PSC Budgeting and Reporting

Overall Objectives
To provide a high level overview of terms, concepts and implementation of Planning and Budgeting, as well as Cost/Revenue Reporting in Oil & Gas Production Sharing Contract (PSC)
Upon completion of this module, you should understand the basic of:

Work Program and Budget PSC Budgeting PSC Reporting Authorization For Expenditures

Upstream Resource Lifecycle

Identify Explore and Capture and Discover Appraise and Develop Deplete

Exploration Development Production Research Gas Marketing

Each stage of cycle critical to long-term profitable growth Successful execution drives upstream performance Accountants role key throughout lifecycle
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Resources Allocation
The Corporation has to invest its resources into assets that has high opportunity to replace its O&G reserves, will give highest return, with reasonable risks.

This chart is illustration only, it does not represent operations of any particular company 4

Petroleum Business Characteristics

High Risk Business

Exploration Risk Development Risk Political Risk etc Need capital for exploration stage High capital for development stage Long payout period especially for gas Successful discovery enable long term business continuity

Capital Intensive

Long term capital return

Depend on Reserve Discovery

Budget Build-up Considerations Some key considerations in developing budget

Country Risks: political climates, regulations, general security environment, etc. Assets Characteristics: green fields, brown fields, depleted assets Assets Lifecycle: Exploration, Development or Production stage Type of Operations: Onshore Vs. Offshore operations Type of reserves: Oil Vs. Gas

Budget Build-up Process

Corporation

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Re gu Consolidate the lat ion budget at s country level

Asset A (Development, Brown field, Offshore, Gas)

Asset B (Production, Depleted, Onshore, Oil)

Asset C (Exploration, Green field, Onshore, Gas)

PSC Concepts at a Glance

Land lord Investor

PSC Agreement

Exploration Development - Production

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Gross Revenue to be accounted for

PSC Budgeting
Definition WP&B is a proposal of details annual work program and budget, taking into account the operational condition, commitment, effectiveness and efficiency of the PSC Contractor within the contract area The WP&B scope includes:

Exploration activities (Seismic and Geological Survey, Drilling and G&G) Production activities and the exertion to keep production continuity

Plan Of Development POD Sidetrack drillings Production Operations and workover drilling EOR projects

Costs to perform the above program/activities

The scope may vary depends on the cycle of Contractors operations

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PSC Budgeting
PSC terms and requirements Section I (Scope and Definition) BPMIGAS has the authority and controls over the PSC/JOB/KKS management of their operational activities and Contractors should account for the activities before BPMIGAS Section IV (Work Program and Expenditures) Three months prior to the commencement of the calendar year, Contractor should have prepared and submit the Original WP&B for BPMIGAS approval in order to carry on the activities as stipulated in the work program
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PSC Budgeting
WP&B Cycle Original WP&B - 90 days prior to the beginning of calendar year Revised WP&B - 6 months prior to the end of calendar year Approval process Technical Meeting may required to submit a Replacement WP&B Management Meeting to agreed on the annual program and budget that will be documented by a formal approval letter
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PSC Budgeting
Budget Schedule
(Ref. Financial Budget and Reporting Procedures Manual)

BS 1 - Financial Status Report BS 2 - Key Operating Statistics BS 3 - Expenses/Expenditures Summary BS 4 - Exploration/Development Summary BS 5 - Exploration Drilling Expenditures BS 6 - Development Drilling Espenditures BS 7 - Miscellaneous Capital Expenditures BS 8 - Production Expenses Summary

BS 9 - Production Facilities Capital Expenfitures BS 10 - Miscellaneous Capital Expenditures BS 11 - Administration Expenses Summary BS 12 - Administration Capital Expenditures BS 13- Capital Assets Place In Service BS 14 Depreciation old/new BS 15 - Detailed Program Support Listing BS 16 - Production Lifting Foracasts BS 17 - Budget Year Expenditures

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Budget Preparation

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Budget Preparation

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Budget Preparation

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Budget Preparation

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