Masterclass: Advanced Strategies in Oil & Gas Finance & Accounting: M2: Advanced Oil & Gas Finance & Accounting Strategies

Masterclass: Advanced Strategies in Oil & Gas Finance & Accounting (Modular Course) 10-14 November 2014, Hong Kong Module 1: Introduction to Oil & Gas Finance & Accounting 10-11 November 2014, Hong Kong Module 2: Advanced Oil & Gas Finance & Accounting Strategies 12-14 November 2014, Hong Kong Each module can be booked separately. Attend all the modules and save US$1,690. Contact energy@euromoneyasia.com for more information.
M2: Advanced Oil and Gas Finance and Accounting Strategies (Day 3-Day 5) Day 3 Advanced Capital Budgeting and Risk Analysis and Expert Issues about Derivatives and Risk Management in the Oil and Gas Industry Session 1: Advanced capital budgeting and risk analysis in the Oil and Gas industry Would you like to master financial forecasting and analysis? If so, this session is a “must” in gaining the cutting-edge skills necessary for sophisticated financial analysis and modelling of oil and gas projects. In this session, Monte Carlo simulation will be used to model uncertainty for key value drivers of large oil and gas projects. Monte Carlo simulation is a powerful tool that can help evaluate what can happen to an investment’s future cash flows and summarise the possibilities in a probability distribution. This is particularly helpful in oil and gas project analysis since the outcomes from large investment projects are often the result of the interaction of a number of interrelated factors (or value drivers) that are highly uncertain. Risk analysis of oil and gas projects using Excel Sensitivity analysis, sensitivity charts, and scenario analysis Advanced risk analysis using Monte Carlo simulation Distribution fitting and correlation assumptions 5 basic rules of thumb in choosing probability distributions Three popular probability distributions for use in simulation models Displaying and understanding output - tornado Charts, etc Modelling energy prices in capital budgeting risk analysis Techniques and challenges in modelling energy prices Modelling energy prices using mean reverting processes incorporating poisson jumps Case studies and Excel applications Case study: Zombie oil and gas wells once abandoned are now profitable again due to technological advances. Session 2: Case study applications and open discussion of crucial issues related to advanced capital budgeting and risk analysis: Shale oil and gas drilling project. In this session, delegates will conduct advanced capital budgeting and risk analysis for an actual shale drilling project in the U.S. Many oil and gas companies around the world are participating in shale drilling projects through joint ventures with U.S. companies. Through the case study analysis, delegates will learn important details about unconventional shale oil and gas exploration and production. Unconventional shale oil and gas exploration and production has only recently become economic with advances in horizontal drilling, drill bit tools such as PDC drill bits, and hydraulic fracturing. This has made these projects economically feasible and zombie oil wells are "coming back to life" with advances in technology. Risk analysis tools such as Monte Carlo simulation will be used to value shale drilling. Delegates are encouraged to bring laptops to analyze the project using the latest software and analysis techniques. Session 3: Current issues about derivatives and risk management in the oil and gas industry Oil and gas companies are facing many financial risks currently and risk management is a critical issue for these firms. Risk management encompasses the identification and assessment of the risks that materially affect company value and enterprise risk management addresses the implementation of a company-wide strategy to manage those risks. In this session, participants will learn about the following topics: What do we mean by risk management and why do firms manage risks? How hedging can increase firm value Introduction to terminology and instruments used in the energy derivatives markets Energy price volatility, types of derivative markets Lessons from hedging mistakes: recent hedging disasters Session 4: Advanced topics in hedging and risk management Do you need more knowledge or want to learn more about derivatives and hedging in this complex industry? If the answer is yes, this session is a must for you. In this session, we pick up where we left off in the last session and cover more advanced topics related to risk management Topics covered include: Hedging, basis risk, and factors affecting basis Petroleum and natural gas price risks and risk management strategies Options (calls, puts, collars, floors, caps) Energy swaps Value-at-Risk (VAR) and Cashflow-at-Risk (CAR) The Greeks (delta, vega, theta, rho, and gamma) and what they mean Energy trading Day 4 Advanced Topics in Valuation of Oil and Gas Companies Session 1: Valuation of oil and gas companies using relative valuation using market comparables - Part 1 Introduction to relative valuation for oil and gas companies Valuation of oil and gas companies using the method of comparables Valuing an IPO Most commonly used valuation ratios (multiples) and DCF valuation techniques for oil and gas companies Enterprise valuation using EBITDA and EBITDX multiples EBITDA and firm free cash flow Why use EBITDA/EBITDX multiples rather than cash flow multiples? Session 2: Valuation of oil and gas companies using relative valuation using market comparables – Part 2 Valuing a privately held firm The effect of risk and growth potential on valuation multiples Adjusting the multiple valuation metric for the private oil and gas firm discount Equity valuation of an oil and gas firm using the priceearnings (PE) multiple Valuing a division using the PE method – example for Exxon Mobil’s Chemical Division Case study applications Session 3: Case study: Valuation of ExxonMobil’s acquisition of XTO energy using relative valuation In this session, we will focus on valuation of a fairly recent acquisition – Exxon Mobil’s purchase of XTO Energy. Was XTO worth the $41 billion offered by ExxonMobil? There are many different methods by which to value firms in the industry; often other industry firms are used as benchmarks in the valuation process. Several will be explored here. There are five questions to be addressed specifically, they include: (1) What should the acquisition price for XTO shares have been? (2) Which comparable firm is the best comparison firm for XTO? (3) Why did ExxonMobil want to acquire XTO? (4) Based on the analysis, did ExxonMobil overpay for XTO or get a bargain? And (5) What additional information could help with this analysis? Session 4: Open discussion of crucial issues from days 1 through 4 In this final session of day 4, delegates will have the opportunity to further explore issues covered in the course. Attendees can choose cases to analyse that most closely match their areas of interest and will have the opportunity to work in a stimulating group setting with other participants. Delegates can share experiences, make suggestions, and query the group for their insights on topics of high concern in the oil and gas industry. Day 5 Advanced Topics in International Accounting Standards and US GAAP for Oil and Gas Companies Session 1: Accounting for hedging under IFRS – IAS 39 and US GAAP financial accounting standards (FAS) 133 What are the current accounting standards as they relate to risk management? In this session, we will discuss these very issues as they relate to US GAAP and IAS Topics included cover: How should a company account to its shareholders for the derivatives it holds? Example of a speculating position and hedging position FAS 133 and IAS 39 (fair value hedge, cash flow hedge, speculative transaction) including definition of hedges, accounting of hedges, and criteria for hedging Measuring hedge effectiveness under FAS 133 and IAS 39. Session 2: Case study applications in hedging and risk management for oil and gas and accounting applications Session 3: Strategies to maximize value in the global oil and gas industry value chain Mergers and acquisitions continue to be a feature of the global oil and gas industry landscape. At the same time we have seen major integrated companies demerging. What are the motives and are these strategies actually creating value? Understanding these trends will help your company make value-enhancing strategic decisions in this competitive industry for future success. In this session, we will discuss the pros and cons and evaluate these strategies energy companies are using for value creation. Strategies employed: mergers, acquisitions and demerging How to unlock value from the energy value chain New entrants and evolving competitive environment Future strategies and best practices for success Case study examples Session 4: Course wrap-up In this final session, delegates will have the opportunity to further explore issues covered in the course Course summary and close