"This book is a terrific addition to the existing literature on the subject, and will be invaluable to a wide range of professionals, from Energy Ministry staff through NOCs to energy company economists, advisors and consultants. By far the best way to understand all the subtleties of fiscal regimes is to build one's own models of them, and then to play 'what if?' games with them. This is what the book encourages, by being set out so clearly and well, and a thorough study will take the reader from beginner to near expert status."
Graeme Simpson, Honorary Professor in Petroleum Geology/ former Professor of Energy Industry Management, the University of Aberdeen, Scotland; former Business Manager, Exxon
"This book is both a reference for the various types of fiscal regimes and a how-to guide for spreadsheet modeling. Practitioners at every level will find it to be a valuable resource."
Dan Olds, Senior Vice President – International, Ryder Scott Petroleum Consultants; Past President, Society of Petroleum Evaluation Engineers
"This book gives a comprehensive and in-depth discussion of petroleum economics. It provides a step-by-step guide to understanding fiscal models similar to what many residential courses offer. The excel sheets and formulas are extremely helpful for the novice and users of economic software such as PEEP to start modeling fiscal regimes. As an experienced economist, the book has helped fill gaps in my knowledge and I would personally recommend it as a reference guide for those in commercial disciplines in the industry."
Aditya Mukherjee, Economics Analyst, Global New Business Development, Hess Services UK Limited
"Kasriel and Wood have produced a monumental set of materials for understanding how to model and analyze the impacts of upstream petroleum fiscal terms on project economics. Unique to their approach is a step-by-step guide on using Microsoft Excel that provides users with a kind of x-ray vision into the complex and sometimes unanticipated outcomes associated with various sorts of taxes, royalties, and production sharing contracts. It is a brilliant practitioner's guide to the subject."
Graham A. Davis, Professor, Division of Economics and Business, Colorado School of Mines
"I find the book a great tool for anyone who intends to initiate his/her career into the world of petroleum economics. Furthermore, I think experienced economists should always have this book on their desk for quick consultation/reference as it is very comprehensive around the modeling of oil and gas deals. This book is a must-have in every economists book shelf!"
Germán Beckmann, Business Analyst, Premier Oil PLC
"This book will be a useful, practical tool for the petroleum economics practitioner. Practitioners will find the practical spreadsheet tips, delivered in an easy-to-read, conversational style, particularly helpful."
Roy Kelly, Managing Director, Kerogen Capital
From the Back Cover
Upstream Petroleum
Fiscal and Valuation Modeling in Excel: A Worked Examples Approach
Ken Kasriel & David Wood
"This is a book no deal team should be without. It is a must for those involved in upstream oil and gas transactions, planning, budgeting, investment appraisal and portfolio management. Its step-by-step approach cuts through complexity, making it comprehensive and understandable by a wide range of users with a wide range of abilities. It can be used as a textbook, an introductory primer or as a handbook that you can dip in and out of or read cover to cover."
Michael Lynch-Bell, Senior Advisor, Oil & Gas, Ernst & Young LLP; ex-officio Chairman, UN Expert Group on Resource Classification
In the upstream petroleum industry, it is the value of post-tax cashflows which matters most to companies, governments, investors, lenders, analysts, and advisors. Calculating these cashflows and understanding their "behavior," however, is challenging, as the industry's specialized fiscal systems can be complex, jargon-laden, and sometimes seem to be a "world of their own."
Upstream Petroleum Fiscal and Valuation Modeling in Excel: A Worked Examples Approach demystifies fiscal analysis which, unlike disciplines such as Earth sciences and engineering, can be learned from a book. Written in plain English for laymen and for experienced practitioners alike, it is a reader-friendly, clear, practical, step-by-step hands-on guide for both reference and self-paced study.
The book does not catalogue the 100+ different petroleum fiscal regimes in use at the time of writing. Rather, drawing on the authors' combined 48 years' experience, it takes a more timeless, generic treatment, by covering the most common variants of royalties, taxation, production sharing arrangements, bonuses and abandonment funding, through a dual approach: first, showing how to model them in Excel, and then providing interactive exercises to prompt (and answer) questions that analyze impacts on cashflows.
In addition to the main text, the book consists of over 120 Excel files (ranging from modular examples to full models) in Excel 2007 and 2003 formats; over 400 pages of supplementary PDF files; VBA features to enhance model functionality; and an introduction to risk modeling with exercises for the included trial version of Oracle's Crystal Ball software. It offers both a wealth of content and models equal to or surpassing what is available from fiscal modeling courses costing several times more; and greater insights into underlying calculations than commercially available "black box" fiscal software.
New US Securities and Exchange Commission (SEC) rules planned for 2013 will force petroleum companies to disclose more fiscal information on an individual country basis. This will make it more important than ever for analysts to understand how to model oil and gas terms and the potential impacts of the disclosed government payments on future oil and gas company profitability.
About the Author
KEN KASRIEL is a Senior Petroleum Economist with RPS Energy, London. He has 18 years of experience in petroleum finance. He has performed numerous upstream petroleum valuations of assets in Africa, Asia, Europe, the Former Soviet Union, the Middle East and North America. His valuations and analyses have been used in public offerings, annual reports and other regulatory filings in various jurisdictions; and for the purposes of project financing, bid rounds, transaction valuation, portfolio optimization, expert witness support in commercial arbitration, and governmental fiscal design advisory. Before joining RPS Energy he worked 7 years as Senior Analyst for the Global Petroleum practice of PriceWaterhouseCoopers. He has also worked as an oil and gas equities analyst with Robert Flemings Securities (now part of JPMorganChase) and Creditanstalt Investment Bank (now part of BankAustria), and as an independent consultant to London-based oil and gas equity research teams. He has written on petroleum economics in the Oil and Gas Journal. His email is ken_kasriel@yahoo.com.
DR. DAVID WOOD has over 30 years of energy industry experience, mainly in petroleum, spanning technical and commercial exploration and production operations, mid- and downstream projects, and contract evaluation. His early energy industry experience includes Phillips Petroleum, Amoco (Africa, Europe and UK), and Lundin Oil (South America, Africa, Middle and Far East). From 1993-98 he was UK Managing Director for a portfolio of North Sea and onshore UK oil and gas assets. Since 1998 he has worked as an independent consultant, training provider and expert witness. He runs an oil and gas consulting company, DWA Energy Limited. He has published on energy related topics including: performance modeling of fiscal designs, petroleum economics and risk analysis, enterprise risk and portfolio management, LNG, GTL, gas storage and supply, deepwater E&P techniques, corporate performance, M&A, negotiations and project management. He has provided fiscal design advice to organizations including the Alaskan Legislature and the Yemen Government. He is involved in professional training, research, publication and development programs and is the assistant editor-in-chief of the Journal of Natural Gas Science & Engineering. He has designed and taught online training courses including oil and gas MBA programs. His email is dw@dwasolutions.com and website is http://www.dwasolutions.com
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