Energy Institute (EI)

Budgeting, Planning and Forecasting Training Course for the Oil and Gas Industry



All organisations operating in the oil and gas sector must regularly develop, manage and adjust budgets and forecasts to reflect changing market conditions and their competitive performance. To do this successfully and establish credible budgets and business plans that function as useful and user-friendly management tools to monitor and help improve performance, it pays to be aware of and incorporate best budgeting, planning and forecasting practices.

This course provides participants with insight and understanding of the budgeting process and the key planning and forecasting techniques that should be used to successfully build and manage reliable budgets and business plans. This enables fit-for-purpose budgets and business plans to be developed that robustly model complex, but realistic, situations in a flexible and auditable manner.

The course involves a mixture of presentations, exercises and worked examples in Excel spreadsheet models.

This course is designed for technical, planning and financial specialists and others with budget and planning responsibilities. The course avoids technical and financial jargon and is therefore also suitable for non-technical and non-financial participants.

Whether you are an international oil company (IOC), a national oil company (NOC) or a service provider to such companies, budgeting, planning and forecasting are essential facets of business management that need to be mastered and understood in the specific context of the oil and gas sector.

Day one:
Strategic dimensions to budgeting and planning

  • Budgeting as part of the strategic and business planning cycles
  • Setting budget targets and goals: balanced scorecards
  • Scenario planning for uncertain futures
  • Planning requirements along the oil and gas supply chains
  • Budget responsibility centres
  • Zero-based and performance budgeting versus incremental budgeting
  • Activity-based budgeting
  • Contractual and fiscal influences on budgeting requirements
  • Production sharing agreement (PSA) components
  • Joint-ventures and mineral interest agreements
  • Joint operating agreements and joint-venture budgets
  • Authorisations for expenditure (AFE)
  • Procurement, invoicing, payment cycle and cost control
  • Essential financial considerations: balance sheets, profit, loss, cash flow
  • Accounting and audit procedures

Day two:
Forecasting and benchmarking

  • Estimating and forecasting requirements
  • Most forecasts are wrong! But many can still be useful
  • Factoring in uncertainty: risk and opportunity
  • Benchmarking and gap analysis
  • Financial key performance indicators (KPIs) favoured by the industry
  • Non-financial KPIs favoured by the industry
  • Safety, environmental and stakeholder KPIs
  • Budgeting for downtime: planned and unplanned
  • Corporate, social responsibility (CSR) and community requirements
  • Triple bottom line and susta inability criteria
  • Life-cycle analysis (LCA). efficiency and emissions
  • Capitalisation and leveraging debt and equity
  • Consolidating budgets for multiple assets in a portfolio

Day three:
Production, cost and price factors

  • Petroleum-volume accounting
  • Forecasting production profiles and decline curves
  • Lifting and billing
  • Incorporating a range of cost and price forecasts
  • Nominal and real values
  • Flow of funds through a generic oil and gas company
  • Capital and operating cost components
  • Contractual framework and project execution sequence
  • Milestone monitoring
  • Achievement analysis and earned value concepts
  • Revenue and profit margin planning
  • Netback price calculation
  • Working capital requirements
  • Budget analysis and calculating variances using spreadsheets
  • Aids to help present complex budgets in digestible terms
  • Reports regulating budgetary performance

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