Production Sharing Contracts & International Petroleum Fiscal Systems

The Production Sharing Contracts (PSC) course provides critical information to create the right commercial framework for successful PSC negotiations. It examines state-of-the-art practice and techniques in fiscal system, analysis and design.

Any type of ‘extractive industry’ will come under the realm of the course including coal, gold & rock mining, geothermal, coal-bed methane, conventional oil & gas, shale oil & gas, deepwater, enhanced oil recovery, LNG & gas-fired power generation. And that is because the PSC course goes way beyond just PSCs.

It covers:

All types of fiscal/contractual arrangements that govern business relationships between oil companies and governments
Strong fundamental elements of normal petroleum operations, production & revenue generation, cost
Recovery and division of profits
Numerous variations on the basic themes such as royalty/tax, PSC and Service Agreements, Risk Service
Contracts, rate of return systems & R-factors, ringfencing, relinquishment, bonuses & goldplating.

The course offers 2 Modules over 3.5 days, and delegates

have the option of attending either

Module 1 for 2.5 days or Module 1+2 for 3.5 days.

Course Director

Daniel Johnston
President & Founder, Daniel Johnston & Co

Daniel Johnston, President & Founder of Daniel Johnston & Co., is an independent financial consultant to the international petroleum industry. For the past 25 years he has worked in 44 countries with both International Oil Companies (IOCs) and National Oil Companies (NOCs) on contract analysis and design, negotiations, disputes, and renegotiations. He has a Bachelor of Science Degree in Geology from Northern Arizona University and an M.B.A. (Finance) from the University of Texas at Austin. Daniel founded Daniel Johnston & Co., Inc. in 1985. He writes a column for the Petroleum Accounting and Financial Management Journal (Institute of Petroleum Accounting – University of North Texas) and is author of a number of books including International Petroleum Fiscal Systems and Production Sharing Contracts Pennwell Books (1994).

Who Should Attend

Top Management

CEO, VP, MD, GM

Analyst

Policy, Economic, Financial, Business

Professionals

Legal, Financial, Audit, Tax, Geologist, Engineers

Corporate Executives

Policy Developers, Economist

Government

Regulators, Policy Makers

Investors

Bankers, Financial Institutions

ATTENDANCE 2008 - 2024

Module 1 (2.5 Days)

12 - 14 May 2025, Trinidad

30 June - 3 July 2025, Dubai

Theory of Economic Rent
Taxation Theory related to the Petroleum Industry
Calculating Government Take: The Common Denominator
Negotiation of Commercial Terms: Key Aspects
Concessionary (Royalty/Tax) Systems
Production Sharing Contracts
Variations of the PSC Theme
Risk Service Contracts
Rate of Return Contracts
Joint Ventures
Technical Assistance/EOR PSCs
Threshold Field Size Analysis
The Global Market For Exploration Acreage
Worldwide Fiscal Systems

Plus Exercises on

Calculating Government Take
Effective Royalty Rates
Cash Flow Audits
Value of Reserves
Savings Index
Government Participation
Lifting entitlement (‘Booking Barrels’)
Sliding Scales

Module 2 (1 Additional Day)

14 - 15 May 2025, Trinidad

2 - 3 July 2025, Dubai

Introduction to Petroleum Economics & Analysis
Cash Flow Modelling & Analysis
Expected Value Theory
Exploration Threshold Field Size Analysis
Development Threshold Field Size Analysis

Plus Exercises on

- Value of Discovery Exercise
- Value of Reserves-in-the-Ground Exercise
- Dynamics of the Savings Index
- Government Participation Analysis
- Rate-of-Return-Systems

Delegates are required to bring their own laptop for Module 2.

An additional session on the 3rd/4th day of the course will feature practical computer-based basics of petroleum risk analysis and decision theory, progressing to the fine points of economic modelling in the international arena.

DELEGATES WILL BE REQUIRED TO BRING THEIR OWN LAPTOP

An additional Workbook will be provided as part of the 3rd/4th day cirriculum.

A spreadsheet containing modules for performing cash flow analysis for most of the mainstream types of fiscal systems including:

Systems with "R factors"
Rate-of-Return (RoR) based systems
Production Sharing Agreements, as well as
Royalty/Tax system and Service Agreements

will be provided.

A WORKING KNOWLEDGE OF EXCEL IS A REQUIREMENT FOR PARTICIPANTS ATTENDING THE 3rd/4th DAY SESSIONS FOR MODULE 2

Extensive Documentation & Research Materials as Study Aids

Module 1

(420+ pages) with exercises with numerous problems that teach the practical application of petroleum fiscal system analysis.

Module 2

An additional workbook covering the Computer-based exercises will be handed out to participants signing up for the 3rd/4th day sessions.
A spreadsheet module for performing cash flow analysis for most of the mainstream types of fiscal system will also be included as part of the course materials for the 3rd/4th day sessions.
Delegates must bring a laptop for the 3rd/4th day computer-based exercise sessions. If you would like a laptop to be arranged for you, separate rental fees will apply – Contact the PSC Secretariat for details.

The course offers a very good starting point to help understand PSC for anyone with very little background knowledge

- Sales,TRC Consultants

Exposure to many different fiscal systems worldwide

- JPDA Director, National Authority for
Petroleum & Minerals

Able to provide real life historical context for why+how PSC’s have evolved and changed. David is an excellent presenter and provides real life stories to keep students engaged. This is not just a course based on theoretical concepts

- Commercial Manager/ Osaka Gas Australia

Excellent and great insight with the determination of Government take in a production sharing contract

- Exploration Geosciences Team Lead, Chevron

Experienced, knowledgeable and is very good at simplifying his explanations

Head of Petroleum Economics, Timor Gap, E.P

Very good on discovery of PSC’s & especially simplifying them

- Ryder Scott Co., Senior Petroleum Engineer

The Course Director is very good at delivering the concepts and making sure you understand

- Mubadala Petroleum, Analyst, M & As

Managed to cover a lot of fiscal terms which I was not too
comfortable with before

- Petroleum Brunei, Legal Manager

Provided a great overview of all aspects of the subject. Learning government position was very useful

- Shell Products & Technology, Petroleum Engineer

Comprehensive course plus a good instructor who makes everything so simple

- Philodrill Corporation, Lawyer

The course was impressive and exceeded my expectations

- Kuwait Energy Company, Portfolio Analyst

Programme at a Glance

Module 1

Theory of economic rent
Taxation theory related to the petroleum industry
Calculating government take: the common denominator
Negotiation of commercial terms: key aspects
Concessionary (royalty / tax) systems
Production sharing contracts
Variations on the PSC theme
Risk service contracts
Rate of return contracts
Joint ventures
Technical assistance / EOR PSCs
Threshold field size analysis
The global market for exploration acreage
Worldwide fiscal systems
Production sharing contract outline

Module 2

Introduction to Petroleum Economics and Analysis
Cash Flow Modelling & Analysis
Expected Value Theory
Exploration Threshold Field Size Analysis
Development Threshold Field Size Analysis
Tests for progressiveness (regressiveness)
Testing “progressive” royalties

Exercises

Value of Discovery Exercise
Value of Reserves-in-the-Ground Exercise
Dynamics of the Savings Index
Government Participation Analysis
Rate-of-return systems

Production Sharing Contracts & International Petroleum Fiscal Systems

PSC Course