Financial Management in Oil & Gas and Petrochemical Industry

• Latest Events in the Oil & Gas sector- price volatility and supply & demand changes
• The nature of the Petrochemical industries.
• Managing the macro-economic factors, e.g. interest rates, exchange rates, oil prices
• Resources & Reserves

• Revenue Recognition
• Costs in Acquisition, Exploration, Development and Production of new oil or natural gas reserves
• Break Even Oil, Cost Oil & Profit Oil
• Accounting Approaches – The “Successful Efforts” (SE) Method or the “Full Cost” (FC) Method
• IFRS in relation to the Oil & Gas Sector and petrochemical industry

• Oil and Gas Company Financial
• Financial Statement Analysis in the Oil & Gas sector and petrochemical industry:
  • Profit and loss account (income statement)
  • Balance sheet
  • Cash flow statement and its importance
• Measurement of operating performance
• Measures of financial performance and financial position
• Risk measurement
• Limitations of ratio analysis
• Annual Reports Analysis

Financial Structure

• Cost of debt
• Cost of equity
• Weighted average cost of capital (WACC)
• Optimal capital structure

Costing

• Fixed costs, variable costs, and overheads
• Overhead allocation, absorption and the use of activity based costing (ABC)
• Expenses versus inventory (stock valuation)
• Contribution compared with a profit

Decision-Making

• Make versus buy decisions
• Shut-down or contribution decisions
• Product mix decisions and limiting factors
• Decisions trees

Capital Budgeting

• Capital rationing
• Ranking investment projects
• Inflation and investment
• Using expected values and standard deviations to make decisions
• Purposes of budgeting
• The budget process
• Activity-based budgeting
• Uncertainty and risk – worst and best outcomes
• Maximin and minimax regret rules

Financial Ratio Analysis

• Types of Ratios
• Dupont Analysis – Evaluating and Improving Return on Equity (ROE)
• Evaluation of Share Price and Investment Performance
• Evaluating the Financial Performance of leading international companies in the sector

Valuation of Oil & Gas Company and Petrochemical Industry

• Types of valuation methods
• Payback
• Net present value
• Internal rate of return
• Discounted payback

Working capital management and Cash Improvement

• Working capital and working capital requirement
• Managing working capital
• Cash improvement techniques
• Cash management and the banking facilities
• Mergers and Acquisitions Practices Today