Course details

  • Duration: 1 day, 2 days, 3 days or 5 days
  • Fees:
    1 day - £750
    2 days - £1500
    3 days - £2025
    5 days - £3375
  • Contact us
Register or login

20 November 2018

This session considers the links between the “accounting model” (potentially net profit, earnings per share, price to earnings ratio, even return on investment %) and the “economic model” (present value of the project’s expected future cash flow). It outlines the way in which cash flow information is constructed from basic project details and then to represent that information as a set of accounts, as this is widely used for presentation and reporting of financial information. It could be argued, however, that cash flow information is much more useful.

For mineral projects particular attention has to be paid to the treatment of the key independent variables such as grade, and dependent variables, such as grade-tonnage relationships, and the way these influence the rate of mining, associated costs and optimisation of the value of a project. Petroleum projects are based on initial volumetrics, segment production and annual production profiles, revenue, operating costs and capital costs. The distinction between technical appraisal and financial factors will also be addressed and the reason why discounted cash flow (DCF) models need to be integrated correctly into financial accounts explained. This will be linked to concepts of shareholder value and the role of gearing to maintain an efficient balance sheet.

 

More information

Schedule

Management and Business: Cash Flow Modelling

Cash Flow Modelling and Financial Accounting
Principles. Valuation of Mineral of Mineral Projects. Analysis of Risk and Uncertainty.
Time
Session 
Contributors
 
09:00-10.00
 
 
 
 
 
 

Cash Flow Modelling and Financial Accounting  

Valuation of Mineral of Mineral Projects. Terminology and share performance metrics. Methods.Analysis of Risk and Uncertainty. Sensitivity analysis. Monte Carlo simulation.

D Buchanan

10.00-11:00

Cash Flow Modelling and Financial Accounting.

Project Finance and the Cost of Equity. Weighted average cost of capital and capital asset pricing model. Integrated economic and accounting model. Optimisation of gearing

D Buchanan
11:00-11:30
Break
 
11:30-13:00
 
 
 
 
 
 
 

Management of Projects, Markets and Supplies

Quantifying Uncertainty in hydrocarbon production forecasts. Demonstration of the approach needed in calculating recoverable reserves and their associated uncertainty based on monte-carlo simulation and the application to the SPE Petroleum Resource Management System.

Peter King
13:00-14:00
Lunch
 
14:00-15:30

Cash Flow Modelling and Financial Accounting
Petroleum Fiscal Regimes. 

Colin Howard
15:30-15:45
Break
 
15:45-17:00

Cash Flow Modelling and Financial Accounting
Generation of Financial Models.

Colin Howard

Presenters

Professor Dennis Buchanan (Course Director)

Emeritus Professor of Mining Geology & Senior Research Fellow, Imperial College London 

Professor Buchanan works jointly between the Department of Earth Science and Engineering and the Business School at Imperial College London and will act as the Course Director.   

Professor Buchanan's current research interest lies in addressing the underlying technical principles applying to mineral projects and demonstrating how these influence financial modelling. He has 36 years’ experience teaching mining geology, mineral exploration and mineral project appraisal and is responsible for the MSc in Metals and Energy Finance.  This is a joint degree between the Department of Earth Science and Engineering and the Business School at Imperial College. Professor Buchanan has worked as a Mining Geologist in both gold and platinum mines in South Africa and had wide experience as a consultant to industry, as an expert witness and in designing and delivering short courses for industry

 

Professor Peter King

Chair in Petroleum Engineering, Department of Earth Science and Engineering, Imperial College London

Professor Peter King holds a Chair in Petroleum Engineering in the Department of Earth Science and Engineering. After completing a PhD in theoretical statistical physics from Cambridge University in 1982 Professor Peter King spent 17 years with BP at their technology centre in Sunbury-on-Thames where he worked on a wide variety of subjects applying methods of mathematical physics to reservoir characterisation and modelling. In particular he developed a real space renormalisation approach to both single and two phase upscaling. In collaboration with the members of the Department of Physics at Boston University he has used percolation theory to estimate connectivity of sands as well as uncertainties in production from low to intermediate net-to-gross systems. He had also developed network models of pore scale flow and viscous fingering, object based methods for characterising reservoir heterogeneities. Again in conjunction with Boston University he worked on segregation in avalanches in granular materials as an explanation for the formation of cross beds in Aeolian systems. Recently he has worked on applying stochastic search algorithms (simulated annealing and genetic algorithms) to optimising business decisions with particular interest to decision making in the presence of uncertainty.

Colin Howard
Director, CTH Resource Economist Ltd

Colin Howard is a consultant petroleum economist, specialising in the evaluation, fiscal modelling and risk analysis of hydrocarbon projects. Prior to establishing his own consulting business, he worked with Schlumberger Plc, providing software support to international oil and gas companies. He holds MSc degrees in structural geology from the University of Pennsylvania and in Mineral Project Appraisal from Imperial College London. He has extensive experience in modelling a wide variety of hydrocarbon tax regimes and production sharing contracts throughout the world, as well as presenting professional training courses. Clients include Royal Dutch Shell, BP, BG Group, Hess Corporation, and Sonatrach, Algeria.