INTRODUCTION
This intensive training course is designed to develop the essential skills necessary to prepare and evaluate Oil & Gas and Petrochemical Accounting and Performance Measures. It focuses on the risks currently facing the sector including oil price volatility and changing patterns of demand. It focuses on the latest techniques to evaluate Financial; Operational & Social Performance as well as relevant International Financial Reporting Standards (IFRS) relevant for the preparation of Oil & Gas accounts.
Objectives
This Financial Management for Oil and Gas Companies & Petrochemical Industries training course will give participants the required level of financial awareness and practical application, by enabling them to:
- Analyze the profit and loss account (income statement), balance sheet, and cash flow statement, and use ratios to interpret financial statements the Oil & Gas sector and petrochemical industry
- Gain knowledge of the major risks of the Oil & Gas and Petrochemical sectors and the Tools to manage those Risks
- Learn the latest International Tools and Techniques to develop Skills of Evaluation and Performance Measurement
- Evaluate the Major Issues facing the Oil & Gas and Petrochemical sector
- Appreciate the significant importance of cash flow (rather than profit) and Discounted Cash Flow (DCF) in Oil & Gas companies and petrochemical industries
- Develop costing systems such as Activity-Based Costing (ABC) for optimal decision-making to maximize shareholder wealth
- Appreciate the role of managers in the budget process and the use of Activity Based Budgeting (ABB)
- Determine the cost of capital to evaluate alternative sources of financing and optimal financial structure (gearing)
- Effectively manage cash and working capital to reduce costs and improve cash flow in Oil & Gas companies and petrochemical industry
Course Outline
Day 1 : Overview of Accounting & Financial Essential in Oil & Gas Sector and Petrochemical Industry
- Latest Events in the Oil & Gas Sector - price volatility and supply & demand changes
- The Nature of the Petrochemical Industries
- Managing the Macro-economic Factors, e.g. interest rates, exchange rates, oil prices
- Resources & Reserves
Major Accounting Issues in the Oil & Gas Sector and Petrochemical Industry
- Revenue Recognition
- Costs in Acquisition, Exploration, Development and Production of New Oil or Natural Gas Reserves
- Break Even Oil, Cost Oil & Profit Oil
- Accounting Approaches - The "Successful Efforts" (SE) Method or the "Full Cost" (FC) Method
- IFRS in Relation to the Oil & Gas Sector and Petrochemical Industry
Day 2: Financial Management in the Oil & Gas Sector and Petrochemical Industry
- Oil and Gas Company Financial
- Financial Statement Analysis in the Oil & Gas Sector and Petrochemical Industry
- Profit and Loss Account (income statement)
- Balance Sheet
- Cashflow Statement and Its Importance
- Measurement of Operating Performance
- Measures of Financial Performance and Financial Position
- Risk Measurement
- Limitations of Ratio Analysis
- Annual Reports Analysis
Day 3: Financial Structure Costing and Decision-Making
- Financial Structure
- Cost of Debt
- Cost of Equity
- Weighted Average Cost of Capital (WACC)
- Optimal Capital Structure
- Costing
- Fixed Costs, Variable Costs, and Overheads
- Overhead Allocation, Absorption and the Use of Activity Based Costing (ABC)
- Expenses vs. Inventory (stock valuation)
- Contribution Compared with Profit
- Decision-Making
- Make vs. Buy Decisions
- Shut-down or Contribution Decisions
- Product Mix Decisions and Limiting Factors
- Decisions Trees
Day 4: Capital Budgeting & Financial Ratio Analysis
- Capital Budgeting
- Capital Rationing
- Ranking Investment Projects
- Inflation and Investment
- Using Expected Values and Standard Deviations to Make Decisions
- Purposes of Budgeting
- The Budget Process
- Activity based Budgeting
- Uncertainty and Risk – worst and best outcomes
- Maximin and Minimax Regret Rules
- Financial Ratio Analysis
- Types of Ratios
- Dupont Analysis – Evaluating and Improving Return on Equity (ROE)
- Evaluation of Share Price and Investment Performance
- Evaluating the Financial Performance of Leading International Companies in the Sector
Day 5: Valuation of Oil & Gas Company and Petrochemical Industry
- Types of Valuation Methods
- Payback
- Net Present Value
- Internal Rate of Return
- Discounted Payback
Working Capital Management and Cash Improvement
- Working Capital and Working Capital Requirement
- Managing Working Capital
- Cash Improvement Techniques
- Cash Management and the Banking Facilities
- Mergers and Acquisitions Practices Today