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:
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Understand the principles of finance and economic decision analysis in the energy business
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Gain skills in effective formulation of investment decisions
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Understand the challenges of investment under uncertainty
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Gain skills in using analytical tools, including probabilities and decision trees
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Apply the knowledge and skills to the analysis of value-creating decisions
Target Audience:
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Analysts working on feasibility analysis of energy projects
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Engineers involved in the investment decision process
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Managers with responsibility or interest in the investment decision process
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Decision-makers within corporations or government bodies
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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
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Introduction to Energy Value Chain
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Analysis of decision making and corporate objectives
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Understanding uncertainty in Energy Projects
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Modelling Uncertainty
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Using probability to encode uncertainty
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Economic Consideration: Informed Analysis for value-creating decisions
Day 2
FROM UNCERTAINTY TO VALUE
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Comparative Analysis of Value
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Comparisons of Value Across Time
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Comparison of value across various levels of uncertainty
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Risk vs Uncertainty: Theory and Practice
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Principles of Discounted Cash Flow
Day 3
PROJECT CASH FLOWS, UNCERTAINTY, AND RISK
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Technical and Market Risks
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The Effect of Diversification
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Risk-Return Tradeoffs
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The Capital Asset Pricing Model (CAPM)
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Discounting Risk Premiums
Day 4
PROJECT APPRAISALS
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Uncertainty, risk, and financial return at Project and Portfolio Level
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Financing Leverage and its Effect
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General Investment Analysis, Energy Markets, and Prices
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Estimation of the Discount Rate
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Introduction to certainty-equivalent approach to investment analysis
Day 5
CHALLENGES IN THE ENERGY LANDSCAPE
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Managerial flexibilities and uncertainty
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Energy commodities and exchanges, market instruments to hedge risk
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Decision trees as a modeling and communications tool
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An integrated approach to valuation and analysis of value creation
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Future Challenges: environmental issues, emission taxes, and emission markets
