Energy Institute (EI)

Portfolio Management of Oil and Gas Assets


Successful oil and gas organisations constantly review, value and risk their assets with a view to optimising the overall performance of their asset portfolio. This activity requires a strategic approach to managing uncertainty, exploiting synergies to ensure that the portfolio maintains a balanced and diversified mix of assets. Modern portfolio techniques involve the construction of sophisticated models to value risk and characterise alternative combinations of assets. Such models can provide a range of graphical displays to aid decision-making, such as feasible envelopes and efficient frontiers defined in terms of financial and non-financial metrics over defined planning horizons. A combination of linear and nonlinear optimisation algorithms are used to help select potentially high-performing asset combinations.

This course addresses portfolio management from theoretical and practical perspectives applicable to assets from along the oil and gas supply chain. Exercises concentrate mainly on upstream asset portfolios, but do address the involvement of midstream and downstream assets and other nonpetroleum energy assets in the context of balanced portfolios. Course materials include presentations, exercises and discussions facilitating delegate participation. The course information should help delegates to identify and select appropriate portfolio management techniques to suit their particular mix of assets.

This course is designed for a multi-disciplined professional audience drawn from portfolio, economic analysis, strategic planning, corporate, fiscal, financial and business development divisions of oil and gas companies, institutions financing such companies, and analysts of the oil and gas sector. The skills and industry insight provided by the course will be of value to corporate, portfolio and assetbased decision-makers.

Attendees should include:
Economic, technical and strategic analysts and managers involved in portfolio management; corporate and asset team members involved in acquisitions; disposals and optimisation of oil and gas assets.

Day one: Fundamentals of strategic portfolio management

  • Why a portfolio approach is needed for asset and corporate management
  • Exercise: diversifying risk
  • Portfolio characterisation: special requirements of upstream asset portfolios
  • Strategic dimensions to portfolio construction and business development
  • Exercise: portfolio planning and rationalisation
  • Capital allocation issues for asset portfolios
  • Exercise: making choices using efficient frontiers
  • Background to modern portfolio theory
  • Exercise: asset correlation and risk
  • Access to resources and sustainability scenarios
  • Key success factors and winning portfolio combinations
  • Exercise: rationalising an upstream portfolio based on risk and value
  • Organisational issues associated with portfolio management teams

Day two: Portfolio analysis techniques and tools

  • Asset synergy: selecting assets to fit with an existing portfolio
  • Exercise: recognising performance trends
  • Portfolio approach to implementing a quantified strategy
  • Portfolio uncertainty and probability of achieving key strategic targets
  • Exercise: estimating under conditions of uncertainty
  • Exercise: interpreting portfolio characteristics from statistical distributions
  • Exercise: evaluating performance of alternative asset combinations
  • Balanced scorecard technique as a portfolio management tool
  • Exercise: bidding for assets in competitive situations
  • Techniques to identify optimum portfolios
  • Exercise: rank and cut optimisation
  • Linear and non-linear optimisation techniques compared

Day three: Asset, Portfolio and Corporate Risk Management

  • Competitive bidding theory versus practice
  • Risk preferences impact portfolio management decisions
  • Exercise: identifying facets of uncertainty/risk
  • Above-ground and sub-surface risks and opportunities
  • Probabilities and expected values used to evaluate upstream assets
  • Enterprise risk management: national oil company case
  • Exercise: impact of optionality on decision-making
  • Methodology for riskedportfolio-simulation models
  • Simulation analysis of a hypothetical portfolio of upstream assets
  • Exercise: simplistic Monte Carlo simulation analysis
  • Combining simulation, optimisation and risk and strategy analysis
  • Portfolio approach to acquisition and divestment decisions
  • Portfolio challenges and pitfalls to mergers and acquisitions
  • Exercise: global perceptions of individuals and organisations
  • Taking a global perspective to cope with dynamic environments

Day four: Integrating portfolio valuation, risk and the human dimension

  • Portfolio analysis tools: software options
  • Video: complexity of some offshore assets
  • Portfolio requirements of unconventional oil and gas assets
  • Exercise: key performance indicators at asset level
  • Assessing third party portfolio performance and value
  • Exercise: valuing IOCs by extrapolating balance sheet metrics
  • Overcoming human resistance to portfolio management
  • Challenges to successful portfolio management
  • Dealing with an asset crisis
  • Portfolio impacts of extreme asset risks and catastrophes
  • The importance of midstream infrastructure in balancing risk
  • Embracing modern portfolio management techniques

Customer reviews

No reviews were found for Portfolio Management of Oil and Gas Assets. Be the first to review!