In this course, we will cover the art and science of making hydrocarbon exploration decisions.Our goal is to familiarize the participants with an understanding of decisions, their relevant uncertain factors, and show them a consistent valuation of exploration opportunities.
| Code | Date | Location | price (€)* |
|---|---|---|---|
| ECO 704 | 3 - 7 Jun 2024 | Online | 1390 |
| ECO 704 | 20 - 24 May 2023 | London | 2990 |
* Prices are subject to VAT and local terms. Ph.D. students, groups (≥ 3 persons) and early bird registrants (8 weeks in advance) are entitled to a DISCOUNT!
In this course, we will cover the art and science of making hydrocarbon exploration decisions. Our goal is to familiarize the participants with an understanding of decisions, their relevant uncertain factors, and show them a consistent valuation of exploration opportunities. This course holds five modules (over five days), twenty hours in total.
We will use the book “Economic Decision Analysis” as a reference to this course. The book seamlessly combines the paradigms of decision analysis and corporate finance. In addition, the concepts discussed in the book reveal some of the most efficient tools to tackle real world challenges.
Any valuation is for decision making. In this first part we discuss the major decisions in the petroleum exploration business. We further discuss the relevant uncertainties, the value drivers, and a method for consistent decision making. Topics include
o Understanding key decisions
o The Value chain for exploration (and development) of hydrocarbons
o Economic decision analysis, why we make decisions based on expected values?
o Key aspects of petroleum exploration decisions
With the knowledge of key decisions, uncertainties and economic value drivers, in this second part we discuss the analytic backbone of financial valuations
o Risk versus uncertainty; a discussion about subsurface and oil market
o Discounting for time and risk
o Corporate finance and commodity markets
o Parctical aspects of exploration decisions
o Case Study: exploration in a mature area
Armed with the knowledge and analytic background, in this part we discuss the formal method of analysis, valuation, and communication of the decisions.
o Decision trees; how to model exploration opportunities
o conditional probabilities and value of information
o Case study: Valuation Challenges of Frontier Exploration
We discuss the applications of the powerful decision analysis approach in upstream petroleum business. In this part we show how we apply the methods to a variety of opportunities.
o Probabilities to encode uncertainty
o Bayesian approach to assessment of conditional probabilities
o Value of information in exploration decisions
o Case study: The decision to drill an appraisal well
o Case study: Value of seismic information
On this last part of the course, we will discuss more advanced topics along with the emerging issues (such as environmental considerations) in exploration business.
o Value of flexibility, real options, and value of information
o Environmental considerations in hydrocarbon exploration
o Emission tax, emission markets, and emerging trends
o Case study: multi-prospect and sequential exploration
o Case study: waiting option within an exploration license
Babak Jafarizadeh is an assistant professor of petroleum economics at HeriotWatt University. With teaching and research interests in the oil and gas industry’s economics of decision making, he works towards combining academic practice with his experience from the oil and gas industry to create useful decision insights.
Before joining academia, Babak was a senior economic analyst in Statoil (now Equinor), working on energy projects from all stages of value chain and in a variety of geographic areas, yet mostly on exploration of hydrocarbons. His interests in petroleum exploration inspired his research projects on topics such as economic decision analysis, real options, and valuations. He holds a PhD degree in Petroleum Investment and Decision Analysis (University of Stavanger), as well as MSc and BSc degrees in industrial and financial engineering.
This course is useful for analysts, engineers, and managers involved in the process of exploration decision making, as well as professionals interested in practice of oil and gas exploration business.
This training course is suitable to a wide range of professionals including:
o Technical staff interested in decision-making side of exploration
o Commercial staff interested in gaining in-depth knowledge of valuation and analysis
o Managers involved in exploration decisions
o Researchers and practitioners who aim to broaden their knowledge of exploration valuation
o Advance
Participants will learn:
o Understanding the principals of economic decision analysis in petroleum exploration o Gaining skills in effective formulation of exploration decisions o Understanding the challenges of investment under uncertainty o Gaining skills in analytical tools, including Bayesian probabilities and decision trees
Registration is now OPEN!
* Prices are subject to VAT and local terms. Ph.D. students, groups (≥ 3 persons) and early bird registrants (8 weeks in advance) are entitled to a DISCOUNT!
For more details and registration please send email to: register@petro-teach.com
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