Summary
The oil and gas sector has unique needs when it comes to accounting. Exploration and development, production and sales, and the impacts of the energy market all influence how finance and accounting is tracked and measured.
This course is targeted to non-finance professionals who want to understand the financial structures and implications that affect the oil and gas industry. You will examine accounting specific to exploration and production activities, assess costs associated with reserves, and evaluate risks and costing strategies for energy businesses. In addition, you will also explore financial reporting for the oil and gas sector.
- Examine long-term strategic challenges specific to the oil and gas sector.
- Understand important financial accounting and reporting principles.
- Identify economic, financial, and commercial drivers.
- Convey effective and prompt information to key stakeholders.
- Enhance measurement, controls, and performance reporting
- Professionals in the oil and gas industry
- Board members and other stakeholders in the energy sector
- Anyone looking to understand the unique aspects of financial accounting for oil and gas
This course uses a variety of adult learning styles to aid full understanding and comprehension.
Participants will review case studies to highlight key areas of importance and possible areas for faults.
They will be supplied with the best tools required to carry out learning exercises to improve their skills. Participants will analyse the examples to gain a thorough understanding of how these skills, techniques and methods apply in the workplace.
Course Content & Outline
- Describe the role of Exploration and Production (E&P) in the oil and gas sector.
- Review the business environment of E&P.
- Examine risks, rewards, oil and gas field life cycles, and commercial arrangements.
- Outline the role of the finance professional in the oil and gas sector.
- Explore fundamentals of project economics including: project cash flows, cost of capital, time value of money (TVM), decision criteria, and project models.
- Outline financial reporting frameworks for the oil and gas sector.
- Define key accounting principles, standards, and terms.
- Describe the essential components of an accounting system.
- Examine capital and operating expenditures.
- Explore costs associated with resource exploration and appraisal.
- Compare full cost and successful efforts accounting methods.
- Discuss development costs including commitments and tangible assets.
- Define the three reserve categories: proved, probable, and possible.
- Examine the implications of reserve quantity disclosures.
- Discuss present challenges in accessing reserves.
- Identify production costs: lifting costs, maintenance costs, royalties.
- Describe the Depreciation, Depletion, and Amortisation (DD&A) accounting method.
- Use the Unit of Production (UOP) method to calculate depletion.
- Outline the requirements and process for both ceiling and impairment tests.
- Explain the process of reporting on decommissioning liabilities and costs.
- Describe the advantages and challenges of joint ventures.
- Examine the cash flow and reserve implications of production sharing agreements.
- Discuss pricing structures and offtake agreements for long-term gas contracts.
- Outline the structure of interest or risk transfer strategies: farmout agreements, and carried interests.
- Review statements for financial performance, cash flow, and position.
- Calculate and interpret ratio analysis results.
- Discuss the leverage ratios used to evaluate energy businesses.
- Identify strategies to improve business needs and corporate governance.
- Discuss the energy market and its associated risks.
- Outline product life cycles and the basics of Earned Value Management (EVM) for the oil and gas sector.
- Describe how to develop, measure, and report KPIs.
- Analyse the main components of financial statements including investment, budgets, profitability, liquidity, and solvency.
- Identify how to develop and manage risk registers, cost estimates, and contingency plans.
- Apply the Monte Carlo simulation to model probabilities.
- Develop financial and management reporting methods to support decision-making.
- Discuss contract development and management.
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