Energy Finance: Analysis and Valuation, Risk Management, and the Future of Energy

1922 Pages·2013·19.63 MB·English

by  Betty Simkins

Contents
Cover
Series
Title Page
Copyright
Dedication
Acknowledgments
Chapter 1: An Introduction to Energy Finance and
Economics
SO WHY A BOOK ON ENERGY FINANCE AND
ECONOMICS?
THE CHALLENGES OF ENERGY TRANSITIONS AND THE
TRICKY TRADEOFFS
SUMMARY OF THE BOOK CHAPTERS
WHAT DOES THE FUTURE HOLD FOR ENERGY?
CHAPTER QUESTIONS
NOTES
REFERENCES
ABOUT THE EDITORS
Part One: An Overview of Energy Finance and
Economics
Chapter 2: Geopolitics and World Energy Markets*
INTRODUCTION
ENERGY GEOPOLITICS FOR THE NEXT GENERATIONS:
DEMAND, MIX, AND INTERNATIONAL MOVEMENTS
THE WORLD MARKET FOR ENERGY
OPEC AND THE FUTURE ROLE OF A CARTEL
THE RISE OF NATIONAL OIL COMPANIES AND
BILATERAL CONTRACTS
PIPELINES
SEA LANES
THE NEW WORLD OF NATURAL GAS
NUCLEAR POWER
CLIMATE CHANGE AND ENVIRONMENTAL
CONSIDERATIONS
THE FUTURE OF ENERGY GEOPOLITICS AND ENERGY
FINANCE
DISCUSSION QUESTIONS
NOTES
REFERENCES
ABOUT THE CONTRIBUTOR
Chapter 3: Energy Economics
INTRODUCTION
A BRIEF HISTORY OF ENERGY USAGE IN THE UNITED
STATES
U.S. ENERGY CONSUMPTION BY SECTOR
OVERVIEW OF WORLD PETROLEUM CONSUMPTION,
SUPPLY, AND PRICES
PROSPECTS FOR THE FUTURE
CONCLUSION
CHAPTER QUESTIONS
NOTES
REFERENCES
ABOUT THE CONTRIBUTORS
Chapter 4: Sustainable Energy: Myths and Realities
INTRODUCTION
A DEFINITION OF SUSTAINABLE ENERGY
SUSTAINABLE ENERGY MYTHS
A MODEL FOR DETERMINING THE SUSTAINABILITY OF
ENERGY SOURCES
CONCLUSION
APPENDIX
DISCUSSION QUESTIONS
REFERENCES
ABOUT THE CONTRIBUTORS
Chapter 5: A Brief Introduction to the Petroleum Industry
INTRODUCTION
THE CHEMISTRY OF PETROLEUM AND THE REFINING
PROCESS
PETROCHEMICALS
CONCLUSION
DISCUSSION QUESTIONS
NOTES
REFERENCES
ABOUT THE CONTRIBUTORS
Chapter 6: The Economics of Renewable Energy*
INTRODUCTION
MEASURING RENEWABLE ENERGY’S VALUE
OPTIONS APPROACHES
CONCLUSION
DISCUSSION QUESTIONS
NOTE
REFERENCES
ABOUT THE CONTRIBUTOR
Chapter 7: How Our Political Views Affect Our View of
Energy Prices
INTRODUCTION
CONCLUSION
DISCUSSION QUESTIONS
NOTE
ABOUT THE CONTRIBUTOR
Part Two: Financial and Economic Analysis in
the Energy Industry
Chapter 8: Oil and Gas Accounting
INTRODUCTION
SUCCESSFUL EFFORTS ACCOUNTING
DISPOSITION OF CAPITALIZED COSTS
FULL COST ACCOUNTING
INTERNATIONAL FINANCIAL REPORTING STANDARDS
DISCUSSION QUESTIONS
APPENDIX
NOTES
REFERENCES
ABOUT THE CONTRIBUTOR
Chapter 9: Financial Statement Analysis for Oil and Gas
Companies and Competitive Benchmarking
INTRODUCTION
FINANCIAL STATEMENTS
A QUICK LOOK AT CONOCOPHILLIPS AND
COMPETITIVE BENCHMARKING
USING THE FINANCIAL STATEMENTS
RATIO ANALYSIS
ENERGY RATIOS
CONCLUSION
APPENDIX: SUMMARY OF INFORMATION FOUND IN
THE FORM 10-K ANNUAL REPORT
QUESTIONS
NOTES
REFERENCES
ABOUT THE CONTRIBUTORS
Chapter 10: Petroleum Economics, Risk and Opportunity
Analysis: Some Practical Perspectives
INTRODUCTION
DISCOUNTED CASH FLOW (DCF) AND TIME-VALUE
CONSIDERATIONS
MANIPULATING THE PRESENT VALUE AND FUTURE
VALUE FORMULAE
INFLATION, REAL, AND NOMINAL (MONEY-OF-THE-
DAY) VALUES
HURDLE RATES AND MINIMUM ACCEPTABLE RATES OF
RETURN
THE NONLINEARITY AND COMPLEXITY OF
UNCERTAINTY
GEOPOLITICAL RISKS AND OPPORTUNITIES
CONCLUSION
DISCUSSION QUESTIONS
REFERENCES
ABOUT THE CONTRIBUTOR
Chapter 11: Real Options and Applications in the Energy
Industry*
INTRODUCTION
A BRIEF HISTORY OF REAL OPTIONS
DISTINCTION BETWEEN FINANCIAL OPTIONS AND
REAL OPTIONS
TYPES OF REAL OPTIONS AND EXAMPLES IN THE
ENERGY INDUSTRY
VALUING REAL OPTIONS
CONCLUSION
DISCUSSION QUESTIONS
NOTES
REFERENCES
ABOUT THE CONTRIBUTORS
Chapter 12: International Petroleum Fiscal System
Design and Analysis
INTRODUCTION
GEOPOTENTIAL AROUND THE WORLD
CONCESSIONS OR LICENSES—ROYALTY/TAX SYSTEMS
PRODUCTION SHARING CONTRACTS
RISK SERVICE CONTRACTS
EVOLUTION AND DEVELOPMENT OF THE INDONESIAN
PSCs AND RSAs
COMPARATIVE ANALYSIS (SERVICE AGREEMENTS—R/T
SYSTEMS—PSCs)
NUMEROUS SIMILARITIES AMONG FISCAL SYSTEMS
ACCOUNTING ASPECTS OF FISCAL SYSTEMS ARE
FAIRLY UNIVERSAL
DIVISION OF REVENUES AND PROFITS
SIGNATURE BONUSES
GOVERNMENT PARTICIPATION
ROYALTIES AND PROFITS-BASED MECHANISMS
CONTRACTOR AND GOVERNMENT CASH FLOW
GOVERNMENT TAKE
EFFECTIVE ROYALTY RATE
KEEPING COSTS DOWN—THE SAVINGS INDEX
LIFTING ENTITLEMENT
ALIGNMENT OF INTERESTS
INCREMENTAL PRODUCTION CONTRACTS (IPCs)
ALLOCATION AND LICENSE PROMOTION
FIXED, NEGOTIATED, OR BID TERMS
KEY CONTRACT PROVISIONS
CONCLUSION
APPENDIX 12.1
APPENDIX 12.2
APPENDIX 12.3
APPENDIX 12.4
DISCUSSION QUESTIONS
NOTES
References
ABOUT THE CONTRIBUTOR
Chapter 13: Financing Large Energy Projects
INTRODUCTION
SPECIAL ASPECTS OF LARGE PROJECTS IN THE
ENERGY INDUSTRY
FINANCING OF LARGE PROJECTS: A LITERATURE
REVIEW
CENTRALIZED FINANCING OF LARGE ENERGY
PROJECTS
OPERATING FEATURES OF THE CENTRALIZED FINANCE
MODEL
PROJECT FINANCING OF LARGE ENERGY PROJECTS
FINANCING LARGE ENERGY PROJECTS:SUMMARY AND
CONCLUSIONS
DISCUSSION QUESTIONS
NOTES
REFERENCES
ABOUT THE CONTRIBUTORS
Chapter 14: Financing Bio-Fuels Projects: Case Study
Lessons
INTRODUCTION
PYOIL—DEVELOPMENT FROM CONCEPT TO
COMMERCIALIZATION
THE FIRST MOVER PIONEER PLANT ISSUE
CONCLUSION
DISCUSSION QUESTIONS
ABOUT THE CONTRIBUTOR
Part Four: Case Studies
Chapter 15: Energy Derivatives and Markets*
INTRODUCTION
PRODUCTS: AN OVERVIEW
HISTORY
PETROLEUM DERIVATIVES: DETAILS
NATURAL GAS DERIVATIVES: DETAILS
ELECTRICITY DERIVATIVES: DETAILS
PRICING
CLEARING
RECENT DEVELOPMENTS
DISCUSSION QUESTIONS
REFERENCES
ABOUT THE CONTRIBUTORS
Chapter 16: Introduction to Energy Risk Management
INTRODUCTION
RISK MANAGEMENT AND TYPES OF RISK
ENERGY DERIVATIVES AND IMPORTANT
TERMINOLOGY
MORE CONCEPTS AND TERMINOLOGY
EXAMPLES FROM SOUTHWEST AIRLINES AND ATLAS
ENERGY
OTHER EXAMPLES OF HEDGING CONTRACTS
OTHER IMPORTANT ISSUES
CONCLUSION
APPENDIX
DISCUSSION QUESTIONS
NOTES
REFERENCES
ABOUT THE CONTRIBUTORS
Chapter 17: Risks in Trading Energy Commodities