Home » Seminars » Finance & Budgeting » Forecasting the Prices of Crude-Oil, Natural-Gas and Refined Products - PHASE 2

As of the moment, this course is currently not available on our training portfolio.
If you wish to inquire or request a run for this seminar, e-mail us at info@glomacs.ae or call us at +971 (04) 425 0700

Introduction

This 5 day, Phase 2 GLOMACS Training Seminar is concerned with one of the most important activities in the development of oil and gas business-forecasting the oil prices, as basis for planning and investment. As we have learned that oil prices are depending on many factors, and that prices simulations need to be much more stringent in order to determine the actual risk that our investment is facing.

A critical component of decision-making in the energy industry deals with the aspect of “Whither oil prices?”:  Where do we expect prices to move in the near- and distant-terms?  Participants in the Energy Industry are constantly confronted with a wide range of information regarding current and prospective prices in their industry.  Broadly, this data comes from analyses of supply-and-demand changes, geopolitical events and the financial markets, including the commodity markets.

The oil projects require lot of investment, and it takes years for the oilfield to start producing profit, therefore adequate forecasts are essential for companies to understand when and how their returns on investment will appear and how valuable will they be.

While providing the requisite background on the economics of financial commodity markets, as well as the statistical tools required to understand them, this GLOMACS Training Seminar demonstrates how the financial and commodity markets provide useful information for the generation of “expected prices”, or forecast prices, in the critical areas of oil, natural-gas and refined products. In so doing, this GLOMACS training course will also demonstrate the important distinction between valuation and risk/return analyses.

This GLOMACS training seminar course will develop an understanding of pricing, risk management, asset valuation and derivatives within the energy markets:

  • Learn to use financial models to analyze and forecast energy prices; extrapolate forward prices beyond the liquidity tenor
  • Understand the risk of and return from futures and options contracts on energy commodities
  • Manage and optimize your organization’s energy risk exposure
  • Learn to estimate and calculate volatility in energy prices
  • Utilize real options theory to value energy assets; use information from futures / option prices to make optimal production decisions: Optimal timing for extraction, optimal rate at which to extract oil (gas) from a field; value oil fields, pipelines and storage facilities, power plants

Objectives

The objectives of this GLOMACS training course are to provide a comprehensive introduction to the computation and application of forecast prices in the energy industry, with a focus on the oil, natural-gas and refined products segments. Inter alia, the course presents the basic statistical tools required to operationalize these concepts.

At the end of this GLOMACS training seminar, participants will learn to:

  • Use financial models to analyze and forecast energy prices; extrapolate forward prices beyond the liquidity tenor
  • Understand the risk of and return from futures and options contracts on energy commodities
  • Manage and optimize their corporations’ energy risk exposure
  • Estimate expected returns and calculate volatility in energy prices
  • Obtain a comprehensive understanding of the financial-economics techniques used to forecast prices
  • Apply option valuation techniques to the energy markets
  • Utilize real options theory to value energy assets; use information from futures / option prices to make optimal production decisions: Optimal timing for extraction, optimal rate at which to extract oil (gas) from a field; value oil fields, pipelines and storage facilities, power plants

Training Methodology

  • The course will be presented through a combination of four methodologies
  • Clear presentation of notes with the requisite supportive analytics
  • Detailed presentation of the relevant empirical regularities / stylized facts of the energy markets
  • Presentation of several case studies designed to exemplify the application of risk-management and valuation principles
  • Interspersed in the lectures are relevant problem-sets, designed to afford participants with the opportunity to apply the principles conveyed and see their implementation
  • Dissemination to and sharing with participant’s critical spreadsheets that will permit them to address issues within the course, as well as utilize these concepts once they have completed the course

Organisational Impact

From the perspective of the organization, this GLOMACS training seminar conveys to critical personnel the:

  • Computation and correct uses of price forecasts applicable to the energy industry
  • Application of concepts on risk and return on energy commodities
  • Manage and optimize their corporations’ energy risk exposure
  • Apply option valuation techniques to the energy markets
  • Understanding of the key elements of information conveyed by financial markets, and how to apply these to make better business decisions

Personal Impact

As a means of preparing individuals for the higher managerial rungs in their organization, the skills acquired in this GLOMACS training course include understanding the:

  • Main terminology used in the industry
  • Role of financial markets as efficient conveyors of information and assessors of risk
  • Valuation and role of futures contracts and swap agreements
  • Principles of option and derivative-claim valuation, hedging and uses
  • Necessary tools of financial-economics and statistics to forecast near and distant prices for oil, natural-gas and refined products
  • Means to utilize price forecasts to make better business decisions

Who Should Attend?

This GLOMACS training course is suitable to a wide range of professionals but will greatly benefit individuals working in financial analysis, valuation, trading, risk management or quantitative analysis positions with oil and gas exploration companies; investment and commercial banking, consulting, and financial services firms in the energy sector; production and distribution companies; energy trading firms; and corporations outside the energy industry with a significant cost exposure to energy prices.

In terms of job titles, these individuals include:

  • Financial Analysts
  • Quantitative Analysts or Researchers
  • Energy Traders
  • Risk Managers
  • Commercial and Investment Bankers dealing with commodities
  • Consultants in the commodity arena
  • Government and Regulatory Officials with responsibilities for the energy sector

Seminar Outline

Phase 2 is a more advanced sequel with a focus on additional influences, simulation models and current best practices in applying forecasting for oil and gas products, as well as insight of the actual way the upstream petroleum companies are planning their projects.  

Day 1

The Statistics of the Price Processes in Energy Markets 

  • Historical Volatility: The Term Structure of Volatility (TSOV)
  • Estimating Volatility from Market Prices of Options in Energy Markets
  • Historical or Implied Vols?
  • Estimating a Mean-Reverting Process
  • Characterizing the Volatility “Surface” Across Time and Strike

Day 2

The Extrapolation in Energy Finance

  • Jump-Diffusion Process
  • Valuation of Long-Dated Real Assets and Financial Structured Products
  • Extrapolating Crude-Oil Prices
  • Extrapolating Natural-Gas Prices
  • Extrapolating the Term Structure of Volatilities (TSOV)
  • Extrapolating Correlations

Day 3

Energy Derivative Products:  Structuring and Valuation 

  • Commercial Structured Products
  • Categorizing Derivative Products: Option Collars, Average Options, Spread Options, Swing Options, Weather Derivatives, Commodity-linked Bonds; “Swing” Options; Weather Derivatives
  • Structuring and Valuing Option Collars
  • Structuring and Valuing Average (Asian) Options

Day 4

Energy Derivative Products:  Calibration and Hedging in Profitable Market-Making

  • Example of Calibration: Using Vanilla Options to Determine the Value of Volatility for Valuation of Average Options
  • Non-Commercial Structured Products
  • Exotic Instruments: Constant Maturity Contracts, Compound Options, Quanto Contracts

Day 5

Geopolitical and Economic Events and Crude Oil Prices

  • Inventories, Oil Prices and Production
  • Difficulty in Planning for the Oil Safety Stock
  • API Reports
  • Oil Market Rebalancing
  • Cost Break-even Oil Prices
  • Role of Shale Oil
  • Diversification in the GCC
  • How different countries deal with the oil price changes?

Accreditation

  • Quality Logo

In Association With

Oxford Management Centre

Oxford Management Centre

A GLOMACS - Oxford Management Centre collaboration aimed at providing the best training services and benefits to our valued clients

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PetroKnowledge

PetroKnowledge

Our collaboration with Petroknowledge aims to provide the best training services and benefits for our valued clients

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Home » Seminars » Finance & Budgeting » Forecasting the Prices of Crude-Oil, Natural-Gas and Refined Products - PHASE 2

VAT Announcement: The Government of UAE have introduced Value Added Tax (VAT) on goods and services from 01-January-2018. In compliance with the legislation issued by the UAE Government, we will be applying a 5% VAT on the fees for all our programs and services offered from January 2018 as applicable and stipulated in the FTA circulars.

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