AGENDA: BUDGETING FOR OIL AND GAS COMPANIES

SECTION 1 – Morning

1. Why Build a Budget?
   1. Goal Setting / Accountability
   2. Earnings Calls / Investor Presentations
   3. Bank Covenants
   4. Board Meetings
2. Budgeting Best Practices
   1. Communicate – All you Wanna do is Talk Talk
   2. Actualize – Is it an Adjective, a Noun, a Verb??
3. Fundamentals of Financial Statements
   1. Income Statement – AKA Profit & Loss
   2. Balance Sheet – It’s the Water in a Bathtub Combined with the Water Bill
   3. Cash Flow Statement – Exactly how much $ do I have in my Checking Account?
   4. Cash vs Non-Cash – Let the Battle Begin
4. How to Forecast the Income Statement
   1. Production, Prices, Revenue – It’s just Physical
   2. Hedge Settlements – It’s just Financial
   3. Operating Expenses – The Day-to-Day Expenses
   4. Depreciation, Depletion, and Accretion – AKA DD&A
   5. General & Administrative Expenses – AKA Overhead
   6. Current and Deferred Taxes – The Tax Man Cometh
   7. Net Income – The Bottom Line, Sort Of

SECTION 2 – Afternoon

5. How to Forecast Assets
   1. Cash – Keep it Simple, and Low
   2. Capital Expenditures – The Big Ticket Items
   3. Accumulated Depreciation, Depletion, and Accretion – AKA Accumulated DD&A
   4. Accounts Receivable – Money that’s Coming In
6. How to Forecast Liabilities and Equity
   1. Accounts Payable – Money that’s Going Out
   2. Bank Debt and Public Debt – To Plug or Not to Plug
   3. Retained Earnings – Back to the Bottom Line
7. How to Forecast the Cash Flow Statement
   1. Net Income – Begin with the Bottom Line
   2. Non-Cash Items – Give them the Boot
   3. Working Capital – Both a Source and a Use of Cash
   4. Operating Cash Flow – The Sum of A through C
   5. Investing Cash Flow – AKA Capital Expenditures and Other Stuff
   6. Financing Cash Flow – AKA Bank Debt and Other Stuff
   7. Increase / Decrease in Cash – The Sum of D through F
8. Pulling it All Together / Closing Remarks