This paper looks at the problems facing the international oil explorationist and host Governments in 1992, under a cloud of low oil prices and falling company profits, yet with more quality acreage available worldwide than for many years, especially with the emergence of the CIS states as prospective ‘hunting grounds’ for the western oil company.

Given the extent of the spread of opportunities available to companies and recognition of the increasing need to justify, on economic grounds, progress with any licence application this paper suggests two approaches that companies can adopt to rank the opportunities available, and maximise the value, on an after risk basis, of their (limited) international exploration budget: subjective rating by factor or the Risk/Reward balance.

Both of these approaches include measures of prospectivity and measures of local cost and fiscal effects in providing an overall exploration rating which can be used by companies to rank the available opportunities.

Governments in 1992 are having to compete with each other to secure exploration funds, particularly as companies devote an increasing amount of time in assessing the prospects in the CIS. This paper shows how, by modifying their fiscal regimes, they can readily affect the Risk/Reward balance and provide incentives which will continue to attract exploration when the prospectivity of the country is not perceived as relatively high, yet maintain the Government take as the prospectivity improves.

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