Jacob James

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Oil & Gas Financial Modeling 101

Out of all the industry-specific courses I’ve released, Oil & Gas Financial Modeling has drawn the most interest.

That surprised me at first because there’s no obvious reason why it would be more popular than the others.

But once you start learning something about the oil & gas industry, the reason becomes obvious: the strategies you use when modeling oil & gas companies apply to more than just oil & gas companies. legit essay writing service also make unique paper on oil and finance.

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The obvious example is mining, where there’s a lot of overlap, but almost anything that depends on commodity prices is similar.

The good news is that while bank and insurance modeling is almost a different game entirely, oil & gas modeling is more like a variation on a game you’re already familiar with.

How Does the Oil and Gas Industry Work?

Oil & gas, mining, and other natural resource companies have a simple business model: find and extract valuable stuff from the ground, turn it into something useful, and then sell it to customers. You can always find a cheap essay writing service to get essays written on the oil and finance.

But if you read that statement carefully, you’ll immediately see how it gets more complex:

So, what do you focus on? Finding and extracting valuable stuff? Turning it into something useful? Transporting and selling it to customers? All of those?

If you make software or widgets or clothes, you can pretty much set prices yourself… within reason. Some products sell for $10, some for $1000, and there’s always a reason why. But if you sell gold, oil, or gas, you can’t determine the price – “the market” does. The writing paper service are expert in writing about oil and gas industry.

Let’s address point #1 above first and see how the industry is divided:

Upstream Companies: Also known as Exploration & Production, or E&P, companies, they focus on finding and extracting minerals and resources from the ground.

Midstream Companies: They focus on transporting oil, gas, and other commodities to companies that will sell them. This is mostly done via “pipelines” that carry these commodities over great distances.

Downstream Companies: They refine and market commodities (hence the “R&M” name for them), turn them into something useful – AKA jet fuel, automobile gasoline, diesel, and so on – and then sell them to customers. The cheap research paper writing service to research for you on Gas Industry Work.

Oil Field Services: They don’t find, transport, or sell oil & gas, but instead provide services to companies that do. They might maintain their oil fields, repair broken spots, upgrade the technology, or even provide security for workers.

Integrated Majors: Think BP and Exxon Mobil. These companies do everything above, just in different proportions. The most common combination is to focus on upstream and downstream, and then leave the rest to dedicated specialists.