How much product price volatility is "normal"? How should this volatility affect a price forecast, along with the focus and metrics applied in our daily work? If one tries to limit price volatility through hedging, what happens if production falls short of the goal? What kind of risk/reward relationship do we see in the equity markets, and can we apply this data and thinking to our oil and gas projects and acquisitions?
Each of the above questions should generate some thought when today’s petroleum engineer considers the challenge of surviving and thriving with the global volatility that’s inherent in our industry. Just as this paper raises several key questions for the engineer evaluating an oil and gas project or acquisition’s economics, the paper will present strategies, observations and conclusions about how to handle the questions raised above.
Rather than being an in-depth presentation of one specific topic, this paper takes a high level view of several key factors. Nevertheless, it will still deliver detailed, applicable solutions to the questions raised. Hence, the professionals attending will take not just one or two pragmatic applications from the presentation, but several. This will leverage their time and generate a range of benefits for each attendee.
One may rightfully ask: "What is the significant of the subject matter concerning the Social Responsibility technical knowledge base of the industry?" Everyone in our industry, from the front line engineer to the uppermost executives, has a responsibility to take a holistic look at a project’s economic evaluation. This is particularly critical when one considers the range of shareholders a company may have and the semi-recent volatility of the equity markets.
Hence, this paper will deliver on its Social Responsibility technical knowledge base of the industry expectations by assisting with the evaluation of risk, return and how oil and gas projects can accommodate the global economic environment.