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Oil and Gas Modeling

Designed for finance professionals pursuing Oil & Gas careers, this course allows trainees to develop an in-depth understanding of the industry, including Oil & Gas accounting and financial statement analysis, appropriate Oil & Gas projection drivers such as commodity prices, production volumes, and operating costs, and Net Asset Value modeling. At completion, trainees will have developed comprehensive financial and valuation models for an Exploration & Production company case study.

Course Manual and Modeling Samples

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WSP Course Manual

Oil & Gas NAV Modeling Guide Sample

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WSP Course Manual

Oil & Gas Modeling Industry Primer Sample

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Sample Oil & Gas Modeling Template

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What You Will Learn

  • Industry Accounting & Financial Statement Analysis
  • Financial Statement Modeling
  • Net Asset Value (NAV) and DCF modeling
  • Accretion/dilution (M&A) modeling
  • Leveraged buyout (LBO) modeling
  • Comparable company analysis
  • Comparable transaction analysis
  • Financial & valuation modeling best practices
  • Excel mechanics and functionality for the O&G industry

Oil & Gas Modeling Highlights


  1. Intuitive, Self-Paced and Comprehensive

    Wall Street Prep's Oil & Gas Financial & Valuation Modeling Self Study Program is intuitive and self-paced. You should expect to spend approximately 100 hours to complete it. The program uses approximately 700 pages of tutorial guidance and Excel model templates to teach students how to build, analyze, and interpret Oil & Gas financial and valuation models in a step-by-step fashion, at their own pace.


  2. Real World "On the Job" Investment Banking Training

    The Oil & Gas Financial & Valuation Modeling Self Study Program bridges the gap between academics and the real world to equip O&G finance and industry professionals with the practical financial skill set they need on the job. The program utilizes a case study format, as students follow their tutorial guide alongside the Excel model templates, and are directed to the appropriate external documents (SEC filings, research reports, etc.) in order to build complex O&G Financial & Valuation models the way they would on the job.


  3. Support Center

    Upon enrollment, students gain 24-month free access to Wall Street Prep's Online Support Center, where they receive answers to questions, free downloads, and important updates.


  4. CFA Institute PD Credits

    Wall Street Prep is registered with CFA Institute as an Approved Provider of professional development programs. This program is eligible for 35 PD credit hours as granted by CFA Institute.


  5. Boost Add-In for Excel

    Free Access to Boost, an all-in-one suite of time-saving tools designed for people who build financial models in Excel. Key features include: Attach common number formats to keyboard shortcuts and cycle rapidly through the different font and color schemes; Easily understand long formulas with the powerful ‘Precedents’ and ‘Dependents’ Tool; and much more!

Prerequisites

The course is self-paced and anyone is welcome to enroll. It does not assume a prior background in Oil & Gas Modeling. However, those who select this course should possess knowledge in:

  • Accounting: The program assumes a basic introductory knowledge of accounting (e.g. interaction of balance sheet, cash flow, and income statement). Students with no prior background in Accounting should enroll in the Accounting Crash Course.
  • Corporate Finance: Although general exposure to corporate finance is helpful, it is not required.
  • Excel: Basic introductory Excel knowledge is highly recommended. Students with limited or no experience using Excel should enroll in the Excel Crash Course.

Oil and Gas Modeling Agenda

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Introduction to O&G accounting & financial statement analysis

  • Participants will understand dynamics of the O&G industry and the factors determining crude oil and natural gas prices
  • Learn the different business segments – upstream, midstream, and downstream – that make up the O&G industry
  • Learn O&G terminology, units, and key terms
  • Distinguish between full-cost and successful efforts accounting methods and their impact on financial statements and on financial statement analysis
  • Learn the structure and layout of the O&G financial reports and filings (i.e. 10-K, 10-Q, annual report)
  • Learn how to analyze and interpret O&G financial statements, footnotes, and disclosures
  • Understand how to perform O&G reserves and production ratio analysis

Introduction to O&G financial modeling

  • Building comprehensive O&G financial models from scratch the way it is done at major financial institutions.
  • Forecasting crude oil and natural gas prices
  • Understanding the role of price and volume hedges
  • Standard formatting best practices.
  • Excel best practices, efficient formula construction, and appropriate driver selections
  • Learning to use data tables to present various sensitivities to projected financial metrics
  • Balancing the balance sheet accounts, including excess cash and revolver
  • Fixing circularity problems, iteration, and other common modeling troubleshooting
  • Balancing sheet / cash flow statement crosschecks

Overview of O&G valuation modeling

  • Enterprise value vs. Equity value
  • Relative vs. Intrinsic value
  • Modeling techniques
  • Calculating and interpreting multiples
  • Useful Excel shortcuts and functions
  • The “football field”

Building an O&G Net Asset Valuation (NAV) model

  • Project cash flows for each major project and field to derive the value of E&P segment
  • Learn how to value in-ground versus producing reserves
  • Understanding proper valuation methodology and drivers for each major O&G business segment
  • Estimating the weighted average cost of capital (WACC) and common pitfalls to avoid
  • Using data tables to analyze a broad range of scenarios given different assumptions

Building an O&G trading comps model

  • Set O&G evaluation benchmarks & select comparable companies
  • Gather appropriate financial history and projections
  • Normalizing operating results and calculating LTM operating results
  • Exclude nonrecurring charges, normalize for stock option expense
  • Calculate shares outstanding using the treasury stock method
  • Input financial data & calculate and interpret financial and market ratios
  • Presenting trading comps by structuring output schedule
  • Selecting key valuation multiples using the VLOOKUP function and generating multiple tables

Building an O&G transaction comps model

  • Similarly to trading comps, trainees set O&G evaluation benchmarks, select precedent O&G transactions, gather appropriate financial details, input financial data, and calculate and interpret financial and market ratios
  • Calculating purchase premiums
  • Understanding pricing structures (fixed vs. floating, collars, and walk-away rights)
  • Best practices for incorporating synergy assumptions and appropriately calculating unaffected pre-deal share prices

Building an O&G M&A modeling

  • Participants will build an O&G merger model in Excel to reflect the pro forma impact of various acquisition scenarios.
  • Topics covered include a quick test of accretion-dilution in all-stock deals, pricing structures (exchange ratios/collars/”walk-away” rights), purchase accounting, the step-by-step allocation of purchase price, and the derivation of important O&G metrics and ratios.