An Intensive 5-Day Training Course
Forecasting the Prices of Crude-Oil, Natural-Gas & Refined Products (Phase 1)
We currently have no scheduled session for this Course. If you are interested in running this course, please contact our Training Department at info@petroknowledge.com
Why Choose this Training Course?
Why Choose this Training Course?
This 5-day PHASE 1 Petroknowledge Training Course is concerned with one of the most important activities in the development of oil and gas business-forecasting the oil prices, as basis for planning and investment. As we have learned that oil prices are depending on many factors, and that prices simulations need to be much more stringent in order to determine the actual risk that our investment is facing.
A critical component of decision-making in the energy industry deals with the aspect of “Whither oil prices?”: Where do we expect prices to move in the near- and distant-terms? Participants in the Energy Industry are constantly confronted with a wide range of information regarding current and prospective prices in their industry. Broadly, this data comes from analyses of supply-and-demand changes, geopolitical events and the financial markets, including the commodity markets.
The oil projects require lot of investment, and it takes years for the oilfield to start producing profit, therefore adequate forecasts are essential for companies to understand when and how their returns on investment will appear and how valuable will they be.
While providing the requisite background on the economics of financial commodity markets, as well as the statistical tools required to understand them, this Petroknowledge Training Course demonstrates how the financial and commodity markets provide useful information for the generation of “expected prices,” or forecast prices, in the critical areas of oil, natural-gas and refined products. In so doing, the training course will also demonstrate the important distinction between valuation and risk/return analyses.
This Petroknowledge training course will develop an understanding of pricing, risk management, asset valuation and derivatives within the energy markets:
- Learn to use financial models to analyze and forecast energy prices; extrapolate forward prices beyond the liquidity tenor
- Understand the risk of and return from futures and options contracts on energy commodities
- Manage and optimize your organization’s energy risk exposure
- Learn to estimate and calculate volatility in energy prices
- Utilize real options theory to value energy assets; use information from futures/option prices to make optimal production decisions: Optimal timing for extraction, optimal rate at which to extract oil (gas) from a field; value oil fields, pipelines and storage facilities, power plants
What are the Goals?
What are the Goals?
The objectives of this Petroknowledge training course are to provide a comprehensive introduction to the computation and application of forecast prices in the energy industry, with a focus on the oil, natural-gas and refined products segments. Inter alia, the training course presents the basic statistical tools required to operationalize these concepts.
At the end of this Petroknowledge training course, participants will learn to:
- Use financial models to analyze and forecast energy prices; extrapolate forward prices beyond the liquidity tenor
- Understand the risk of and return from futures and options contracts on energy commodities
- Manage and optimize their corporations’ energy risk exposure
- Estimate expected returns and calculate volatility in energy prices
- Obtain a comprehensive understanding of the financial-economics techniques used to forecast prices
- Apply option valuation techniques to the energy markets
- Utilize real options theory to value energy assets; use information from futures/option prices to make optimal production decisions: Optimal timing for extraction, optimal rate at which to extract oil (gas) from a field; value oil fields, pipelines and storage facilities, power plants
Who is this Training Course for?
Who is this Training Course for?
This Petroknowledge training course is suitable to a wide range of professionals but will greatly benefit individuals working in financial analysis, valuation, trading, risk management or quantitative analysis positions with oil and gas exploration companies; investment and commercial banking, consulting, and financial services firms in the energy sector; production and distribution companies; energy trading firms; and corporations outside the energy industry with a significant cost exposure to energy prices.
In terms of job titles, these individuals include:
- Financial analysts
- Quantitative analysts or researchers
- Energy traders
- Risk Managers
- Commercial and investment bankers dealing with commodities
- Consultants in the commodity arena
- Government and regulatory officials with responsibilities for the energy sector
How will this Training Course be Presented?
How will this Training Course be Presented?
The Petroknowledge training course will be presented through a combination of four methodologies:
- Clear presentation of notes with the requisite supportive analytics
- Detailed presentation of the relevant empirical regularities/stylized facts of the energy markets
- Presentation of several case studies designed to exemplify the application of risk-management and valuation principles
- Interspersed in the lectures are relevant problem-sets, designed to afford participants with the opportunity to apply the principles conveyed and see their implementation
- Dissemination to and sharing with participant’s critical spreadsheets that will permit them to address issues within the training course, as well as utilize these concepts once they have completed the course
Organisational Impact
From the perspective of the organization, the Petroknowledge training course conveys to critical personnel the;
- Computation and correct uses of price forecasts applicable to the energy industry
- Application of concepts on risk and return on energy commodities
- Manage and optimize their corporations’ energy risk exposure
- Apply option valuation techniques to the energy markets
- Understanding of the key elements of information conveyed by financial markets, and how to apply these to make better business decisions
Personal Impact
As a means of preparing individuals for the higher managerial rungs in their organization, the skills acquired in this course include understanding the:
- Main terminology used in the industry
- Role of financial markets as efficient conveyors of information and assessors of risk
- Valuation and role of futures contracts and swap agreements
- Principles of option and derivative-claim valuation, hedging and uses
- Necessary tools of financial-economics and statistics to forecast near and distant prices for oil, natural-gas and refined products
- Means to utilize price forecasts to make better business decisions
Daily Agenda
Phase 1 is concerned with the basics of equity and commodity markets, using excel as a tool for modeling the pricing forecast, as well as the calculations of Interest Rates, Contracts and Option pricing.
PHASE 1
Day One: The Current State of the Equity and Commodity Markets
- Measuring Nervousness / Uncertainty of Equity and Commodity Markets
- The Crude-Oil Markets: The Paradox of World Crude Oil Prices
- Complexity and Interdependence in the Oil Market
- Upstream Petroleum Fiscal Valuation and Modelling
- The Refining Spread and Retail Gasoline Prices
- Refined oil products-refining capacity and throughput
- Natural gas
- Physical characteristics and supply
- Reserves and production
- Demand determinants
- Trade
- Pricing
Day Two: A Primer on the Interest-Rate Markets
- Time and Time Value of Money-Modeling Commercial Behavior with the Economic Limit Test
- The Brent Contract and IPE Brent Market
- Financial Markets’ Message from Markets: Interpret Bond-market Moves in Conjunction with those in Equity Markets
- Floating Rate Securities
- Understanding the Fundamentals of Bond Valuation and Excel Functions for Bond Pricing
- Bond risks, Interest-Rate Volatility and Interest Rate Risk as the Key Bond Risk
- Duration and Convexity: Hedging Interest Rate Exposure
- Forecasting Future Interest Rates Using
- A financial-economics Approach
- Practitioners' Approaches
Day Three: Overview of Statistical Concepts, Forwards and Futures
- Basic Statistical Concepts: Average and Volatility; Stationarity of Time Variables
- Regression Analysis
- Using Solver to Solve Constrained Optimization Problems
- Amortization and Depreciation
- Fundamentals of Forwards and Futures Contracts: Definition, Payoff Diagram, Pricing by Arbitrage
- Forward / Futures Prices and Forecast Prices
Day Four: Swap Contracts and Options in Energy Markets
- Commodity Swaps
- Payoffs and Put-Call Parity
- Black-Scholes Formula
- Option Sensitivities (the “Greeks”): Delta and Gamma
- The Binomial Model and the Valuation of American-Style Options
Day Five: Forecasting the Prices of Oil, Natural-Gas and Refined Products
- The Market Price of Risk: Estimating a Risk Premium in Finance, and Applying it to Energy Prices
- How Can Use Regression Analysis to Fortify Our Understanding of Financial Markets’ Perspective on Forecast Prices?
- Where Can We Observe Forecast Prices?
- What is the Difference between Futures Prices and Forecast Prices?
- What is the Capital Asset Pricing Model (CAPM) and How Can We Use it to Forecast Oil Prices?
- Applying a Jump-Diffusion Model to Oil Futures Options
- Using the Market Price of Risk to Implement Risk-Management from a Corporate Perspective
Certificate
- On successful completion of this training course, a PetroKnowledge Certificate will be awarded to the delegates
