In recent years petroleum producers have become engaged in significant expenditure towards exploration and development in conventional and unconventional gas plays in United States and in Canada. How efficient would be such expenditure for different producers and different basins?

This paper describes the methodology of the analysis of correlation between exploration expenditure and producer's reserves and production. A model has been developed to quantitatively assess exploration expenditure, production, and reserves of various producers for different conventional and unconventional gas plays. The model incorporates producer's booked reserves and production from the public sources as well as reserves and production forecasts. The model is used to analyze different types of exploration expenditure, including land, drilling and seismic, incurred at different time periods prior to the booking of reserves and production. The proposed methodology has been used to compare the exploration expenditure of various producers operating in the United States. The analysis has demonstrated an overall positive correlation between exploration expenditure and reserves and production; however the correlation showed significant variance between various producers operating in different plays. The proposed methodology and the result of the study can be applied to the analysis of efficiency of the exploration investment, which in turn can help improve corporate planning process.

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