Training Course Overview
This advanced energy finance executive education program is designed to provide participants with a strong foundation for understanding energy finance. This training course will address three areas of finance in an energy context: Pricing, asset valuation, and risk management.
The program will begin by developing participants’ understanding of energy markets, as well as how to forecast energy prices. This training course will then consider valuation and the application of option theory to energy-related assets.
This training course will focus on giving delegates an understanding of energy-related derivatives. Delegates will be taught the different derivative products and learn how to apply them in the energy markets to develop hedging and risk management strategies. Such strategies will specifically include energy end-users – producers or consumers – seeking to hedge the risks their corporations face from varying and uncertain energy prices.
By the end of this training course delegates will leave with an understanding of the energy markets and how to manage the financial risks created by volatile energy prices. In addition, delegates will gain the skills to accurately value energy assets and use derivatives to mitigate energy price risk.
Training Course Objectives
This executive education program designed to provide participants with an understanding of pricing, risk management, asset valuation and derivatives within the energy markets:
- Use financial models to analyze and forecast energy prices; extrapolate forward prices beyond the liquidity tenor
- Understand the risk of and return from futures and options contracts on energy commodities
- Manage and optimize their corporations’ energy risk exposure
- Estimate and calculate volatility in energy prices
- Apply option valuation techniques to the energy markets
- Understand and use derivative products to mitigate energy price risk; use structured products to enhance firm value; understand exotic structures unique to oil (e.g. average option) and gas and power (e.g. swing options, weather derivatives)
- Utilize real options theory to value energy assets; use information from futures/option prices to make optimal production decisions: Valuation of oil fields, pipelines, storage facilities and power plants
- Apply Value-at-Risk to the energy industry
This course is designed for individuals working in financial analysis, valuation, trading, marketing, risk management or quantitative analysis positions with oil and gas exploration companies; investment and commercial banking, consulting, and financial services firms working in the energy sector; production and distribution companies; energy trading firms; and corporations outside the energy industry with a significant cost exposure to energy prices, such as energy-intensive manufacturing industries, transportation including air, coal companies and oil-field services.
In terms of job titles, these individuals include:
- Financial analysts
- Quantitative analysts or researchers
- Energy traders dealing with commodities
- Risk Managers dealing with commodities
- Commercial and investment bankers dealing with commodities
- Consultants in the commodity arena
- Government and regulatory officials, esp. those with responsibilities for the energy sector
The Course Outline
Amongst a wide range of valuable topics, the following will be prioritised:
- The Current State of the Equity and Commodity Markets - The "Message from Markets"
- Forward/Futures Prices and Forecast Prices
- Energy Risk Management at the Corporate Level
- Basic Option Valuation Techniques
- Volatility and Correlation in Energy Prices
- Using Derivative Products to Mitigate Energy Price Risk
- Extrapolating in Energy Markets
- Energy Assets as Real Options - Power Plants as Spread Options
- Value-at-Risk in the Energy Industry