Course Description
This is a basic course on "Exploration Economics and Risk Analysis". It is not an "advanced" course BUT delegates must be familiar with basic present-value theory and the meaning of the term "Internal Rate of Return". The course covers all basic elements of economics and risk analysis:
- Theory and practice, terminology, formulas, etc
- Detailed economic modeling and sensitivity analysis
- Expected Value theory and Decision tree analysis
- Monte Carlo simulation
This course prepares delegates to comfortably discuss with other professionals all economic, financial, accounting and risk aspects of international exploration and development projects.
This is a computer-based course. We use an Excel spreadsheet model. Each delegate must bring a laptop or have classroom-access to a computer. Economic modeling software is provided which consists of simple cash flow model that allows users to model basic production sharing contracts and royalty/tax systems. Delegates are taught how the models work and how to use them for a variety of situations:
- Exploration economics, scoping economics, threshold field size analysis
- Field development feasibility studies
- Production economics
- Sensitivity analysis
- Various exercises
The delegates should have a working understanding of how an Excel spreadsheet works. However, this is not absolutely mandatory because it does not take long to learn how to use the model.
Group exercises are the heart and soul of this course. This course uses numerous "hands-on" group exercises to evaluate practical every-day situations/decisions that require economic modeling and quantification and characterization of risk.
After the course the delegates will keep the software and associated documentation provided by Daniel Johnston.