Training Course in Financial Strategy and Accounting for Oil and Gas Companies
1Summary
Financing an oil and gas project is one challenge; accounting for it correctly once it is running is another — and getting either one wrong can distort investment decisions for years. This training course in financial strategy and accounting for oil and gas companies was built to close both gaps at once, giving participants the tools to recommend sound financing methods and to prepare, read, and evaluate financial accounts specific to this industry.
The course focuses on the finance and accounting issues that hit the oil and gas sector hardest: IFRS 6 exploration and evaluation of mineral assets, the choice between the Successful Efforts and Full Cost accounting approaches, and the accounting treatment of reserves, resources, and assets.
2Objectives and target group
Who Should Attend?
- Accountants and finance professionals responsible for financial accounting, treasury, budgeting, and management reporting.
- Bankers and professionals working in energy lending.
- Those responsible for raising and managing finance, or for capital investment decisions.
- Those who make decisions based on finance budgets.
By the end of this course, participants will be able to:
- Recommend appropriate methods for financing capital projects and evaluate capital investment proposals.
- Prepare financial statements in line with International Financial Reporting Standards.
- Evaluate financial statements to identify and recommend improvements within their own organization.
- Apply the latest tools and techniques relevant to their role, supporting their career development.
3Course Content
Module 1: The Oil and Gas Sector in Strategic Context
- The nature of the oil and gas sector and the business and financial environment surrounding it.
- Current and future challenges: a question of supply and demand.
- Volatility in demand, energy prices, exchange rates, and interest rates.
- Resources and reserves, and the ongoing need for research and development.
- Financial issues that shape strategic development and growth.
Module 2: Accounting Foundations for Oil and Gas
- The accounting system and how to read the annual report.
- Preparing financial statements in accordance with IFRS.
- IAS 18 revenue recognition and IFRS 17 revenue from contracts with customers.
- IFRS 6: exploration for and evaluation of mineral assets.
- Accounting approaches: the Successful Efforts (SE) method versus the Full Cost (FC) method.
Module 3: Accounting for Reserves, Resources, and Assets
- The size and importance of resources and reserves, and how they are classified and disclosed.
- Accounting for assets under IAS 16, 36, 37, 38, and 39.
- Depreciation, depletion, and amortization (DD&A), and ceiling or impairment tests.
- Decommissioning, removal, and restoration of assets.
Module 4: Structuring Combinations, Joint Arrangements, and Production Sharing
- Why cooperation matters in a capital-intensive industry.
- IFRS 3 business combinations and IFRS 10 consolidated statements.
- IFRS 11 joint arrangements, joint operations, and joint ventures.
- Production sharing agreements and their revenue, cost, cash flow, and reserve implications.
Module 5: Financing Growth and Capital Decisions
- Identifying growth opportunities and financing them through equity, debt, or alternative sources.
- Evaluating capital investment using Payback, ARR, NPV, and IRR.
- Internal and external capital rationing.
- Sources of finance, the optimum capital structure, and the cost of capital.
- Financial forecasting in Excel, and modelling energy prices in capital budgeting.
- Managing uncertainty around production, prices, capital costs, and construction delays.
Module 6: Analyzing Performance and Managing Financial Risk
- Analyzing financial statements: profitability, liquidity, operational, and solvency measures.
- Off-balance sheet items and contingencies.
- Investment measures used by leading international oil and gas companies, and improving return on equity.
- Developing and implementing a risk management strategy, including risk analysis in Excel.
- Sensitivity analysis, scenario analysis, and Monte Carlo simulation.
- Hedging energy prices, interest rates, and foreign exchange, and accounting for hedging under IFRS.
Module 7: Executing Strategy Through Advanced Decisions and Project Delivery
- Strategic planning and decision-making in a volatile market, supported by analytical tools.
- Diversifying income streams by balancing upstream, midstream, and downstream activities.
- Growth strategies: exploration, diversification, and vertical or horizontal integration.
- Mergers, acquisitions, joint ventures, production sharing agreements, and strategic alliances.
- Estimating activity durations and costs, critical path analysis, and manpower planning.
- Earned value analysis, budgetary control, and variance analysis.
- Implementing and managing change, suspension, or shutdowns.