Petroleum Economics & Reserves Evaluation
Petroleum economics and reserves evaluation from first principles: the uses of reserves and the evaluator's role, PRMS and SEC classification, volumetric estimates with Monte Carlo ranges, Arps and modified hyperbolic decline analysis, type curves for unconventional development, price forecasts and discounting, cash flow models, lease royalties, North Dakota production taxes and federal income tax provisions, capital budgeting, risk and expected value, decision trees and the value of information, and year-end reserves reconciliation and disclosure under the SEC rules, applied to a North Dakota Bakken producer.
PET-450 Year 4 3 credits 12 lessons · 3 h 43 min ▶ Video lessons coming soon
Offered by HSM University · Petroleum Engineering
This is the American version of this course. See the Canadian version.
What you'll learn
- Explain how reserves estimates are used by companies, lenders and investors, and the roles of internal engineers, third-party auditors and boards under the SEC rules.
- Classify petroleum quantities as reserves, contingent resources or prospective resources, assign uncertainty categories and project maturity subclasses, and apply the commerciality tests.
- Estimate oil and gas in place and recoverable volumes by deterministic and Monte Carlo methods and report P90, P50 and P10 values correctly.
- Fit Arps decline curves, apply a modified hyperbolic decline with a terminal rate, and forecast EUR and remaining reserves to the economic limit.
- Build normalized type curves from analog wells, avoid selection biases, and use them to forecast undeveloped locations.
- Build field prices from benchmarks and differentials, treat escalation and inflation consistently, and apply discounting conventions correctly.
- Build a well or project cash flow model and calculate NPV at several rates, IRR, payout, profit-to-investment ratio and capital efficiency.
- Apply lease royalties, North Dakota production taxes and federal income tax provisions for oil and gas to calculate after-tax cash flow and government take.
- Rank capital projects and select a portfolio under a budget limit using PIR, incremental analysis and the marginal value of capital.
- Estimate chance of success and expected monetary value, account for risk tolerance with certainty equivalents, and aggregate uncertain quantities correctly.
- Solve decision trees, calculate the value of perfect and imperfect information with Bayes' theorem, and run Monte Carlo and tornado analyses of value.
- Prepare a reserves roll-forward and performance measures and describe the disclosure required by Regulation S-K Subpart 1200 and ASC 932.
Course content
12 lessons · 3 h 43 min total · final exam
- 1 Petroleum economics and the evaluator's role 21 min · quiz
- 2 Reserves and resources classification 19 min · quiz
- 3 Volumetric estimates and probabilistic ranges 19 min · quiz
- 4 Decline curve analysis 18 min · quiz
- 5 Type curves and unconventional forecasting 19 min · quiz
- 6 Price forecasts and the time value of money 18 min · quiz
- 7 Building a cash flow model 18 min · quiz
- 8 Royalties, severance and income taxes 16 min · quiz
- 9 Economic indicators and capital budgeting 18 min · quiz
- 10 Risk, probability and expected value 19 min · quiz
- 11 Decision trees, Monte Carlo and value of information 19 min · quiz
- 12 Reserves reporting and disclosure 19 min · quiz
- E Final exam 20 questions
Requirements
Recommended background. You can start any course at any time.
Description
Petroleum economics and reserves evaluation from first principles: the uses of reserves and the evaluator's role, PRMS and SEC classification, volumetric estimates with Monte Carlo ranges, Arps and modified hyperbolic decline analysis, type curves for unconventional development, price forecasts and discounting, cash flow models, lease royalties, North Dakota production taxes and federal income tax provisions, capital budgeting, risk and expected value, decision trees and the value of information, and year-end reserves reconciliation and disclosure under the SEC rules, applied to a North Dakota Bakken producer.
Part of the Engineering stream, typically taken in year 4.