Oil and Gas Financial Management Course

If you have role as petroleum engineer or management for Oil Company, you must understand about financial management related to the petroleum industry.




Oil and Gas Financial Management course is aimed to understand the fundamental of finance applied to the petroleum industry. It provides an overview of the key issues concerned in energy investment, including sources of funds for energy projects, project finance and risks associated with it, and bank borrowing for oil and gas projects.

The topics in the oil and gas financial management should have several topics as listed below;

Financial Management
• Management of Liquidity
• Management of Capital Structure
• Management of Long Term Investments

Financial Objectives
• Maximization of Profits
• Maximization of Shareholders Wealth
Capital Structures
• Principal Components of a Corporate Balance Sheet
• Definition of Major Capital Structure Components

Organizational Structures - Corporation

• Basic Concept
• Operational Concept
• Management Structure
• Subsidiary Corporation
• Wholly Owned Subsidiary
• Not Wholly Owned Subsidiary
• Incorporating a New Oil Company
• Private Company
• Public Company
• Joint Ventures
• Definition
• Joint Venture Agreement
• Management
• Partnerships

Energy Project Finance
• Advantages and Disadvantages of Project Financing
• Characteristics of a Project Viable for Financing
• Parties Involved in Project Financing
• Components of Project Financing
• Project Finance Cycle
• Types of Project Financing
• Nonrecourse Project Financing
• Project Financing Covered by a Guarantee of Completion
• Project Financing Supported by an Undertaking for the Life of the Financing

Sources of Funds for Energy Projects
• Sources of Equity and Debt
• Instruments used in Raising Debt or capital
• Internal and External Sources
• Trade Credit
• Open Account
• Commercial Banks
• Short Term Loans
• Secured Loans
• Unsecured Loans
• Long Term Debt
• Commercial Paper
• Bonds
• Debentures
• International Lending Agencies
• Lease Financing
• Common Stock
• Preferred Stock
• Partnerships
• Venture Capital

Risks Associated with Oil and Gas Project Financing
• Risks in Project Financing that are Within the Company’s Control
• Operating Risks
• Participant Risk
• Engineering Risk
• Completion Risk
• Risks in Project Financing that are Outside the Company’s Control
• Reserve Risk
• Market Risk
• Infrastructure Risk
• Environmental Risk
• Political Risk
• Foreign Risk
• Risks in Project Financing - Lender’s Perspective
• Reserves
• Infrastructure
• Construction
• Costing Aspects
• Capital Costs
• Operating Costs
• Marketing
• Economic Viability
• Risks Versus Capital Availability
• Role of Independent Consultant in Project Finance

Developments in Oil and Gas Industry Financing
• Creative Financing
• Oil Price-Linked Financing Instruments
• Master limited Partnerships
• Leverage Buyouts

Cost of Capital and Financial Ratios
• Weighted Average Cost of Capital
• Weighted Average Cost of Capital as an Investment Criteria
• Capital Rationing Situation
• Financing Ratios
• Current Assets to Current Liabilities: Current Ratios
• Long Term Debt to Net Worth
• Return on Assets and Return on Equity

Financing of Acquisitions and mergers in the Petroleum Industry
• Reasons for Mergers and Acquisitions
• Economics of Mergers and Acquisitions
• Successful and Unsuccessful Mergers and Acquisitions

Privatization of National Oil Companies
• Motives for Privatization
• Methods of Privatization
• Consequences of Privatization
Bank Borrowing for Energy Projects
• Bank Borrowing Based on Oil and Gas Reserves
• Petroleum Production Loan
• Risk Factors in Oil and Gas Financing
• Structuring a Loan Facility
• Determination of Loan Value
• Cover Ratios
• Future Net Revenue to Debt Service
• Remaining Future Net Revenue to Loan
• Elements of a Loan Information Memorandum
• How to Negotiate a Loan
• Loan Approval Process

Books for Petroleum Economics for oil and gas financial management