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Home/Courses/Management & Leadership/Budgeting and Cost Control in Petroleum Company

Budgeting and Cost Control in Petroleum Company

Overview

Course Description

Oil and gas industry is a dynamic industry. In the pursuit to achieve goals and objectives the management faces a lot of obstacles, good planning is one of the management pillars that help to avoid those obstacles, and budgeting is the financial tool that help the management in the planning process; and also the budget play an important role in the controlling, communicating, and motivating processes. Budgeting and cost control provides the essential knowledge and skills to enable delegates to successfully control costs; prepare, manage and control budgets effectively in the Oil and Gas industry. Knowledge and skills, vital for an industry which currently faces severe pressure on Gross Margins due to oil price volatility and fluctuations in demand.

Course Objectives

Participants attending the programme will:

  • Understand budgets and budgeting
  • Develop techniques for effective budgeting
  • Understand how to manage budgets
  • Understand the basics of capital budgeting
  • Understand advanced forecasting techniques
  • Use budgets to monitor and control the costs
  • Prepare the key elements of an operating and capital budget and evaluate the different budgeting approaches
  • Apply cost control tools, analyze management variance reports and take proper corrective action
  • Calculate different capital budgeting evaluation techniques as included in a capital expenditure proposal
  • Utilize cost-volume-profit analysis in making budgeting decisions
  • Understand the reasons and impact for oil price volatility
  • Recommend innovative hedging strategies used by leading international companies to control risk and manage budgets effectively

Who Should Attend?

This training course is specifically tailored for those working or wishing to work in the Oil & Gas industry. It is particularly suited to:

  • Those responsible for devising budgets, managing and controlling budgets
  • Those responsible for making or acting on decisions based on budgets
  • Professionals who require a more in-depth understanding of integrated planning and budgeting techniques
  • Financial Planners and Cost Analysts
  • Line heads with direct planning and budgeting responsibility

Location & Date

Fees

  • 2020
    • Per participant
    • USD 4,000
Fees + VAT as applicable
Tax Registration Number : 100139824100506

Course Outline

Course Outline

  • Day 1:
  • Introduction – Petroleum Industry and its characteristics
    • Petroleum industry and its segments
    • Characteristics of petroleum industry
    • Types of petroleum companies
    • Oil Price Volatility – The Causes & Impact
    • Major Costs of Acquisition, Exploration, Production and Development
    • Cost classifications in petroleum agreements
    • Cost Oil and Profit Oil
    • The Cost Curve of the Oil Market
    • Controlling Gross Margins and Net Margins
  • Day 2:
    • Finding Strategic Solutions to Cost Control
    • The difference between cost control and cost reduction
    • Re-assessing the Strategic Plan in the light of recent developments
    • The need for Growth whilst managing costs
    • Managing Working Capital and Cash Flow
    • Evaluating and Managing Capital Projects
    • Joint ventures; Merger and Acquisition as a solution and growth opportunity
    • Finance solutions to growing costs and oil price volatility
  • Day 3:
    • Measuring & Controlling Costs
    • Cost Classification and Cost Behaviour
    • Job Process Costing, Batch Costing & Activity Based Costing
    • Statistical Estimates of Costs
    • Controlling Fixed and Variable Costs
    • Earned Value Management
    • Variance Analysis
  • Day 4:
    • Budgeting in the Oil & Gas Industry
    • The Benefits and Limitations of Budgeting
    • The Essential Features and Types of Budgets
    • Managing and Controlling Budgets
    • What is Capital Budgeting?
    • Classification of Investment Projects
    • Steps in Capital Budgeting
    • Methods (NPV, IRR, MIRR, Profitability Index, Payback, discounted payback)
    • Types and Interaction with Risk
    • Measuring Risk
    • Sensitivity analysis and Scenario Analysis
    • Break-even analysis
  • Day 5:
    • Hedging Costs to Manage the Budget
    • Defining Hedging and Identifying Costs / Risks to Hedge
    • Determining the Hedging Strategy
    • Hedging Oil Price Volatility
    • Hedging Exchange Rate Risk
    • Hedging Interest Rate Risk
    • Controlling the Hedge to avoid Speculation