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Led by Senior Petroleum Economist Simulacrum
Petroleum economics from the oil and gas value chain and investment framework through cash flow modelling, financial statements, capital budgeting, risk analysis (sensitivity, Monte Carlo, decision trees), fiscal regimes (concessionary, PSC, service contract), and strategic decision-making.
Led by Senior Petroleum Economist Simulacrum
The question
The oil and gas industry is the most capital-intensive in the world — a deepwater development costs $5–20 billion before a single barrel is produced, and the revenue depends on uncertain oil prices, reservoir performance, and government fiscal terms. This module covers the five-stage value chain (exploration through abandonment with typical success rates and costs), the time value of money and the discount rate (risk-free rate + WACC + risk premium), the cash flow model structure (revenue, OPEX, CAPEX, fiscal payments, net cash flow), four key economic indicators (NPV, IRR, payback, profitability index), and portfolio management for investment ranking.
Outcome
The student can describe the value chain, calculate present value, construct a cash flow model, calculate NPV/IRR/payback/PI, and rank projects for portfolio selection. (Petroleum economics fundamentals)
Sub-units
Led by Senior Petroleum Economist Simulacrum
The question
The cash flow model is the petroleum economist's primary tool — and its quality determines the decision quality. This module covers the three-sheet model architecture (inputs, calculations, outputs with separation principle), production profiling using decline curve analysis (exponential, harmonic, hyperbolic with the b-factor), cost modelling (CAPEX by category with contingency at two project stages, fixed vs. variable OPEX, discounted abandonment), the three financial statements (income, balance sheet, cash flow — with depreciation as a non-cash tax shield), and model auditing (formula review, logic checks, balance check, benchmark check).
Outcome
The student can construct a three-sheet model, apply decline curve analysis, model CAPEX/OPEX/abandonment, construct the three financial statements, and describe the audit process. (Cash flow modelling)
Sub-units
Led by Senior Petroleum Economist Simulacrum
The question
The capital budgeting decision — whether to invest billions in a new development — is the most consequential the company makes. This module covers multi-option comparison with incremental NPV analysis (including the do-nothing base case), exploration economics using expected monetary value (EMV = probability-weighted NPV), development concept selection (subsea vs. platform vs. FPSO) through to FID, production economics (OPEX optimisation, infill drilling PI calculation, EOR screening), and abandonment economics (the economic limit calculation, the abandonment provision, and the optimal timing trade-off).
Outcome
The student can apply incremental analysis, calculate EMV, compare development concepts, evaluate infill drilling, and determine the economic limit. (Capital budgeting and investment appraisal)
Sub-units
Led by Senior Petroleum Economist Simulacrum
The question
The NPV is only as good as the assumptions — and every assumption is uncertain. This module covers sensitivity analysis with the tornado chart (identifying the three most influential inputs and the switching/break-even value), three-case scenario analysis with coherent correlated inputs, Monte Carlo simulation (defining input distributions — normal, lognormal, triangular — running 10,000 iterations, interpreting the S-curve and P10/P50/P90 NPV), decision trees for sequential decisions under uncertainty (working backward from terminal nodes), and the value of information — when additional data changes the decision and when it does not.
Outcome
The student can construct a tornado chart, build three coherent scenarios, set up and interpret a Monte Carlo simulation, construct and solve a decision tree, and calculate the value of information. (Risk analysis and Monte Carlo)
Sub-units
Led by Senior Petroleum Economist Simulacrum
The question
The fiscal regime determines how the hydrocarbon value is divided between the government and the investor — two identical fields in different countries can have dramatically different economics. This module covers the three regime types (concessionary with royalty-tax, production-sharing contracts with cost oil/profit oil and the cost recovery ceiling, service contracts with capped returns), government take analysis and fiscal regime comparison (front-loaded vs. back-loaded timing effects), and strategic decision-making beyond economics — political stability, regulatory predictability, security, infrastructure, geological prospectivity, the country risk premium, and strategic fit.
Outcome
The student can model cash flows under concessionary and PSC regimes, calculate the government take, compare two fiscal regimes, describe six strategic factors, and explain the country risk premium. (Fiscal regimes and strategic decisions)
Sub-units