Declining global economic conditions and increased pressure to find new, affordable sources of energy create a turbulent macro environment for oil and gas companies. Stakeholders present conflicting goals of increased return on investment while simultaneously reducing risk and providing greater transparency into project performance. The traditional models of large scale investment into major capital projects can no longer guarantee success; instead, organizations must focus on capital management throughout a project's life cycle. Significant effort, time, and resources are invested in project delivery. However, poor decisions during the planning phases may result in loss of value during execution. By combining decision analysis tools and techniques with integrated, dynamic planning systems, companies are able to carefully manage their capital across the project life cycle to understand their costs, resources, and schedules. These companies benefit from increased collaboration leading to more informed decision making balancing risk and reward.

This paper presents an innovative method for evaluating and dynamically planning the development of uncertain upstream investments. It centers on a paradigm shift in the way upstream managers assess investments, toward an approach that incorporates decision analysis tools and techniques with integrated dynamic planning systems. Case study examples are provided to illustrate key principles.

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