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Financial option

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Proceedings Papers

Paper presented at the PSIG Annual Meeting, October 17–19, 2001
Paper Number: PSIG-01W1
... and Competition Example: Satisfying Market Demand Commoditization and Interruptible Speculative facilities Physical based Financial Options Non-traditional approach New Services Capital and Optionality Rationalizing efficiency Selection criteria Asset deployment Asset re-deployment 9 Risk Management...
Proceedings Papers

Paper presented at the SPE Hydrocarbon Economics and Evaluation Symposium, March 29–30, 1993
Paper Number: SPE-25837-MS
... Abstract Assumptions encumbering option theory methods for valuation of oil and gas assets, unlike purely financial assets, are reviewed and shown to severely burden getting serviceable answers. In fact as a general rule, the further upstream the oil and gas asset valuated with option theory...
Proceedings Papers

Paper presented at the SPE Hydrocarbon Economics and Evaluation Symposium, March 29–30, 1993
Paper Number: SPE-25821-MS
... component and then return to chance factor at the end of this discussion. Prospect Reserve Size A good starting point for understanding the prospect reserve size component of seismic option value is to note the 25 relationship to an analog that has been exhaustively studied -- financial options. The most...
Proceedings Papers

Paper presented at the Abu Dhabi International Petroleum Exhibition and Conference, November 3–6, 2008
Paper Number: SPE-118251-MS
...Binomial Tree Approach Limitations The real options approach for project valuation corresponds to an extension of financial options, supported on stochastic models and decision theory concepts. Likewise, the most common methods for valuing real options are also an extension from financial...
Journal Articles
J Pet Technol 52 (08): 52–59.
Paper Number: SPE-65058-JPT
Published: 01 August 2000
.... A new financial tool, real-options analysis, estimates the value of acquiring a knowledge base or developing a new technology. A real-options analysis indicates that a maximum-value benefit in reducing reserves' uncertainty is a function of a project's estimated net present value (NPV), with uncertainty...
Proceedings Papers

Paper presented at the SPE Asia Pacific Conference on Integrated Modelling for Asset Management, March 29–30, 2004
Paper Number: SPE-87051-MS
... resolves uncertainty around key variables which, in turn aids rational decision making. This age old, inherent disconnect between theory and practice has motivated researchers to borrow ideas from financial options and reconstruct a new framework to value projects through real options 12 . Although slow...
Proceedings Papers

Paper presented at the SPE Annual Technical Conference and Exhibition, September 21–24, 2008
Paper Number: SPE-116697-MS
... The flexibility that real options provide to project management serves in great measure to value creation, whereas traditional valuation methods disregard this value implicit to the uncertainty inherent in every investment project. According to Brach (2002) , since the first options on financial...
Proceedings Papers

Paper presented at the SPE Annual Technical Conference and Exhibition, October 9–12, 2005
Paper Number: SPE-97065-MS
... Abstract Recent years have seen numerous management and petroleum-related articles on the application of financial option techniques to valuation of real assets under uncertainty and operational flexibility. However, universal acceptance of this methodology has been elusive or even resisted...
Proceedings Papers

Paper presented at the SPE Hydrocarbon Economics and Evaluation Symposium, March 16–18, 1997
Paper Number: SPE-37965-MS
... options are discussed. Second, the option valuation model is presented. Third, some properties of the model are illustrated with a hypothetical test case and two real fields. Finally, some conclusions are presented. Real Options Real options, i.e. investment opportunities, resemble financial options...
Proceedings Papers

Paper presented at the Offshore Technology Conference, May 2–5, 2005
Paper Number: OTC-17695-MS
... of resources but there is no benefit from having more information. Real options valuation techniques provide a methodology for estimating the economic value of flexibility that can take advantage of the revelation of additional information. Whether decision analytic or financial options based in approach...
Proceedings Papers

Paper presented at the EUROPEC/EAGE Conference and Exhibition, June 8–11, 2009
Paper Number: SPE-121426-MS
... & intelligence option valuation investment abandonment decision valuation flexibility financial option real option valuation investment decision oil price information assumption real option analysis probability Binomial Lattice NPV black-schole formula Introduction Oil companies strive...
Proceedings Papers

Paper presented at the Offshore Technology Conference, May 6–9, 2002
Paper Number: OTC-14205-MS
... Abstract Option-pricing theory has moved from the financial markets mainstream to the decision making process for upstream projects in the petroleum industry, taking shape as Real Option Valuation (ROV) techniques. It is proposed herein to employ option-pricing theory for selecting the best...
Proceedings Papers

Paper presented at the Oil and Gas Economics, Finance and Management Conference, April 28–29, 1992
Paper Number: SPE-24232-MS
... may change the way we do project evaluations in practice. The starting point for all of this was a paper by Black and Scholes, which asserts that almost all corporate liabilities can be viewed as options of varying degrees of complexity. Although the financial presentation may be unfamiliar...
Proceedings Papers

Paper presented at the Europec/EAGE Conference and Exhibition, June 9–12, 2008
Paper Number: SPE-113634-MS
... for the final decision gate. Real Options The cash flows of a project are computed assuming a set of decisions are made during the life of the project that determine its financial performance. However, because alternatives exist to these choices and decisions can be made at different times impacting...
Proceedings Papers

Paper presented at the SPE Latin American and Caribbean Petroleum Engineering Conference, March 25–28, 2001
Paper Number: SPE-69595-MS
... and the impact on the overall project NPV. In the case of ROV the underlying commodity price uncertainty is one of the primary inputs into the model and treated in conjunction with the other main inputs. This input is the commodity price volatility. Rationale A financial option is the right...
Proceedings Papers

Paper presented at the SPE Hydrocarbon Economics and Evaluation Symposium, April 3–5, 2005
Paper Number: SPE-94665-MS
... of the methodology and its impacts in the evaluation and decision process for E&P projects. THE INTEGRATED MODEL: DCF, REAL OPTIONS AND PREFERENCE THEORIES The proposed approach for valuation and decision-making complements the results of DCF in situations of great uncertainty and financial risk. After...
Proceedings Papers

Paper presented at the SPE Annual Technical Conference and Exhibition, September 30–October 3, 2001
Paper Number: SPE-71409-MS
... Abstract This paper describes a Real Options evaluation of a real-world farmout opportunity in case history format. The Real Options evaluation utilizes exotic options (standard barrier option and cash-or-nothing binary options) borrowed from the financial community and adapted for use in Oil...
Proceedings Papers

Paper presented at the SPE Annual Technical Conference and Exhibition, October 1–4, 2000
Paper Number: SPE-62968-MS
... question can be answered with yes, when comparing financial options with E&P projects. When taking a closer look at the different phases of E&P projects, however, it is believed that especially in the exploration phase where the geological risk is of paramount importance, the OPT is considered...
Proceedings Papers

Paper presented at the 16th World Petroleum Congress, June 11–15, 2000
Paper Number: WPC-30427
... associated to call and put options for an asset on the financial market. In the case of real options, the corresponding underlying assets are real assets. Real options can be classified as followsvi: option to grow; option to expand; option to wait; option to change the sources of inputs, products...
Proceedings Papers

Paper presented at the SPE Hydrocarbon Economics and Evaluation Symposium, April 3–5, 2005
Paper Number: SPE-94577-MS
... Recombining Lattices Binomial models are accurate, remarkably robust, and intuitively appealing tools for valuing financial and real options. A well-known example of specifying parameters for a recombining binomial lattice is the GBM model of the diffusion of asset price over time. For a GBM we write...

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