Fiscal System Diversity and Booking Barrels
This course is about the basic economic, financial, and accounting aspects of international petroleum fiscal systems, production sharing contracts, and service agreements particularly with respect to “booking barrels.” The history of this issue (reserve disclosure) is explained and numerous examples of different fiscal/contractual arrangements are provided to show the impact on oil company lifting entitlements and the impact on reserve disclosure. The objective is to show the similarities and differences between royalty/tax (concessionary) systems and production sharing contracts (the two main families of business structure between oil companies and governments) from an economic/financial/accounting point of view and from the point of view of lifting entitlements, economic interests, and booking barrels. Another objective is to cover the diversity of industry language and terminology associated with these subjects.
- Basic economic, financial and accounting aspects of the various fiscal/contractual structures
- Industry language and terminology, key provisions and structures and how they impact reserves disclosure requirements such as royalty in cash vs. royalty in kind, service agreements with no lifting entitlement, taxes in lieu, and impact from changing prices, etc.
- Reserve disclosure impact on a company’s reserve replacement ratios and finding costs
Introductory to Advanced
These issues are extremely important to companies because the more barrels a company can book the lower the finding costs and the greater the reserve replacement ratio. These things are closely monitored by the marketplace for public companies.
Who Should Attend
Anyone interested in issues surrounding reserves disclosure (booking barrels) and basic elements of the various petroleum fiscal/contractual systems that exist and govern the business relationships between international oil companies and governments. The course should be sufficiently basic yet comprehensive enough to provide insight and value to lawyers, economists, engineers, geologists, anarchists, and musicians.
A working understanding of cash flow analysis for exploration and development is fairly important but it is not critical that delegates be familiar with risk analysis (expected value approach) for example.
0.4 CEUs (Continuing Education Units) will be awarded for this 1-day course.
Daniel Johnston is chairman of Daniel Johnston & Company, an independent financial advisory firm founded in 1985. He started his career in 1978 as a logging engineer and petrophysicist and has 34 years experience in the international sector of the industry. He has worked for many major and large independent oil companies and more than 40 governments. His consultancy specializes in evaluating exploration potential, providing expert testimony, and working with both international oil companies and governments on contract analysis and design, negotiations, and dispute resolution.
He has a BA in geology from Northern Arizona University and an MBA (finance) from the University of Texas at Austin.
He is author of eight books and over 90 articles on the subjects of oil company financial, economic, and risk analysis and petroleum fiscal system analysis and design.
He has taught seminars in 35 countries and various universities. His books have been used as textbooks at universities in India, Australia, California, Saudi Arabia, Angola, Colorado, Oklahoma, Scotland, Texas, Louisiana, Canada, Alaska, the UK, Newfoundland, Thailand, and Norway.