Introduction 

This training course aims to provide the knowledge and skills to analyze and evaluate investment decisions— to distinguish value-creating from value-destroying ventures. Finding energy resources is an uncertain business. Historically, many ventures failed, yet some successful projects also led to business success and significant value creation. Then, what is a good project opportunity?

The answer is likely multi-dimensional; it is about understanding disciplines from subsurface to economic, comprehensive coverage that eventually reflects our understanding of the value potentials of energy projects

Course Objectives:

By the end of this Energy Value Creation training course, the participants will be able to:

• Understand the principles of finance and economic decision analysis in the energy business

• Gain skills in effective formulation of investment decisions

• Understand the challenges of investment under uncertainty

• Gain skills in using analytical tools, including probabilities and decision trees

• Apply the knowledge and skills to the analysis of value-creating decisions

Target Audience:

• Analysts working on feasibility analysis of energy projects

• Engineers involved in the investment decision process

• Managers with responsibility or interest in the investment decision process

• Decision-makers within corporations or government bodies

• Individuals interested in expanding their skills and knowledge in the field of energy value creation

Course Outline:

Day 1

PRINCIPLES OF CORPORATE FINANCE AND VALUE CREATION 

• Introduction to Energy Value Chain

• Analysis of decision making and corporate objectives

• Understanding uncertainty in Energy Projects

• Modelling Uncertainty

• Using probability to encode uncertainty

• Economic Consideration: Informed Analysis for value-creating decisions

Day 2

FROM UNCERTAINTY TO VALUE 

• Comparative Analysis of Value

• Comparisons of Value Across Time

• Comparison of value across various levels of uncertainty

• Risk vs Uncertainty: Theory and Practice

• Principles of Discounted Cash Flow

Day 3

PROJECT CASH FLOWS, UNCERTAINTY, AND RISK 

• Technical and Market Risks

• The Effect of Diversification

• Risk-Return Tradeoffs

• The Capital Asset Pricing Model (CAPM)

• Discounting Risk Premiums

Day 4

PROJECT APPRAISALS 

• Uncertainty, risk, and financial return at Project and Portfolio Level

• Financing Leverage and its Effect

• General Investment Analysis, Energy Markets, and Prices

• Estimation of the Discount Rate

• Introduction to certainty-equivalent approach to investment analysis

Day 5

CHALLENGES IN THE ENERGY LANDSCAPE 

• Managerial flexibilities and uncertainty

• Energy commodities and exchanges, market instruments to hedge risk

• Decision trees as a modeling and communications tool

• An integrated approach to valuation and analysis of value creation

• Future Challenges: environmental issues, emission taxes, and emission markets