training specialists to the upstream oil and gas industry
 
 

Well Cost Control & Forecasting

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Course overview

The course begins with a discussion of the fundamentals of Well Cost Control & Forecasting. The aim is to refresh the student in the principles of the well cost improvement cycle.

Starting with an overview of the technical side to well construction and cost, through to the relationship with finance and partners in the well, we then look at the authorisation for expenditure (AFE) process.

Following on, we focus on the importance of cost tracking, how it fits in the finance team's monthly reporting cycle, and how it benefits the well engineering team.

Next we look at the final cost review and post well reconciliation process, before finally pulling all the disciplines together into the well cost improvement cycle and how this benefits the organisation’s annual budgeting, cost estimation, cost tracking, reconciliations, finance & partner reporting, and overall value adding information to the internal management team.

The course is designed for

  • Finance Teams & Cost Engineers with an interest in Well Cost Control & Forecasting principles
  • Attendees with little or no experience in Well Cost Control & Forecasting to pick up the principles and run a Cost Tracking Model for very simple to more complex types of wells (batch drilling)

The course pulls all the principles of Well Cost Control & Forecasting together and shows how the role fits into an Oil & Gas Operator’s organisation, and how it adds value for the management.

Learning objectives

  • Learn or refresh the principles behind well cost control and forecasting
  • Discuss the practical use of well cost control
  • Learn the methods to ensure accurate cost control
  • Learn to create financial control documents: AFE’s, Cost Trackers, Well Reconciliations
  • Learn how to create the value of work done and apply this to month end reporting and overall project forecasting
  • Use what you learn to improve the overall cost improvement cycle
  • How to report and present this financial information and add value to your organisation

Course outline

Reporting - how cost control feeds finance / different reports / feeding finance and how they deal with it

Well cost reporting

  • Reporting daily, weekly and monthly estimated drilling cost report
  • Understanding the array of well cost reporting and how to analyse them
  • Preparing drilling cost reports
  • Graphs – cost plan v actual, Cost per foot
  • Other well reporting
  • Dealing with finance

 

Well reconciliations - why do them / how to do them / risks associated and problem areas if not done

Post drilling reconciliations

  • Methodology for detailed well cost reconciliations to required industry standard
  • How to perform monthly materials usage stock reconciliations
  • Discussion of audit trails, reporting and liaison with accounting
  • Audit rights under JOA and preparation for JV audit
  • Final well cost review and materials usage reports

 

Other - inventory / material management - provisions write-downs etc.

 

Wrap up

 

Various exercises through out

Introduction

How oil companies decide where to drill wells

  • Exploring for oil and gas, a process of reducing uncertainty
  • Objectives of drilling a well: presence, geology, and evaluation data 

 

How wells are drilled

The drilling operation - (High Level overview)

  • Geology
  • Drilling
  • Rigs
  • Main equipment, e.g. Drill bits, Xmas trees etc.
  • Overview of Well Construction

 

Life cycle of well costing

Budgets

  • Requirement (JOA etc.)
  • How are they built up
  • Company Capital allocation process

 

AFE - project stage gates / requirements for different AFEs LL AFE / build up / JOA rules etc. / Set up and controls in place

Role of the AFE

  • Preparing a well AFE, setting up an AFE tracking system
  • Using project management techniques to plan, organise and control resources
  • Rig contract and support services for drilling
  • Materials and supplies used in well drilling
  • Typical well cost breakdown
  • Project approvals

 

P2P process - how this links in with cost control and AFE controls

Controlling actual well costs

  • Controlling and reporting financial commitments
  • Role of the cost tracker in relation to well operations, drilling and the company man
  • Comparing invoiced costs to tracked costs and reporting variances
  • How to identify cost over-runs and prepare information for an AFE supplement

 

Cost control - cost tracking model / set up cost tracker / forecasting / problems and handling change e.g. MOC supplement AFE

Accounting for well expenditure - financial accounting

  • >Breakdown of costs
  • How is it managed
  • How to deal with changes
  • Where information comes from

 

Location Start Date End Date Cost Trainer Book
Bali 9 Dec 2019 11 Dec 2019 £1,750 Simon Law
Bali 26 Feb 2020 28 Feb 2020 £1,750 Simon Law
Aberdeen 16 Mar 2020 18 Mar 2020 £1,750 Simon Law
Muscat 19 Apr 2020 21 Apr 2020 £1,750 Simon Law
Mexico City 6 Jul 2020 8 Jul 2020 £1,750 Simon Law
Kuala Lumpur 2 Dec 2020 4 Dec 2020 £1,750 Simon Law
Bali 7 Dec 2020 9 Dec 2020 £1,750 Simon Law

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