and general business management situations, or they may bring the details of one of their own current projects. Because of this experience with practical situations, participants may use these business management principles right on their first day back on the job.

 

Topics:

1. Understand budgeting of OpEx (operating expenses), CapEx (capital expenditures) and O&Ms (operations and maintenance costs) and cost controlling concepts

2. Determine the inputs and monitor the budgets

3. Trace all relevant inputs to the proper object identifier to better manage budgets

4. Build your own budget

5. Develop actionable key goal indicators (KGIs) and key performance indicators (KPIs)

6. Design budget management control system

7. Leverage the principles of zero-based budgeting and its development and implementation

8. Determine parent-/root-causes of budget variances using the proper tools and techniques

9. Manage and not mismanage operating run-rates/costs

10. Develop excel-based tools for managing and controlling costs

 

 

AFC-108 PETROLEUM ECONOMICS AND FINANCIAL INVESTMENT

Petroleum companies are evolving to become more complex in their operations and yet remain nimble. Most companies' portfolio/projects are growing larger, more expensive and going offshore. As commodity oil & gas prices (from conventional and unconventional sources) and costs fluctuate dramatically in a matter of weeks, it is more prudent than ever to be able to develop scalable budgets and make apt investment plans that are accurate and flexible. The company's budget can either be its roadmap to success or its hindrance to executional excellence.

 

Historically petroleum companies have relied on the outdated budget processes built solely to control costs and not manage operations. Costs should be tied to revenues to insure that the company is achieving its greatest potential and highest level of success. The ability to properly create and manage the operations through the company's budgets and plans is paramount in the 21st century oil & gas company. 

 

Topics:

1. Cash flow: revenue, capital and operating costs, excel-based exercises

2. Economic evaluation: net present value concepts, sensitivity and risk analysis, decision trees, royalty, sources of capital, incremental economics, sunk costs, inflation, annuity, profitability indexes, etc

3. Budgeting: examples and exercises, long-range/strategic planning

4. Cash versus write-off decision: depreciation, depletion, and amortization (DD&A)

5. How to read an annual report: statements, financial ratios, what is and is not included, reading between the lines ad fine prints

6. Worldwide business operations: concessions, licenses, production sharing contracts, risk services agreements, joint ventures, weighted average cost of capital, sources of funding, debt and equity

7. Economics/performance appraisals: purchase, lease, sell, lease-to-own options

8. Practical tips on format and inclusion of economic factors in excel-based analysis

9. Business ethics in investment economics

 

 

AFC-109 TREASURY AND INVESTMENT MANAGEMENT

Sucessfully managing petroleum operation requires a blend of technology, business administration savvyness, and human capital skills. If you already have a firm grasp of exploration or development or production technology, learn to amplify its effectiveness with applied treasury and investment management techniques. This course will provide the fundamentals necessary to enable you to formulate and recommend economic, financial, tax, and fiscal policies of petroleum investments. Budgeting and financing, accounting, and contractual arrangements significantly impact the economic viability of a petroleum project, are covered. Participants practice cash flow techniques for economic evaluations and investigate frequently encountered situations. Participants are invited to submit their own offshore technology or economic problems (in advance), if appropriate. 

 

Topics:

1. Valuation of portfolio investment opportunities

2. Utilization of models to weigh risk and uncertainty

3. Evaluation of decision alternatives using predictive techniques

4. Assessment of how portfolio/project management effects the corporation