Basic Petroleum Economics

Disciplines

Business & Management

Category

Foundational • Introductory • Reservoir Characterization • Production • Drilling • Completion

Format

Classroom • Live Online 

Available

Public • Private 

Who Should Attend

Entry level petroleum economists, geoscientists and engineers, geoscience and engineering technicians, decision analysts, financial analysts, land managers, oil and gas accountants, and energy professionals who are engaged with building and evaluating economic models for drilling wells, capital projects, operational decisions, portfolio management, mergers, acquisitions, and divestitures.

Description

Energy companies spend money exploring, appraising, and developing oil and gas fields, as well as constructing the infrastructure to produce the fields. Economics are used throughout the life cycle of the asset to provide guidance to managers who are making decisions regarding acquiring leases, gathering data about the producing formations, drilling wells, and creating an asset development plan for the field. Decisions are made regarding secondary and tertiary recovery, infill drilling, divestiture or abandonment of fields using economic models. The work of the petroleum has a significant impact on the successful efforts of the company.

Learning Outcomes

• Fundamental concepts of cash flow from one entity to another including is it relevant, how big is it and when does it occur?
• Cash flow within the phases of the asset life cycle including exploration, appraisal, development, production, and decommissioning.
• Concession and contractual fiscal terms, production sharing contacts, royalty or production taxes, cost recovery
• Net cash flow projections, discounting, net present value (NPV), return on investment (ROI)
• Economic metrics including unit costs, margin, payback, internal rate of return (IRR), present value index (PVI) and corporate hurdle rates
• Building discounted cash flow models
• Incremental economics
• Full cycle economics from exploration to abandonment
• Decision analysis, decision trees, Swanson’s rule, expected monetary value (EMV)
• Sensitivity analysis

Course Content

Participants in this course will learn the basic concepts of petroleum economics. Participates will review and construct simple economic models using spreadsheets. Participants of this course will receive the Introduction to Petroleum Economics textbook (2017) and a lab manual with exercises. All students will be required to have a laptop with Excel installed. Although this is not a programming course, a proficiency with Excel is recommended.

Instructor

Susan Howes, PE, PHR

Venue

SCA Training Center - Houston

Cost

$1,450.00

Date(s)

April 25, 2025