Portfolio management has become an important aspect of oil and gas business planning to support the efficient allocation of capital. As oil and gas becomes more difficult and expensive to find, petroleum companies are looking to portfolio management for providing both a more streamlined business planning process and an advantage over the competition in the industry. However, portfolio management has traditionally been deployed at a corporate planning level and has often missed the opportunity to consider the operational reality at the asset team or regional level. Each capital investment decision must be consistently evaluated for its ability to contribute to the corporate strategy while maximizing the usage of available resources. The aim of this study is to show how an integrated portfolio management solution can provide benefits when used at every stage in the asset development life cycle (from exploration through to production and abandonment) as well as at different levels in the corporation (asset teams through business units to corporate planning) to drive more efficient and effective business planning.

This robust, integrated approach to portfolio management will drive more efficient investment across the corporation. The methodology can be applied to business planning processes at the asset team, the business unit, and at the corporate level within any petroleum company.

The first section provides the best practices in maturing opportunities as producing, development, and exploration properties are evaluated consistently in the context of the company portfolio. The second section of the study covers some specific examples in which the asset development plan is put together to create typical drilling and rig schedules with operational issues such as dependencies between assets and facilities resource constraints. The third section looks at various portfolio management techniques to define the long-term corporate strategy and bridge it with short-term operational constraints to determine an optimized portfolio.

The study concludes with specific recommendations on integrated portfolio management practices at every level in the organization to ensure that the corporate strategy is aligned with available resources. This integrated approach to portfolio management will allow corporate planners to balance long-term strategic goals with operational constraints from the business unit down to the asset team. It will result in a more balanced and diversified portfolio and drive better decisions in the capital allocation process.

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