Every exploration and production company has the difficult task of deciding between a large number of competing oil and gas projects for future investments. Many companies are developing corporate strategies and making investment decisions without considering the relationship between the two. The result is a less than optimal financial performance and failure to meet corporate goals. The application of portfolio analysis within the strategy and investment stages provides a disciplined and systematic method of analyzing these relationships. Portfolio analysis can be used to develop and compare strategies given a "pool" of investments. Conversely, portfolio analysis can also be used to evaluate individual investments with respect to how they impact the company's ability to meet its strategy. Effective portfolio analysis requires high-quality data addressing such questions as: what assets are currently owned, which ones might be purchased, what stakes might be acquired, or what stakes might be developed in the near future? By taking on a particular economic project, is another opportunity missed that has a better net return? This presentation will illustrate the use of portfolio analysis to develop and compare alternate strategies that a company might pursue. The examples illustrate how projects and corporate performance measures interact and how the interactions create new opportunities for the corporation. The interactions can be quantified in terms of simple graphical summaries that allow decision-makers to compare alternate strategies and quickly assess the business performance trade-offs they will likely face when they select one strategy over another.

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