Abstract
This article discusses the practice of using "risked reserves" as an input parameter to economic models used to analyze drilling prospects. "Risked reserves" are here defined as the probability-weighted average of the possible field sizes. We will show that, in general, using a single point "risked reserves" value in determining prospect viability will result in an erroneous and misleading decision parameter. Recommendations are given which will provide more reliable decision criteria.
Keywords:
decision criteria,
profitability,
profit loss,
reserve value,
node 2,
hydrocarbon,
prospect,
discovery,
average reserve,
prospect analysis
Subjects:
Asset and Portfolio Management
Copyright 1987, Society of Petroleum Engineers
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