Project Financing for the Energy Markets: M1 - Upstream Development & Production

Module 1: Upstream Development & Production (4 days) 7-10 October 2014, Hong Kong By attending this highly interactive and practical course you will: Gain a better understanding of oil and gas markets and how oil and gas projects are financed Gain a better understanding of the current trends in energy project finance Review the technical evaluations of upstream and downstream projects Understand how the technical issues of energy projects are translated into financial and credit risks Understand the finer aspects of financial modelling by identifying and quantifying the major risks that impact a project's cash flow generation capabilities Gain a better understanding of credit structuring techniques, so as to effectively mitigate the credit risks of an energy project Review the finer aspects of legal documentation, with legal documentation techniques and tips to help you properly reflect a credit structure in the legal contract Project Financing For The Energy Markets course background & methodology The course will enable participants with skills to identify and analyse prospective borrowers, structure credit facilities, and prepare credit applications for formal presentation and approval by bank credit committees. These skills can be used by the origination teams and credit teams of lenders and to support organisations which run or sponsor projects. Each section will be covered briefly as a module in a traditional class style, and the real learning experience will be found in the exercises within each module. Suggested solutions to each exercise will be provided and discussed. Supporting materials will be available for further in-depth learning. Who will benefit from attending Project Financing For The Energy Markets This course is designed for a multidisciplined audience suited to those involved in financing oil and gas projects and will be highly valuable to: Investment banking directors, associates and analysts in the energy industry Finance directors and managers of energy companies Accountants of energy companies Business development directors and managers of energy companies Equity analysts Credit analysts Corporate planners, and strategists of energy firms (such as oil refineries, LNG producers and shippers, oil and gas pipeline companies and oil and gas production companies) Financial managers and executives of energy companies Government civil servants, policy makers and bureaucrats for energy projects Institutional investors Private equity investors Lawyers and financial due diligence staff for energy project financings Institutional investors in energy projects, such as pension funds, hedge funds and investment funds Credit directors, managers and analysts, business origination directors, managers and analysts of energy and project finance banks Very good course materials combined with case studies, work through examples and shared experiences from participants from varied but very relevant backgrounds - Keystone Bank Limited (Nigeria) You can attend the 8-day intensive and practical programme'Project Financing for the Energy Markets' which runs from 7-16 October 2014 or pick from the following 3 individually bookable modules*: Project Financing for the Energy Markets 7-16 October 2014, Hong Kong Module 1: Upstream Development & Production (4 days) 7-10 October 2014, Hong Kong Module 2: Mid-stream Pipelines & LNG Projects (1 day) 13 October 2014, Hong Kong Module 3: Downstream Oil Refineries & Petrochemical Plants (3 days) 14-16 October 2014, Hong Kong Including: 17 key industry case studies to improve your understanding. *please email to book a separate module: energy@euromoneyasia.com
Day 1 Overview of the oil and gas sector; the lending markets; recent developments in lending; overview of the credit process Overview of the oil and gas sector Brief history of the modern petroleum industry Oil: 20th century superpower World oil and gas reserves and consumption The bank lending markets Understanding the origins of the established oil & gas lenders and opportunities for new lenders Common types of lending: reserve based lending, mezzanine debt, bonds Credit risk vs. equity risk Recent developments in lending Case study: Each team will review an upstream oil and gas company, identify its financing needs and propose an appropriate financing solution. Overview of the credit process Initial deal review Proposal Due diligence Credit approval Term sheet Legal documentation Deal closing Deal monitoring Case study: Each team will prepare an initial deal review of an independent oil & gas company. Findings and recommendations will be presented to the mock credit committee. Day 2 Technical review; qualitative analysis; identifying and mitigating credit risks Technical review What can the financial analyst do before calling a technical engineer? Reviewing the reserve report Assessing the development plan Case study: Each team will review the technical report for an oil field development, identify technical risks and propose credit risk mitigation strategies. Company specific Management Operating and capital strategies Equity sponsor Borrower’s ability to access capital Identifying and mitigating risks Development risk, including government approvals Reserve risk Commodity price risk Environmental risk Insurance risk Lender’s ability to perfect security over borrowing base assets Corporate structure of borrower Case study: Each team will undertake a credit analysis and prepare a credit application for an oil and gas company, which will be presented to the mock credit committee. Day 3 Modelling in excel; credit structuring including covenants and pricing; legally documenting the transaction Modelling in Excel Creating an upstream oil & gas projection model Earnings vs. cash flow Debt amortisation schedule Assumptions Using derivative products to hedge price risk and enhance debt capacity Ratio analysis Credit structuring Security over borrowing base assets and non-borrowing base assets Covenants, including cover ratios Lending to an operating company vs. SPV Country risk credit considerations Assessing the legal environment and political risks, plus risk mitigation strategies Syndication strategies in the current credit climate Case study: Selecting a country/region: mitigating country risk and lender’s ability to perfect security over collateral; syndication considerations. Each team will present a credit analysis that will address country risk/political risk and outline a syndication strategy. Legally documenting the transaction Overview of a legal contract Legal jurisdiction Perfecting security Subordination and inter-creditor agreements Project/field agreements Risk mitigation Case study: Each team will review excerpts of a draft credit agreement and identity any credit documentation issues and propose risk mitigation strategies. Day 4 High leverage situations; mezzanine debt product; Equity valuation of an upstream oil and gas company - where is the value for investors? Overview of valuation methodolgies for upstream oil & gas investments; upstream oil & gas company comparables table High leverage situations Credit risks: exploration vs. development vs. production Senior debt vs. mezzanine debt vs. bonds “Stretch” tranches Risk mitigation Mezzanine debt product Increasing debt capacity: oil price deck; reserve profile; cover ratios; reserve tail requirement Pricing Warrants Syndication considerations Case study: Each team will review the economics of an oil development project and determine the debt capacity. An appropriate finance package will be recommended by each team. Equity valuation of an upstream oil and gas company – where is the value for investors? Review of an upstream company’s assets and where is the value for investors How are the assets valued? Qualitative analysis and how it impacts a valuation decision Overview of valuation methodologies EV/BOE reserves multiple EV/daily output multiple DCF valuation Case study: Initial investment review: Each team will analyse a group of African and international upstream companies and based on their respective investment merits rank them.