Contents Abbreviations. Preface... What this book is about ‘Target audience for the book Structure of the book.. Acknowledgements Chapter 1: Commercial concepts and petroleum contracts... Introduction... Aword on semantics Petroleum economics defined The reasons why people study petroleum economics Factors that influence the objectives of a firm.. Organizational size... Project phase within the wider portfoli Corporate strategy. The oil and gas project lifecyck Exploration. Operations ... Abandonment. Economic rent. Contractor and government takes. Government marginal takes Fiscal agreements defined. Types of fiscal agreements Fiscal agreements framework. Concessionary systems... Tax/ royally .... Elements of a tax /royalty agreement. How the contract works. + Cash flow components. Net income component Contractor take components. Contractual systems... Productior-sharing contracts... Elements of a production sharing contract... How the contract work: Cash flow components. ‘Net income components... Contractor take component:Risk service contracts... Rate of return contracts... Profit split trigger calculation .. Service agreements... ‘Special topics in petroleum taxation .. Petroleum taxation in the United States, Petroleurn revenue tax in the United Kingdom. Risk and uncertainty 7 Decision tree analysis. Sensitivity analysis Booking reserves.... SPE-WPC-AAPG classification SEC classification... Chapter 2: Petroleum finance and accounting. Introduction. Financial statements. Income statement .. Balance sheet. Statement of cash flows... Overview of financial statement modelin; Measuring free cash flow produced by the business Constructing project cash flow. Expenditure iterns Capital expenditures Capital budgeting. Net Present Value.. How to use the formula... 105 When to use the formula. 106 Decigion criterion 106 Mid year discountiry 107 Setting the discount rate .. 108 Weighted Average Cost of Capital (WACO). 108 Long run discounting. i Internal rate of return (IRR) 113 How touse the formula When to use the formula.. Decigign criterion .... Maximum exposure... ‘How to use the formul:When to use the formul: Decision criterion... Full cycle and point forward economics Incremental economics .. Depreciation Straight-line me Declining balance method Unit of production method Chapter 3: Modeling frameworks and design .. Introduction. Model design defined Design theory and practice. The design process. Integrating solutions. Components of a “good” mode Spreadsheet development. Planning your work... Think about the user .. Think about the information. Section design... Single section design. Multiple section design. Section layouts... Chapter 4: Modeling with Microso(t® Excel®. Introduction. SUM functior SUMPRODUCT function. IF function... SUMIF function. MIN function. MAX function. CHOOSE functior AND and OR functions.. OFFSET function... Naming ranges and cell: Using the define name box... Creating names that refer to other workbooks Absolute cell references Mixed cell references.. Fixing formula errors Formula auditing toolbai Tracing errors manuallyWatch windows... Circular references. 186 LOOKUP function. 188 Drop down menus .. 189 Data tables... Creating a one dimensional data table.. Creating a two dimensional data table. 193 Graphing with Excel . 196 Creating a chart .. 196 Coluinns charts 198 Series charts 198 Pie charts... Area chart 199 Bubble chart: 199 Protecting cell contents. 199 Hiding formula cells . Auditing... Decide what an error looks [il Totals and IF functions. Spreadsheet style... Consolidation .. Borders and white spac Column width .... 209 Combining text and numbers.. 209 Formatting numbers... Changing case. Expert tips.... Viewing all the formulas in a spreadshee Printing a list of shortcut keys. Inserting today's date and tim View the paste names dialog Move quickly to a named range. Customizing your toolbar... Add hidden notes to your formula: Avoid gaps in charts ‘Smart formats. Visual basic macros. Chapter 5: Modeling applications .. Tatroduction..... The decision that is being modeled 10Production sharing contract modeling Input variables......... Production and gr08s | Tevenues CAPEX, OPEX and Bonus inputs. Net cash flow... Tax / Royalty contract modeling, Input variables... Production and gross revenues Royalty and net revenues. CAPEX and OPEX inputs 39 DD&A..... 40 Total applied deductions 41 Taxes... 22 Net cash flow Rate of return contract modeling. Input variables... Production and gross revenues CAPEX and OPEX input DD&A Deductions. Taxes ... Netcash receipts... Amounts brought forward and amounts carried forward. Additional profil. Resource Rent Tax Net cash flow. Special modules. Sliding scales. Two dimensional royalty rates. Bonuses Selected bibliography... Appendix A - depreciation examples. Straight line method Declining balance method . Unit of production method.Energy ‘Approximate Heat Content of Petroleum Products .. Appendix C- production sharing contract influence diagrams... Appendix D - tex royalty influence diagrams ..