Textbook Information
- Required: ISBN: 978-1118017128, Simkin & Simkins, “Energy Finance and Economics”, 2013, John Wiley and Sons.
(*) This textbook will be readily available through the Penn State Libraries E-Book program at no cost to the student. Students do not need to purchase a physical copy of the book. Instructions for accessing the E-Book will be provided in the course.
- Recommended: ISBN: 9781260772395, Ross, Westerfield and Jordan, “Fundamentals of Corporate Finance”, (any edition), 2022, McGraw Hill.
- Recommended: ISBN: 978-0134083247, Hull, “Fundamentals of Futures and Options Markets”, (any edition), 2017, Pearson. This recommended text is for potential use as a reference text.
Published Remarks
- None
Hardware Requirements
- Texas Instruments BA-II Plus is recommended
Software Requirements
The course uses Microsoft Office programs – Excel and Word. Students have access to Microsoft 365 with their Penn State accounts.
Proctored Exams
Exams proctored through Honorlock.
Course Description
This course offers an exploration into energy finance through an examination of the oil, gas, and coal commodity markets, as well as global electricity markets and renewable generation. The course addresses fundamental concepts associated with the complex physical and financial risks faced by firms in the energy industry. Students gain the ability to think critically about the entire energy value chain through an overview of the fundamental practices used by firms in the exploration, production, storage, refining, and processing of hydrocarbon-based energy commodities and the development and distribution of renewable energy and clean-air technologies.
This course offers an exploration into energy finance through an examination of the oil, gas, and coal commodity markets, as well as global electricity markets and renewable generation. The course addresses fundamental concepts associated with the complex physical and financial risks faced by firms in the energy industry. Students gain the ability to think critically about the entire energy value chain through an overview of the fundamental practices used by firms in the exploration, production, storage, refining, and processing of hydrocarbon-based energy commodities and the development and distribution of renewable energy and clean-air technologies.
Course Objectives
By the end of the course, you should be able to:
- Contrast conventional energy with renewable energy, including how each relates to the concept of sustainability
- Evaluate the five primary energy consumption sectors, assess the relationship between the supply and demand of oil and its price, and analyze the historical relationship between oil prices and the overall economy
- Assess the lifetime costs of an electricity generation plant and calculate the real levelized cost of electricity
- Conduct a complete cross-sectional and time-trend financial statement analysis of an exploration and production (E&P) firm using data from the U.S. Securities and Exchange Commission.
- Evaluate the risks and opportunities faced by firms in the oil and gas industry and conduct discounted cash flow analysis for capital budgeting projects, including an analysis of the real options inherent in capital budgeting projects.
- Evaluate the financial derivatives available to the energy firm for hedging purposes and calculate the possible outcomes of hedging alternatives.
Assignments
Each lesson has a list of learning objectives (LO’s) and a set of activity questions or problem sets. Some of the activity question responses will come straight from the lesson material and the textbook, while some will require individual research beyond this, including the supplementary readings.
| Assignment Breakdown | Points |
| Homework (2 x 25 pts each) | 50 |
| Quizzes (3 x 50 pts each) | 150 |
| Excel Projects (3 x 60 pts each) | 180 |
| Energy Derivatives Project | 50 |
| Activity Questions (7 x 10 pts each) | 70 |
| Discussion Forums (10 x 20 pts each) | 200 |
| Total Points | 700 |
- Homework: There are two homework assignments that are designed as practice for the Lesson 6 & 7 quizzes (see below). Homework will be given in Canvas, is not timed, and you can submit each homework assignment up to three times. After each attempt, you will be given your score along with the correct answers. Subsequent attempts will be the same problems with different input variables. Because you have three attempts on these homework assignments, you should be asking questions on anything that is unclear before you take your second and third attempts. Only the highest score for each homework assignment will count and there will be no late homework assignments accepted.
- Quizzes: There are three quizzes that correspond to material covered in Lessons 6, 7, 8, & 9. These quizzes include multiple choice conceptual questions and quantitative problems. You will be given 1 attempt to take the quiz and must complete it in one sitting. There is no save button, but assessment navigation is enabled so that you should be able to select a question and return to it if need be. Late submission of any timed assignment will be subject to the late policy posted below on this syllabus.
- Excel Projects: There are three Excel projects that correspond to the material from Lessons 4, 5, & 6. Full details will be presented in each project’s instructions.
- Energy Derivatives Project: There is one non-Excel project that relates to the derivatives material at the end of the semester. Full details will be provided in the project instructions.
- Activity Questions: There are activity questions for Lessons 1-7. The activity questions will consist of both end-of-chapter (EOC) questions from the textbook, and additional questions that I have added.
- Discussion Forums: The discussion forums are conducted in Canvas. There are ten week-based discussion forums listed under the course schedule. The grading rubric for these forums is posted in Canvas. Please make sure that you read and completely understand the grading rubric and the expectations for your posts. The purpose of these forums is for you to have a chance to discuss topics related to the lesson during a given week. You may draw from your own experiences, in addition to your personal research on these topics. Each student will be required to post at least five responses throughout the week. You may choose the questions that I post for your response, or you may respond to another student’s comment, but all of your responses must be professional in nature. I have outlined, in the grading rubric, the conduct that I expect to see from all students, along with the grading template that I will be using for these forums. You must stay on topic and not stray from the subject being discussed. You may also pose a related question that will further the discussion. I may participate in these forums by making comments when it appears appropriate, but I generally stay out of them.
- *All facts/figures/statistics quoted in the discussion forums must be referenced just like in any other written communication. When referencing online sources, only use well-known established sources and be wary of sites that have an agenda (e.g., political, financial, etc.).
- *The topic of the final two discussions of the semester is ‘open discussion’. Read the explanation of this discussion topic at the beginning of the semester so that you are prepared to contribute to this discussion in weeks 12 & 15.