OIL & GAS PROJECT FINANCE COURSE

BALI, 8 – 10 May 2012

PROGRAM AGENDA

Limited Recourse Financings

· The principle features of a project financing

• the due diligences required
• the choice of entity
• the role of contract
• the role of the project cashflow model
• the rationale for selecting project finance

The Particular Financing Issues to be Confronted in Energy Projects

the challenges of upstream oil and gas

· reserves estimation

· extraction dynamics

· development finance

· reserve-based lending

· determining the borrowing base for a basket

· perfection of security

· abandonment

the challenges of Pipelines

· throughput agreements

· rights of way

· social and security implications

the challenges of LNG

· the traditional contractual lock-in structure

· the effect of the emergence of a spot market

· vertical integration

· the cycle

the challenges of Petrochemicals

· feedstock

· agency and licensing

Legal Issues

· alternative dispute resolution procedures

• reversal of the plaintiff / defendant postions through contract structuring
• ADR conditions precedent for financing

Pre-Completion Risks

· liquidated damages

• policing the liquidated damages - performance bonds and retentions
• fixed price, lump sum, liquidity
• the implication of change orders, cost overruns
• turnkey EPC structures
• standard form contracts
• completion guarantees, refinancing risk
• the assigned insurances relevant as lender security
• completion testing, retentions, latent defects and warranties

Case Study 1 -- LNG Case

Offtake Agreements

· classification of different cashflow profiles within the energy sector

• the security implications of take-or-pay
• availability risk versus market risk
• foreign exchange issues
• hidden recourse

Financing Structures

· risk and its relationship to cashflow

• the central importance of FCF
• the origins of cashflow volatility – the dynamics of project cashflow
• LLCR and ADSCR covenants
• when to apply a cash sweep
• providing liquidity ‘suspension’ for the special purpose vehicle
• different structures to control and capture the cashflow– sector by sector
• cashflow waterfall
• the different types of control accounts
• the syndication process
• tailoring the structure to the project cashflow
• consequences of default

Case Study 2 -- Upstream Oil Case

The Role of the Model in Project Finance

· the cashflow adequacy and the cashflow volatility

• the ‘problem’ with predictive modelling
• purpose of model – initial feasibility, financing choice, post-completion monitoring, etc
• the layout and flow of the model
• the importance of the drivers and the profiles
• treatment of currency issues and escalation
• interface of risk quantification and risk allocation
• methods for processing sensitivities, break-even analysis, and scenarios

Model Reviewing

· procedures on receiving a model

• the use of audit software
• model flow
• building a trace diagram

Case Study 3 -- Pipeline Case

Capital Markets

· Rule 144A bond financings – origins and implications

• the bond rating and its importance
• the effect and implications of the sovereign debt rating
• bond financing in domestic infrastructure projects
• enhancing the credit and the rating
• the advantages of bond financing compared to bank syndication

Case Study 4 -- Bond-Financed LNG Project

The Analysis by Project Sponsors

· how investment appraisal differs between normal investment and project-financed investment

• frequent encountered errors in calculating the rate of return
• project IRR contrasted with the total return to sponsors
• the implementation of the return calculation in excel
• the contractual negotiation with financiers – what clauses impact the equity IRR

Political Risk

· insurers of political risk and the forms of cover available

• the various roles that can be performed by export credit agencies
• typical lending structures of ECAs
• multilaterals and the typical lending structures encountered

Summary of the Essential Ingredients of Oil & Gas Project Financing

COURSE LEADER

Richard A. Capps

M.A. (Cantab.), Barrister-at-Law

Richard Capps is a world-renowned project finance practitioner and consultant with more than 30 years of project finance industry experience. After graduating from Trinity College , Cambridge with a degree in Law and upon becoming a Barrister, Richard entered banking and served at Chase Manhattan for 5 years, in New York and London . At Chase, he spent 18 months as head of Credit Training for Europe, Middle East and Africa , then moving to the role of Corporate Relationship Manager.

Richard joined Schroders and became Head of National Corporate Lending in Australia . Following this, he became Associate Director of Corporate Finance at Wardley (the merchant banking subsidiary of the Hongkong Bank group) with responsibility for the Asia Pacific region, where the bank was involved in a number of hostile acquisition battles and corporate restructurings.

For 6 years leading to 1991, Richard was Chief Financial Officer of a large corporate group involved in resort hotels, film production and television & radio broadcasting, based in dual head offices in Australia and the US .

In a period of frenetic corporate activity and growth he undertook the management of 23 equity raisings ($1.3 billion), 14 acquisitions (of which 9 were hostile) and major complex financings (aggregating $3.2 billion).

Richard brings to this course a unique blend of legal, banking, project sponsor and workout specialist experience, with a rich database of real world case studies to share with you.

FOR MORE DETAIL PROGRAM PLEASE LEAVE YOUR EMAIL, WE WILL SEND THE COURSE BROCHURE

Kind Regards,

Rafsidhi

rafsidhi@efcourse.com