Course description
Oil and Gas: Accounting Financial Statement Analysis and Trading Multiples (1 day)
Industry Overview
This section will provide a brief introduction to the oil and gas industry
Accounting and Financial Statement Analysis
This section will allow delegates to learn accounting principles applied to oil and gas companies, review and analyse oil and gas companies’ financial reports and relevant disclosures.
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Upcoming start dates
1 start date available
Suitability - Who should attend?
- New hires who have joined the firm late and missed the in-house program
- Individuals looking to fill a knowledge gap
- Experienced bankers looking to refresh their technical skills
- Teams employed in financial strategy roles from non-banking corporations
- Graduates preparing to interview for a role in the finance sector
- Students at business school and looking for a career in finance
Outcome / Qualification etc.
Industry Overview Learning Outcomes
- Oil and gas production and consumption growth and profile
- Global reserves
- Key players: NOCs, IOCs, independents and oil field service companies
- Value chain of one barrel of crude oil (E&P, refining, retail distribution & taxes)
- Stages in the upstream: exploration, appraisal, development, production and abandonment
- Volumes and conversion factors
- Price benchmarks (Brent vs. WTI)
Accounting and Financial Statement Analysis Learning Outcomes
- Reserves and resources definitions (proven developed & undeveloped, probable & possible, contingent resources and prospective resources)
- Exploration and evaluation: Full costs vs. successful efforts accounting methods
- Development expenditures
- Depreciation, depletion and amortisation (unit of production method)
- Borrowing costs
- Abandonment
- Revenue recognition (overlifts vs. underlifts)
- Farm outs vs. farm ins
- Post balance sheet events and impairments
- Disclosure of reserves and resources (US GAAP vs. IFRS)
- Structure and layout of financial reports and filings, interpretation of financial statement disclosures, including PV-10 DCF disclosures under US GAAP
- Standardised measure of cash flows (EBITDA, EBITDAX, DACF, CF to shareholders)
- Analysis of key operational and financial ratios:
- Reserve replacement ratio, reserve life ratio, reserve value ratio
- Production cost per barrel, DD&A per barrel, EBITDAX per barrel, replacement cost per barrel
Comparable Valuation Analysis Learning Outcomes
- Select comparable companies
- Obtain historic and projected data
- Normalise the results and exclude extraordinary charges
- Compute operations metrics: EV/1P or 2P reserves, EV/MCFE
- Compute operational metrics: EV/DACF, EV/EBITDA, EV/EBITDAX, P/CF, Price/NAV and P/E
- We will examine E&P companies listed in the US, Europe and Asia Pacific regions
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