Upstream Oil & Gas Risk, Investment Appraisal and Decision Making for Non-Technical and New Technical Professionals
From Technical Fundamentals to Commercial Understanding
This three-day introductory course — an industry-oriented version of one taught to graduate students — is meant for those with limited experience in geoscience, engineering and/or oil and gas commercial modelling. It is a practitioner’s tour of how risk and uncertainty in the industry are quantified and combined with petroleum economics to determine the intrinsic value of upstream exploration assets. No industry knowledge is assumed.
Learning Process & Outcomes
Course material, broken down into simple examples, is anchored around the quantification of Expected Monetary Value (EMV) — “risked value” — of an unexplored oil and gas target area, or prospect. We also discuss how prospects become economic “Reserves” ( a formal term).
Day 1: At the heart of petroleum valuation is an appreciation of uncertainty and risk. The course begins with an introduction to / refresher of uncertainty principals and modelling them via “Monte Carlo” simulation. Basic statistics are explained more through pictures than formulas.
We then apply these in examples of how uncertainty is accounted for when estimating petroleum volumes, in the event of a discovery. In the process, we help demystify some of the headline numbers from expert Reserve reports, which are required by law in many jurisdictions.
Day 2: We show how exploration prospect risk is calculated, to show how likely they are to be discovered at all. We then “marry” all these risks to basic discounted-value based petroleum economic modelling, to calculate EMV for a single prospect. On the way, we cover key topics, including economic limits, “above-ground” project risks, and discounting’s sometimes counterintuitive effects.
Day 3: Everything covered so far gets applied and “cemented” in a competitive bid round simulation, run on a custom Excel model. Teams get an investment “war-chest” of funds to use to bid for any combination of up to 8 exploration prospects, competing to craft portfolios with the highest EMV. The assets face an “obstacle course” of uncertainties. Prizes for winners!
Paul Chernik, Director, ERCE
A Professional Reserves and Resources auditor registered with APEGA and the SPEE. Reports to the LSE, AIM, TSX and ASX markets. 16 years industry experience.
Ken Kasriel, Principal Economist
24 years industry experience; lead author, “Upstream Petroleum Fiscal and Valuation Modeling in Excel”
Prerequisites / Resources
Delegates will need laptops and a basic familiarity with Excel. Students get a documented basic economic model, a 180-day version of Crystal Ball, post-course exercises, and a copy of Ken’s book
Per-delegate fee is £2,550 + VAT for a London-based course (including in-house). Other locations are discussable.
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“I absolutely loved the approach of the course with an assumption of some people having no experience with decision making/economics. Lectures were very clear and easy to follow.
This has somehow reminded me of “‘topic’ for dummies” books series. Very up to the point and easy to understand to gain the knowledge. You’ve started from the basics and built up with time, which I think is crucial.
I would definitely recommend the course to someone interested in statistics in general, and in-licensing rounds in particular.” Veronika Kustkova, IHS Markit CIS Regional Lead
“I thoroughly enjoyed the 3-day course led by two industry professionals….
The elements which contribute to the overall valuation of an oil and gas reservoir was extremely insightful. The bidding exercise was very fun and also insightful.
After the course I have begun to ask more questions at talks and seminars regarding the economics and risks of exploration projects both past and present. Furthermore, I have developed a keen interest in statistical modelling and economics, something which I previously thought I had no major interest in.
The course has been one of my favourites on my current Masters programme.” Conall Cromie
“I enjoyed the course and found it very beneficial… The final exercise was a great way to apply everything we had learnt over the few days in a fun but realistic way…
It brought a lot of new concepts to my attention, most of which have been reintroduced since in other modules but with your course having given a very solid starting point it’s been easy!” Jodie McNamara
“I would see anyone participating gaining value from it particularly technical oil and gas professionals/ students with little knowledge over the risks associated with exploration and production.” Uthman Hussein