Industries / Oil and gas
Estimate reserves, stress-test capex and schedules, value the asset and back the right investment.
ModelRisk
Tamara
ModelChoice
PelicanNPV of developing a discovery
10,000 futures
Even with oil found, about one development in five loses money. The long right tail is where the value is.
Clients in oil and gas
Also Cooper Energy.
The lifecycle
Seven stages, each with its own question. Pick one to jump to it.
Questions we answer
Charts marked with a model code come from a free example model you can open in Excel. The others are marked illustrative.
ModelChoiceCompare the ways to explore the block on the same inputs. Buying 3D seismic first has the highest expected value, $40.0M against $34.3M for drilling straight away: better information is worth paying for before you commit.
ModelRiskCarry subsurface uncertainty through to the volumes you book. In the Falcon example the P90 is 22.7 MMboe and the P10 66.5. Multiplying all the low inputs gives 11.8 MMboe, a case only 0.2% of futures fall below.
ModelRiskChoose between a tieback, a standalone FPSO, or a tieback with the option to expand, with reserves and price uncertainty built in. The tieback with the option to expand has the highest expected value.
Expected value $2,379M · capital $650M
ModelRiskModel days and cost phase by phase, with trouble time and the events that wreck a well budget. The deterministic estimate holds in 15.6% of futures; a P80 AFE is $46.3M.
TamaraRun the risks against the development schedule in Primavera P6 and find which activities drive first oil before you commit to the date.
The plan says first oil in month 37.
Only 17% of futures make month 37; P80 is month 41.9.
ModelRiskCarry the uncertainty of the decline fit into the forecast, not just the best line. The single-line forecast is more than the well delivers in 64.5% of futures.
ModelRiskSee how each hedge changes the range of two years of revenue. A swap halves the chance of falling below budget, from 42.3% to 21.5%, for about the same average revenue.
5th to 95th percentile $159M to $362M · below budget 42.3%
TamaraPlan deferred production and contractor windows on realistic durations.
The plan says 28 days.
Only 16% of futures finish in 28 days; P80 is 33.1 days.
PelicanOne register for HSE, integrity, operational and project risk, from the first well to decommissioning. It exchanges risks and results with Tamara and takes in results from your ModelRisk models.
| Asset | Risk | Owner | Before | After | Status |
|---|---|---|---|---|---|
| Platform A | Well integrity failure | Wells superintendent | 20 | 8 | Mitigating |
| FPSO | Mooring line failure | Marine superintendent | 16 | 6 | Mitigating |
| Export pipeline | Corrosion under insulation | Integrity engineer | 15 | 6 | Open |
| Onshore terminal | Gas compressor trip | Operations manager | 12 | 4 | Mitigating |
| Drilling | Rig not available for the campaign | Drilling manager | 12 | 6 | Open |
How it fits together
Built in ModelRisk, in Excel. Each step has a free example model you can open.
ModelRiskReservoir and volumesArea, thickness, porosity, saturation, recovery.OG-01 ModelRiskCapEx, OpEx and risksCost ranges and discrete risk events.OG-07 ModelRiskProduction and cash flowProfile, decline, uptime, costs.OG-03 ModelRiskPricesOil price paths fitted to history.OG-04 ModelRiskSimulation and insightsPercentiles, drivers and the value of each option.OG-08 Free example models
Ten ModelRisk models and five ModelChoice decision trees for oil and gas are in the library. Each one opens in Excel.
Volumetric Resource EstimateHow much gas and condensate could the Falcon discovery hold?Production Forecast with Decline UncertaintyHow much more will well K-12 produce?Exploration Prospect EconomicsShould we drill the exploration well?Well Cost and Time (AFE)What should the AFE for well K-15 be?Field Development Concept SelectionTieback, FPSO, or start small and expand?Hedging Production with Swaps and CollarsSwap, collar or puts?Offshore Drilling Campaign DecisionAn independent E&P company holds an exploration license in a deepwater block offshore West Africa.Shale Gas Development DecisionA mid-size E&P company has secured leasehold rights on 5,000 net acres in an emerging shale gas play.Training
Risk analysis modelling courses can focus on your industry and on the problems you model, online or face-to-face.
See the coursesConsulting
Our consultants review your reserves, valuation or schedule model before a critical decision or a public review.
See consultingFAQ
In petroleum resource reporting P90 is the low estimate: the volume with a 90% chance of being exceeded. P10 is the high estimate. Multiplying low inputs together does not give the P90: in the free Falcon example the all-low case is 11.8 MMboe, while the simulated P90 is 22.7 MMboe.
Yes. The free prospect example combines the geological chance of success with the development cash flow. Its expected value of drilling is $40.4M, even though the well loses money in about 80% of futures.
Primavera P6, Microsoft Project and Microsoft Planner Premium. Tamara adds the duration uncertainty and risk events and shows the range of dates and the activities that drive them.
Yes. ModelRisk, ModelChoice and Tamara each have a free 15-day trial, and our team can go through one of your own models with you.
Free 15-day trials of ModelRisk, ModelChoice and Tamara. For Pelican, we'll show it to you on risks like yours.
Vose Software