E&P Cost Control, Budgeting & Cost Estimating

Overview of E&P Industry Costs

• Features of E&P industry and nature of costs
• Costs and cost drivers through the Field Life Cycle
• The cost curve and relationship to the oil market
• Significance of management and reporting of costs in the context of the Oil & Gas Industry

The Planning and Budgeting process

• Company vision and strategy.  Long-term and Medium-term planning
• Work Programmes and Budget.  Purpose of a Budget and various Budget models
• The role of Corporate Departments and Geographical Business Units in the budgeting and forecasting process

Cost Planning, Budgets and Forecasting

• Preparing budgets & forecasts in a volatile oil & gas industry
• Capture and understanding of costs in the planning and budget processes
• Preparation of Capex (facilities / wells), Opex and G&A budgets
• Understanding the importance of classifying cost: fixed / variable; routine / non routine; core / discretionary activities
• Use budgets to make effective decisions
• The importance of Forecasting – the “how & why” and the need to proactively capture different outcomes
• Budgeting and Forecasting as a non-operator in a JV

Cost Capture & Accountability

• Importance of principles & processes in accurate and timely capture of costs
• Cost Accounting models. Understanding cost structures, accountability and coding principles
• Principles on what and when to capture e.g. VOWD and Accruals
• Capturing costs e.g. completion of full well costs and allocation of costs

Strategic Solutions to Cost Management

• Understanding “doing more for less”principle on cost optimization
• Getting behind cost drivers and understanding requisite actions
• Understanding how different costs impact profit - break even analysis
• Benchmarking and how it can drive improvements
• Managing working capital and cash flow

Cost Control and Management in a PSC & JOA Environment

• Overview on principles of cost recovery in a PSC environment
• Importance of adhering to key processes to avoid cost leakage
• Understanding principles of a JOA and Accounting procedures
• Importance of preparedness for Cost Audits and key areas of contention

Cost Control Framework

• Overview of a Cost Control Framework
• Mechanisms for controlling costs: well costs and features of an AFE
• Project costs reporting – key elements of progress reports
• Cost control reports – approved, invoiced, committed and incurred cost
• Controlling costs (fixed and variable) against budgets and forecasts

Cost Performance Reporting

• Reporting of Capex and Opex costs highlighting key drivers
• Variance analysis providing root cause analysis and early warning
• Performance review reporting on cost initiatives and optimization targets
• Overview of KPIs and performance reporting