[EBOOK] A Practical Guide to Opex Modelling In Oil & Gas

In this e-book follow up to A Practical Guide To Capex Modelling In Oil & Gas we set out a categorisation of opex. We have also provided two industry case study examples, with worked solutions in Excel, containing some of the different types and nature of opex that you will typically model in oil and gas projects.

The categorisation of costs presented is not hard and rigid, and the division between costs can be somewhat arbitrary and can be dependent upon the interpretation of variable, fixed and overhead costs. Certain items of expenditure can be classified without question, but the classification of other items can depend on further factors – even the accounting practice of an organisation.

It is important that modellers check and clarify assumptions. Make sure that you are clear on the assumptions and the basis for all items of opex, and the dependencies and timing of costs.

Direct costs are associated with running the asset. Indirect costs are associated with running the business.

Ask a modeller in the oil and gas industry about costs and chances are they will think that capital expenditure ("capex") is way more important than operating expenditure ("opex"). Yet over the life of the project, opex is often a much larger number than capex. In addition, it can be difficult to model.

• This guide will help you understand the types of opex that you are likely to encounter in oil and gas projects.
• It will provide you with worked examples.
• It will help you understand why opex is important, and prompt you to ask questions when you are modelling.

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