Introduction

This five-day program develops an essential understanding of Oil & Gas Exploration & Production (E&P) accounting, reporting, and performance measurement issues and practices. It develops your ability to prepare, use and critically evaluate information on E&P activities, applying specialist industry knowledge and relevant analytical skills.

• The program is designed specifically for those who have a basic understanding of accounting but who need to understand more about accounting and financial reporting policies and practices in the upstream oil and gas industry.

• Topics covered include the successful efforts and full cost methods of accounting, the classification of assets as tangible or intangible, the unit of a production method for depreciation of capitalized costs, the testing for impairment of oil and gas assets, and accounting for removal and restoration of oil and gas facilities.

• The main requirements of Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) relevant to the Oil & Gas Exploration & Production industry are examined for each major phase in the field life cycle.

• Learning throughout the course is achieved through illustrated presentations, group discussions, worked examples, exercises, and solutions, and extracts from published financial statements of international companies.

• Participants in this program gain a broader and deeper appreciation of the role of the E&P Finance Department and the context in which it operates, encouraging a more confident and proactive approach to their work, developing awareness of issues, and preparing them for increased responsibility.

Objectives

By the end of the program, delegates will learn how to:

• Develop an understanding of the accounting standards, policies, and practices used by companies in the Oil & Gas Exploration & Production industry

• Appreciate the nature and financial implications of Production Sharing Contracts and other agreements between host governments and international companies

• Examine issues and guidelines in accounting for Joint Ventures

• Identify and know how to apply international and national accounting standards most relevant to the E&P industry

• Improve the relevance and reliability of financial reports to better meet the needs of users

• Review and use publicly available information for benchmarking the business performance of companies in the E&P industry

Target Audience

• Financial accountants in oil and gas companies
• Finance managers and financial controllers
• Internal and external auditors
• IFRS and GAAP reporting specialists
• Corporate finance professionals in the energy sector
• Investment analysts
• Joint venture and PSC accounting professionals
• Treasury and financial reporting staff
• Risk management professionals
• Government and regulatory finance officers
• Professionals working in upstream oil and gas (E&P)
• New entrants to oil and gas finance and accounting

Outlines 

Day 1: Oil and Gas Accounting and Reporting Framework

• Development and purpose of company accounts
• Financial reporting standards in the oil and gas industry
• Investor reporting and stakeholder requirements
• Taxation and royalties
• GAAP and IFRS convergence
• Reporting implications and PSC impact
• Capital structure and cash flow in the industry

Day 2: Capitalization and Cost Accounting in E&P

• Capitalization of exploration and development costs
• Full cost and successful efforts methods
• Asset classification (tangible and intangible)
• Borrowing costs
• Capital maintenance concept
• Sourcing capital
• Capitalization under IFRS
• Oil and gas value chain overview

Day 3: Exploration, Production and Joint Operations

• Exploration and evaluation accounting
• Development expenditures
• Reserves and resources classification
• Joint ventures accounting (GAAP and IFRS)
• Production sharing agreements (PSA / PSC)
• Royalties and taxation
• Business combinations
• Currency issues

Day 4: Asset Valuation, Impairment and Audit

• Impairment of oil and gas assets
• Decommissioning obligations
• Emission trading schemes
• Accounting treatments and disclosures
• External and internal auditing
• Auditor opinion and reporting standards
• Ethics, governance and regulatory environment
• Investor protection and creative accounting

Day 5: Financial Analysis and Industry Performance

• Financial statement analysis
• Analytical tools in E&P companies
• Full cost vs successful efforts comparison
• DuPont ratio analysis
• Oil and gas company performance (Shell and BP examples)
• Investment finance and capital markets
• Investment criteria and financial intermediaries
• Share price drivers and market influence