A New Era of Project Economics and
in Face of Uncertainty
September 12th - 14th 2017 –Jakarta
Moving from the static approach to probabilistic and dynamic approach framework
for improved investment decision making in upstream project
This three day course is designed for professional or investor who wants to learn investment evaluation in upstream project and to improve their skills in evaluating techniques including risk quantification.
At the end of the course participants will:
- Have acquired the knowledge of best practice of investment strategy in upstream project
- Have acquired the skills to identify, model and evaluate a project using deterministic and probabilistic approach
This course will:
- Learn the basic of evaluation techniques as well as the practical the implementation of these techniques to upstream project
- Enable participants to identify and quantifying risk using probabilistic Monte Carlo Simulation
- Learn how to assess the value of information in managing the uncertainty of the upstream project using decision tree analysis
- Bring participants up to date on recent development in project modeling and evaluation using advance valuation techniques.
The course/workshop comprises 12 chapters with respective workshops where the attendee will apply the theory in a real upstream project data set. To achieve this, the attendee will use the free SIPMath add in excel for probabilistic risk analysis, and excel spreadsheet for real options analysis.
Day 1: Conventional Analysis
1. Introduction – Fundamental of Upstream project
2. Key Valuation Measure:
Undiscounted Cash Flow Analysis (IRR, Pay Out Time)
Discounted Cash Flow Analysis (NPV, PI)
Workshop 1: Building a PSC cash flow model
3. Identifying sources of uncertainty – Sensitivity analysis (spider and tornado charts)
Workshop 2: Building a sensitivity model using data table function
4. Building economic analysis for different reserve and development scenario
Workshop 3: Building a scenario model using index match function
Day 2: Probabilistic and Decision Tree Analysis
1. Introduction to uncertainty and risk – Monte Carlo simulation;
Workshop 4: Building a quantitative Monte Carlo model using SIPMath tools.
2. Quantifying variable uncertainty in upstream project using simulations techniques;
Workshop 5: Assessing the effect of variable uncertainty on project’s NPV.
3. Introduction to decision tree scenario analysis.
Workshop 6: Building a decision tree analysis for Exploration drilling decision.
4. Quantifying Value of Information (VOI) in appraisal drilling or seismic activity;
Workshop 7: Assessing VOI in appraisal drilling prior to Final Development Decision (FID).
Harvard Business Case Study: Penzoil vs Texaco
Day 3: Modern Real Option Analysis
1. Introduction to real options analysis – Birth and institution behind Real Options
2. Conventional vs Modern Valuation
Workshop 8: Fundamental difference between DCF vs Modern
3. Market Comparable – Modern Valuation techniques (Paddock Siegel and Smith model)
Workshop 10: Valuation undeveloped reserve
4. Implementing Real Options in merger and acquisition process
Workshop 11: Case Study In Indonesia:
· Acquisition of Hess Assets in Indonesia
· Pertamina vs Shell in Semai V tender
· Acquisition of PSC block in East Java
As the course is Excel-Based, it would be highly desirable if participants could bring with them their own laptop computer
1. Extensive set of course notes detailing valuation concepts, numerical calculations and practical valuation examples.
2. Excel Spreadsheets Model .
3. Free SIPMath software for Monte Carlo Simulation
Xperiential and Professional Training (XP training)
Ngemplak Karangjati Jl. Monjali No. 45 RT. 003 RW 036 Sinduadi Mlati Sleman Yogyakarta 55284
CP : Anton Wibowo (08118202389), Indah cahyani (08122758968), Naila Zahara (081321754000)