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The Oil and Gas industry has witnessed its ups and downs in history. Unlike investing in the stock market, which is nowadays mostly short-term focused, investing in the Oil and Gas industry requires a long-term focus. <br><br>Visit us: www.meerasimulation.com
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Oil and Gas 360° Portfolio Economics • The Oil and Gas industry has witnessed its ups and downs in history. Unlike investing in the stock market, which is nowadays mostly short-term focused, investing in the Oil and Gas industry requires a long-term focus. • Prior to production commencement, a project will pass various review stages during which its economic viability is checked. The robustness of a project, against the economic conditions and outlook of that time, is an important criteria in any Final Investment Decision (FID). Once FID has been taken, the operator of the field embarks on the journey of developing the field in line with the initial Field Development Plan (FDP).
Oil and Gas 360° Portfolio Economics • Based on the FDP’s, annual Work Programmers & Budgets (WPB) are formulated. These document in great detail how the annual budget of an organization, the big pool in the image below, is going to be spent, the stream leaving the pool via the bridge and how these expenses are recovered, the waterfall back into the pool. This allows you to control and manage your cash flow on an annual basis.
Oil and Gas 360° Portfolio Economics • Development of a field is often phased or subject to Field Development Planning cycles. In case of phased development, a subsequent phase will be subject to its own FID, where the economic viability for further development is assessed. In case of Field Development Planning cycles (a single cycle often lasting 5-10 years), a field development plan is updated or a further field development plan is defined and this update or additional development is subject to FID, confirming that further development is economically viable.
Oil and Gas 360° Portfolio Economics • Although the aim is to develop a field in line with its FDP, there can be numerous reasons for an executed development to differ from its planned development. These reasons might be justified, however the impact on project economic viability might not immediately be clear. A health check is only carried out again at the onset of the next phase or the next development cycle. This assessment is not even looking at what has happened in the past, it is merely focused on the economic viability of the development phase/cycle that is to come. • In times of high volatility and greater uncertainty it is comforting to be able to carry out a health check on your projects or even your portfolio of projects. The Asset Management Suite of Target Solutions offers a module that allows for 360° Economic Evaluations of projects or portfolios.
Oil and Gas 360° Portfolio Economics • On its own the AMS Economic Evaluations module would require manual updating of the various inputs or it can be linked to existing SAP, other ERP systems in your organization or additional Asset Management Suite modules, like MEERA Simulation, to automatically pick up on variations in your annual WPB or your annual drilling schedule. This would allow you to carry out a portfolio health check whenever the situation requires you to do so or it will become part of your organizations quarterly reviews to provide direction.
Oil and Gas 360° Portfolio Economics • The Asset Management Suite of Target Solutions contains a range of modules that allows the AMS Economic Evaluations module to automatically retrieve most of the required data to conduct a project or portfolio health check and complete the circle of a 360° Economic Evaluation.
