Upstream Tax & Royalty Fiscal System Modelling

The course covers: The evolution of petroleum fiscal systems Taxation; how to calculate and how to model it Sliding scale Royalty mechanisms Capital allowance and depreciation methods R-factor and rate of return systems Economics fundamentals (discounting, NPV, IRR, Expected value etc) Government fiscal take calculations and global comparisons How to model petroleum fiscal systems in Excel Plus numerous case studies and a tax and Royalty fiscal system modelling workshop Course objectives: This brand new course has been introduced in response to industry demand for training in fiscal systems with an emphasis on how to model the complex algorithms in Excel™. It covers in detail the main elements of tax and Royalty fiscal systems (including sliding scales, r-factors, depreciation, capital allowances etc). The course has a global outlook where numerous worldwide examples will be drawn on and fiscal take comparisons made. Underpinning any fiscal model are economic valuation principles. Therefore concepts including discounting, net present value, and expected value will also be studied. This course brings the theory to life, allowing delegates to build and interpret their own tax and Royalty fiscal model based on a real life example. Who should attend: Petroleum economists Business development, asset and commercial managers Lawyers involved in the industry Analysts working in energy groups within the financial services sector Geoscientists and engineers Finance personnel working in the industry Auditors working in the industry
Day 1 An introduction to upstream economics & upstream fiscal systems The history and evolution of petroleum fiscal systems The tax/royalty system legal and fiscal framework The tax/royalty flowchart, content and format The fundamentals of upstream economic analysis Discounted cashflow Discount rate, discount factor and discount method The cost of capital and the hurdle discount rate Capital budgeting techniques (NPV, IRR, DPIR, Payback) Valuing an asset, making development and investment decisions Inflation, cost escalation, real vs nominal cashflows Managing risk Day 2 Royalties Government royalties Sliding scales including R-factor Overriding royalties Net profit Interests Royalty calculation and examples Case studies: Namibia, Brazil, Australia, Venezuela, Argentina, India Corporate income tax Depreciation methods Capital allowances Chargeable income Double taxation and tax treaties Tax losses Case studies: UK, Poland, Netherlands, Thailand, Norway, Tunisia, Australia, Nigeria Field and profit taxes Origins of field and profit based taxes Allowances and rates Case studies: UK, Norway, Denmark, Netherlands, Ghana, Nigeria, Angola, PNG, Australia, Brunei, Pakistan, Brazil, Venezuela Sliding scale fiscal mechanisms Production rate Production volume R-Factor and rate of return methods Step versus incremental methods Sliding scale calculations and examples Case studies: Romania, Faroes, Tunisia, Nigeria Other taxes VAT Withholding tax Import/ export duty Environmental taxes Case studies: Norway, UK, Algeria, Australia Day 3 Ring fences Taxation ring fence Ring fence calculations and examples Case studies: UK, Faroes, Denmark, Australia, Italy, Ireland, Angola The economics of PSC’s Investor cash flow Government cash flow Carried interests Comparison with production sharing contract systems (cost recovery, profit share, entitlement) Global fiscal take comparisons Case studies: UK, Namibia, Ghana, Bahamas, Algeria Fiscal modelling workshop A economic modelling workshop modelling the fiscal terms in Microsoft Excel™ Understanding the fiscal structure & algorithms of the UK fiscal system Determining the field, economic & fiscal data and building the input decks Step by step construction of the economic model Running the economic cases & evaluating the results Analysis of the sensitivities Model solution provided to delegates Course summary and close