The 10-Day Training Course on
International Financial Reporting &
Treasury Risk Management for the Oil & Gas Industry

Module 1 - Treasury and Risk Management

Day One: The Role of Treasury Management – An Overview

• The Role & Scope of Treasury Management
• Operation & Location of a Treasury Department – Cost or Profit Centre; Centralised or Decentralised
• Cash & Liquidity Management
• Working Capital Management
• Capital/Finance Management
• Risk Management

Day Two: Cash & Liquidity Management – A Detailed Analysis

• Cash Forecasts: Role & Preparation
• Investment of Cash Surpluses to Maximize Return
• Meeting Cash Calls and Short-Term Cash Shortages/Short Term Finance
• Working Capital Management – Determining the Optimum Level
• Multi-national & Group Cash Management
• Cash Budgets: Process & Control

Day Three: Financing and Capital Management

• Strategic Objectives: Consolidation, Growth, M & A; Joint Ventures, Diversification etc
• Financing Strategic Objectives/Long Term Finance (Public & Private Equity v Buyer & Supplier Debt)
• Optimizing the Capital Structure to Minimize the Cost of Capital (WACC)
• The Capital Asset Pricing Model (CAPM)
• Capital Investment Appraisal – NPV; IRR, Payback
• Capital Rationing: Internal & External

Day Four: Risk Management

• Identifying Risks and Uncertainties – Internal & External; Financial & Non-Financial
• Measuring Risk – Volatility; Variance; Standard Deviation; Probability; Value at Risk
• Determining the Risk Management Strategy – assessing impact and probability
• The 4 T’s – Tolerate; Terminate; Transfer; Treat
• Internal Controls & Internal Auditing
• Credit & Counterparty Risk Management

Day Five: Currency; Interest Rate & Commodity (Oil Price) Risk Management

• Forward Contracts and Forward Rate Agreements
• Options – Calls & Puts; European & American
• Futures – Market Correlation; Margin Payments etc.
• Swaps – Currency & Interest Rate Risk and Benefits
• Foreign Currency Accounts other Internal Methods/Tactics
• Foreign Currency Borrowing

Module 2 - International Financial Reporting Standards (IFRS) for the Oil & Gas Industry

Day Six: The Oil and Gas Sector & Major Accounting Issues

• The Oil & Gas Sector & the Macro-economic Factors
  • Commodity prices, currency fluctuations, interest rate risk and political developments and environmental risk.
• Costs in Acquisition, Exploration, Development and Production of new oil or natural gas reserves
• Accounting Approaches
  • The "Successful Efforts" (SE) Method or the "Full Cost" (FC) Method
• Introduction/Overview of IFRS in relation to the Oil & Gas Sector, with particular reference to:
  • IFRS 1: First-time Adoption of International Financial Reporting Standards
  • IFRS 6: Exploration for and Evaluation of Mineral Assets
  • IFRS 10: Consolidated Financial Statements
  • IFRS 11: Joint Arrangements
  • IAS 16: Property, Plant and Equipment
  • IAS 36: Impairment of Assets
  • IAS 37: Provisions, Contingent Liabilities and Contingent Assets
  • IAS 38: Intangible Assets
  • IAS 39 Financial Instruments: Recognition and Measurement – Superseded by IFRS 9 – was to be effective 2013 but now 2018

Day Seven: Evaluating the Performance and Identifying the Accounting Issues

• Analysis of financial statements
  • Income Statements
  • Statement of Financial Position (Balance Sheet)
  • Cash flow Statements
• Identification & Evaluation of their Accounting Policies
• DuPont Analysis – Evaluating and Improving Return on Equity (ROE)
• Evaluation of their Share Price and Investment Performance
• Case Study: BP, Chevron, Shell and SABIC

Day Eight: Accounting for Upstream Activities with Reference to IFRS

• Reserves and resources
• Exploration and evaluation
• Revenue recognition
• Assets
• Depletion, Depreciation & Amortisation (“DD&A”)
• Impairment of development, production and downstream assets
• Examples: BP, Chevron & Shell

Day Nine: Joint Arrangements, Financial Instruments and Derivatives

• Business Combinations, Joint Ventures & Production Sharing Agreements (“PSA”s)
• Treasury Management Issues for Multi-nationals
• The Use of Derivatives in the Oil& Gas Sector to manage the commodity, currency and interest-rate risks etc.
• British Airways Case Study – Hedging the Oil Price using Futures

Day Ten: Creative Accounting and Corporate Governance

• Creative Accounting – Enron and investor protection
• Leases – IFRS 16 (new standard)
• Auditors and reporting to investors in the oil and gas industry
• External audit investigations and reports
  • The Auditor’s ‘Opinion'
  • True and Fair
  • Sarbanes Oxley
  • Internal audits
• Ethical issues
• Corporate governance
  • Government regulation
  • Investor confidence and share prices