Abstract
A method is proposed for determining an appropriate rate of return (ROR) when evaluating exploration and appraisal ventures in different countries. A continuous relationship between ROR and risk is suggested as appropriate for the majority of projects. Overall risk is obtained from a model in which the factors considered to influence the perception of risk are weighted according to their propensity to reduce a venture’s net present value and then combined. The model is used to estimate the appropriate ROR for an Eastern European venture.
Copyright 1992, Society of Petroleum Engineers
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