PSC Budgeting and Reporting

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Overall ObjectivesTo 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

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Exploration

Development

Upstream Resource Lifecycle

Each stage of cycle critical to long-term profitable growth Successful execution drives upstream performance Accountants role key throughout lifecycle

Production

Research

Gas Marketing

Identifyand Capture

Explore and Discover Deplete

Appraiseand Develop

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Resources Allocation

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

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.

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Petroleum Business Characteristics High Risk Business

Exploration Risk Development Risk Political Risk etc

Capital Intensive Need capital for exploration stage High capital for development stage

Long term capital return Long payout period especially for gas

Depend on Reserve Discovery Successful discovery enable long term business continuity

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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

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Budget Build-up Process

Asset A

(Development, Brown field, Offshore, Gas)

Asset B

(Production, Depleted, Onshore, Oil)

Asset C

(Exploration, Green field, Onshore, Gas)

You?Consolidate the budget at country level

Corporation

Political clim

ate RegulationsGeneral Security

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PSC Concepts at a GlanceLand lord Investor

PSC Agreement

Exploration – Development - Production Gross Revenue to be accounted for

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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 Contractor’s 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

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

Budget Schedule (Ref. Financial Budget and Reporting Procedures Manual)

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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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Budget Preparation

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Budget Preparation

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Budget Preparation

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Budget Preparation