IHRDC

ENERGY MANAGEMENT PROGRAMS

NEW PROGRAM!

Managing International Petroleum Agreements Legal and Fiscal Analysis, Negotiation, Accounting, Auditing and Dispute Resolution

“An ideal program for those involved in the negotiation and management of petroleum agreements.” –2001 Participant

value

June 20–July 1, 2005 Boston, USA

PROGRAM DETAILS Overall Program Objectives This program covers the financial analysis, negotiation and management of international petroleum agreements – including host country oil and gas exploration agreements, joint venture arrangements, and product sales agreements - from their preliminary analysis, through negotiation, financial analysis and management over the life cycle of the exploration, development, production and abandonment periods. It also covers the accounting for government take, joint venture operations and corporate reporting. The focus of the program is the application of E&P business fundamentals to the negotiation and implementation of the agreements found along the upstream petroleum value chain. They range in scope from the host government contracts negotiated prior to exploration, joint operating agreements and their impact on the various participants, to the contracts to market and sell crude oil and natural gas.

Conference Site Back Bay, Boston

The first week, Unit One, is devoted to the analysis and negotiation of the legal agreements. The second week, Unit Two, is devoted to accounting and auditing for joint operations, government take, corporate financial reporting and typical issues that are raised in these agreements.

Who Should Attend This timely program is ideal for government and national oil company officials, lawyers, business development specialists with operating companies, lawyers and accountants who practice in these areas, and all petroleum managers, especially those who do not have a legal background, who seek a clear understanding of the recommended practices of preparing, negotiating and implementing successful agreements in the upstream international oil and gas industry.

Instructional Format The learning format is a careful balance of formal lectures, negotiation sessions and team participation in unique petroleum “business game” in the Republic of Nicola. During the business game teams of participants simulate the negotiation of host country and joint operating agreements and then apply the agreements through the discovery, development and long-term production of a major field. The workshop, which typically takes almost one third of the instruction time, has been highly rated by past participants for its effectiveness in internalizing the learning, generating discussion among team participants, and creating long-lasting friendships and contacts around the world.

Awarding of Certificates A certificate will be issued to individuals who successfully complete this program.

Program Location and Accommodations The program will be held at the John Hancock Conference Center in the attractive Back Bay section of Boston. Known as America’s Walking City, Boston is also the historical, educational, and cultural center of the United States. For your convenience, IHRDC has reserved guest rooms for program attendees at several area hotels. Enrollees needing assistance with accommodations should contact IHRDC for bookings. Rooms are limited— early reservations are encouraged.

Social Activities and Administrative Assistance Enroll online at:

www.ihrdc.com

We want you to feel at home during your stay in Boston. With this in mind, we have an IHRDC Program Coordinator available to assist you with non-program needs including shopping, travel arrangements and individual administrative concerns. In addition, social events are organized during the evenings and excursions by bus to regional sites of interest are scheduled during the weekend.

UNIT ONE: Analysis and Negotiation of Upstream Petroleum Agreements PROGRAM CONTENT Welcome and Introductions

Exploration Project Investment Analysis

Welcome and introduction of all participants; Summary of the contents; Logistics and schedule of non-program activities; Solicitation of program expectations of delegates.

Project cash flow analysis; present value and internal rate of return calculations. Sensitivity analysis of the impact of bonuses, royalties, production sharing, corporate and petroleum taxes, carried interests, ROR and R-Factor features. IHRDC’s economic model and the business game simulator will be used to analyze the impact of the terms found in the various forms of agreements.

Overview of the International Oil and Gas Business Today Overview of the international oil and gas value chains showing the supply, transportation, processing and markets for the major hydrocarbon products including gas. Summary of how the industry is changing and the drivers that are forcing these changes. The nature of the business that exists along each value chain and the need for carefully drawn agreements in this interrelated energy world are discussed.

The Exploration and Field Development Process The nature of the exploration and development process for both oil and gas projects; the five phases of a typical upstream project; Technology, risk assessment; market options; project planning, economic assessment. Service agreements for third party services. Marketing and selling of crude oil, natural gas and gas liquids. Recent trends in petroleum exploration and development technology.

Overview of Upstream Host Government Agreements Overview of host government agreements: Concession, Production Sharing, Risk Service, and Service Agreements), their historical evolution, whether they are competitively bid or negotiated, and the nature of their fiscal and operational terms. Discussion of major terms included in these agreements: area of exploration blocks, work program and relinquishment terms, contract periods, commerciality and development plan approval, the nature of the government participation, sole risk considerations, terms of product sale to the government, environmental procedures/obligations, flaring policy, insurance requirements, rights-of-way, training obligations, technology transfer, import licensing, work permits, and labor law. Review of the Guidance Notes for Prospective Bidders in Nigeria’s Offshore Licensing Round.

Negotiation Process

Review, Discussion and Analysis of Recent Concession Agreements Review of the procedures in which Oil and Gas Leases are issued for the US Offshore; Role of the MMS; Terms offered in a recent Lease Sale Announcement; Review of the Lease Agreement and analysis of the fiscal terms for a typical project using the IHRDC financial model. Review of the terms of a recent Sierra Leone Concession Agreement and analysis of fiscal terms for a typical investment in this country.

Review, Discussion and Analysis of Recent Production Sharing Contracts Review and analysis of two recently executed PSC’s, one in Libya; the other in Trinidad. Comparison of general terms and analysis of fiscal terms using the IHRDC project analysis model for analyzing fiscal terms of a PSC.

Review, Discussion and Analysis of Recent Risk Service Contracts Review and analysis of a recently executed Risk Service Agreement in Venezuela or Mexico. Comparison of general terms and analysis of fiscal terms using IHRDC financial analysis models.

Review and Discussion of Joint Operating Agreements The Joint Operating Agreement is the major document governing the relationship of the parties to a substantial capital project. In this session participants will review and discuss the key terms of the AIPN’s standard JOA agreement and its various exhibits. Review of an existing JOA in West Africa will also be reviewed to identify major areas of potential conflict and dispute.

Summary of the “Getting to Yes” negotiation process as applied to the negotiation of petroleum agreements.

The following is a partial listing of companies who have recently enrolled participants in IHRDC’s programs: ADNOC AGIBA Petroleum Company Anadarko Petroleum Corp. BP Trinidad and Tobago ChevronTexaco Department of Petroleum Resources (Nigeria) Ecopetrol EGPC

ExxonMobil Gas Authority of India INA-Naftaplin Croatia Kondur Petroleum S.A. Kuwait Oil Company Mobil Producing Nigeria MOL Hungarian Oil & Gas Co. Nigeria LNG NNPC/NAPIMS

Obragas Holding N.V. OMV ONGC PanCanadian Petroleum Ltd. PDVSA PEMEX Pertamina Petrobras Petronas Petroleum Authority of Mongolia Petroleum Authority of Thailand PetroVietnam

PlusPetrol QGPC Repsol YPF Saudi Aramco Santos Shell Sonangol Statoil Unocal VICO Indonesia Woodside Energy Ltd.

UNIT TWO: Accounting for Corporate and Joint Petroleum Operations PROGRAM CONTENT Oil and Gas Project Overview

Accounting for the Government Take

Typical life cycle of oil and gas projects; Project risks and their mitigation; Sources of capital for petroleum exploration and development; Expected financial performance for petroleum projects: accounting and cash flow projections; Standard measures of performance; Difference between corporate and tax books; Parties to the Joint Operating Agreement (JOA); Accounting provisions of the JOA.

Accounting for government payments: royalties, income and special petroleum taxes; cost and profit oil shares; additional payments including Rate of Return and RFactor allocations; setting transfer prices and the sale price of crude oil, natural gas and gas liquids.

Overview of Oil and Gas Accounting Definition of various industry terms; Classification of reserves and resources; two major accounting options to account for oil and gas costs: Successful Efforts and Full Cost. GAAP requirements to comply with SEC listing.

Full Cost and Successful Efforts Accounting of Upstream Petroleum Costs Treatment of non-drilling exploration, acquisition, drilling and development costs; Proved property disposition costs: depreciation, depletion and amortization

Accounting for Revenue and Production Activities Under Host Government and Joint Operating Agreements

Supplemental Disclosures Supplemental disclosures required by SFAS 69: Reserves, capitalized costs; costs incurred for acquisition, exploration, and development; standardized measures of present value of future operations.

Audit Process Auditing of oil and gas accounting costs for various stakeholders: tax authorities, ministries, joint venture partners, bankers and shareholders; the audit process and resolution of conflicts.

Dispute Resolution Alternative means of resolving disputes, Obstacles to enforcement of dispute resolution clauses, Problems of suing foreign governments, Recognition and enforcement of judgments and arbitral awards.

Allocation of revenue, capital and operating costs among multiple owners; recognizing revenue of oil, gas and gas liquids; allocating costs; implementing terms of the JOA accounting provisions for joint owners including the government interest; accounting for financed and carried interests.

AFRICA

Republic of Nicola

Workshop Setting: Republic of Nicola The workshop setting is the Republic of Nicola, an emerging “island” country on the west coast of Africa, where oil has been discovered onshore and, with the extension of recent trends in Angola and Nigeria, should be found offshore in relatively deep waters.

Atlantic Ocean

Your company, one of the teams of participants, is interested in the opportunity to explore for oil and gas in Nicola and has approached the government to negotiate one or more exploration agreements, including a concession agreement onshore and production sharing contract offshore. Another company has expressed an interest in participating with you in the ventures. Your team will analyze the opportunities and then negotiates agreements with the host country. You then undertake exploration, prepare a development plan and then manage the production over a 20-year period as you implement and comply with the host country, JOA and related service agreements. During Unit One your team completes the negotiation of agreements and begins the exploration process. During Unit Two you plan the development process and carry the project through construction and operation. Major efforts are devoted to the accounting for the revenues, capital and operating costs, taxes and government share calculations that occur during the life cycle of the project – from early negotiation and exploration through production to abandonment. In the process you comply with local accounting and tax requirements and prepare the corporate financials according to GAAP accounting standards.

INSTRUCTORS

“The speakers and IHRDC support staff were all of the highest caliber and very professional!” –2004 Participant

PROGRAM DIRECTOR Dr. David A.T. Donohue is the Founder and President of both IHRDC and Arlington Storage Corporation. Dr. Donohue is a technical specialist, businessman, attorney and lecturer who is highly regarded for the teaching of management programs devoted to the “business of oil and gas”. He has successfully designed and taught these “business game” programs to more than 10,0000 members of the international oil and gas industry on both in-house and public bases. He was the developer of an innovative video-based learning system for the upstream petroleum industry, which has now been converted to IPIMS, a widely licensed e-Learning system. Dr. Donohue is also the developer and owner of independent underground gas storage facilities in New York State. In his early career he held various positions in engineering and research for Exxon and, for four years, served on the faculty of Pennsylvania State University. Dr. Donohue holds the PhD in Petroleum & Natural Gas Engineering from Pennsylvania State University and a J.D. degree from Boston College Law School. He is active in public affairs in his hometown, a Distinguished Member of the SPE and Alumni Fellow of Pennsylvania State University.

Dr. Mimi Alciatore is an Associate Professor and Director of the Accounting Certificate in Energy (“ACE”) Graduate Program at the University of Houston, which she joined in the fall of 2001. Prior to this, Dr. Alciatore served on the faculty at Louisiana State University, Southern Methodist University in Dallas, and the London Business School in London, England. Dr. Alciatore has taught more than 1600 managers in numerous executive education courses at universities and for various energy companies on such topics as financial statement analysis, financial reporting and disclosure, financial accounting, and oil and gas accounting. Her research activities center on financial markets, with a focus on accounting and financial reporting issues for the energy industry. Professor Alciatore is the author of “Oil and Gas Accounting” in the Encyclopedia of Management, and “Asset Valuation: Case Studies from the Oil and Gas Industry” in the Financial Times. She has published in The Accounting Review, Journal of Accounting and Economics, Journal of Accounting Literature, Issues in Accounting Education, Journal of Accounting and Public Policy, Petroleum Accounting and Financial Management Journal, and the Oil, Gas & Energy Quarterly. Dr. Alciatore is on the editorial boards of the Petroleum Accounting and Financial Management Journal and the Oil, Gas & Energy Quarterly. Owen L. Anderson is the Eugene Kuntz Chair in Law in Oil, Gas & Natural Resources at the University of Oklahoma, a Research Fellow at the Energy Law & Policy Centre, University of Dundee, and a consultant on energy law and transactions. He has lectured on petroleum law in several countries, including Norway, China, and Canada. Professor Anderson is the co-author of several books including International Petroleum Transactions, Cases and Materials on Oil and Gas Law, Hemingway’s Oil & Gas Law & Taxation, and a multi-volume legal treatise, the Law of Oil and Gas, as well as the author of numerous articles on oil and gas law. Professor Anderson is a member of the Association of International Petroleum Negotiators and a Trustee of both the Rocky Mountain Mineral Law Foundation and the Energy and Mineral Law Foundation. He has B.A. and J.D. degrees from The University of North Dakota.

Bradford R. Donohue is Director of Corporate Development for IHRDC, and is responsible for collecting and analyzing budget and financial performance data for each of the company's business units. He is also in charge of quality assurance, marketing and project management for IHRDC's Operations and Maintenance (O&M) training programs, and previously worked for the company in Strategy and Product Development. Mr. Donohue has a broad management, business and technical background in both the private and public sectors. During 2002, he worked for Merrill Lynch in Strategy and Product Development, and from 1997 to 2000, he was a Program Manager and Mechanisms Engineer at the U. S. Naval Research Laboratory's Naval Center for Space Technology in Washington D.C. Mr. Donohue has an MBA degree and a Bachelor of Science degree in Mechanical Engineering, both from the University of Virginia and is a Level II candidate of the Chartered Financial Analyst (CFA) Program.

Watch our 2005 Program Overview at: www.ihrdc.com/video

Maher Habbal is Manager, Business Simulators Development/Applications for IHRDC. He is responsible for developing and implementing the business simulation models used in IHRDC management programs and workshops. To date he has built five such simulators: one for the oil industry, two for the gas, and two for power. His other responsibilities include internal financial reporting, analysis and forecasting. Before joining IHRDC, Mr. Habbal worked three years with Arthur D. Little, Inc. as a Senior Financial Analyst on financial reporting and modeling. Also, as a member of the teaching staff at the Arthur D. Little School of Management Master of Science in Management Program, he taught Finance, Economics and Accounting. Mr. Habbal holds a Master of Science Degree in Management from Arthur D. Little School of Management and a B.S. in Business Economics from the Lebanese American University.

ENROLLMENT FORM 1.

REGISTRATION FEES:

ONE-WEEK: US$3,750

TWO-WEEKS: US$7,000

NOG

The Registration Fee includes instruction, instructional materials, receptions, continental breakfast and lunch during the session days, weekend bus trips and miscellaneous conference expenses.

I would like to enroll in the following program(s): ❑

Managing International Petroleum Agreements

❑ Full Program: June 20–July 1, 2005 ❑ Unit One: Analysis and Negotiation of Upstream Petroleum Agreements (June 20–25) ❑ Unit Two: Accounting for Corporate and Joint Petroleum Operations (June 27–July 1)

June 20–July 1

In addition, I would like to receive a brochure on the following 2005 program(s): ❑ ❑ ❑ ❑ ❑ ❑ ❑

2.

International Gas Business Management Certificate Program

First Offering: May 9–20 Second Offering: October 3–14 Petrochemicals, Refining and Gas Processing Business May 23–27 Commercializing (“Monetizing”) International Oil & Gas Projects June 6–17 Essential Skills for International Oil & Gas Managers and Supervisors June 20–July 1 Managing National Oil and Gas Interests to Create Long-Term Sustainable Value: Policies, Legislation, Strategic Planning, Leadership and Core Competencies August 1–5 Houston: Study Tour to a Selection of Innovative Companies in the Houston Area August 8–12 International Petroleum Management Certificate Program September 12–October 7

Enrollment Information: (Please print clearly.) Name ____________________________________________________________________________ Title ______________________________________________________________________________ Company ________________________________________________________________________ Address __________________________________________________________________________ ____________________________________________________________________________________________________________ Tel ____________________________________ Fax ____________________________________ E-mail ____________________________________________________________________________

3.

Payment Method: ❑ Fee Enclosed

❑ Please Invoice (Send to the attention of:) ____________________________

❑ Mastercard

❑ Visa

❑ American Express

❑ Discover

Card Number ______________________________________ Exp. Date__________________________________________________________________________________________________________________ Signature of Cardholder_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Payment/Substitutions/Cancellations The fee is due and payable to IHRDC before the first day of the program. If an enrollee is unable to attend the course, the enrollee or the company may appoint a substitute at any time without penalty. One half of the registration fee must be paid by those registrants who commit to attend the program and then cancel less than 30 days before the first session.

4.

Please FAX or Mail this form to: IHRDC Management Programs, 535 Boylston Street, Boston, MA 02116 USA Tel: (1-617) 536-0202 • Fax: (1-617) 536-4396 or (1-617) 247-6669 • E-mail: [email protected]

Registration may also be made online at: www.ihrdc.com