Description
Book SynopsisThis book discusses the art and science of economic decision making. It combines logical thinking with analytics, economics, and finance to draw decision insights for the upstream petroleum projects. The book offers useful analysis skills for practitioners in industry, including analysts, engineers, and managers. In addition, advanced undergraduate and graduate students in petroleum engineering, applied petroleum geoscience, industrial engineering, and energy business would benefit from the discussions in this book.
Table of ContentsChapter 1: Exploration Decisions
1.1: The Big Bets of the Industry
1.2: Valuation for Decision Making
1.3: Exploration Decision Model
1.4: Valuations are Subjective and Transitory 10
1.5: The Journey is Important
1.6: Conclusions
Chapter 2: Sources of Uncertainty
2.1: Introduction
2.2: Geological Uncertainty
2.3: Uncertainty in Exploration Value Chain
2.4: All Models are Wrong, some are Useful
2.5: Conclusions
Chapter 3: Uncertainty to Value
3.1: Introduction
3.2: Comparisons Across Time
3.3: Comparisons Across Different Levels of Uncertainty
3.4: Company’s WACC and the Project Discount Rate
3.5: Making Valuation Models
3.6: Markets and Risk-Neutral Valuation
Chapter 4: Applications
4.1: Non-Linearities and Real Options
4.2: Uncertain Future Prices
4.3: Value of a Group of Prospects
4.4: Environmental Considerations
4.5: Useful Analyses and Common Pitfalls
