Economic Evaluation of Oil Exploration Projects

Abstract

This paper has a goal to describe, in brief, the mathematical calculations
in economic evaluation of oil exploration projects.
Described are calculation of geological risks, reserve size, development
costs, production curves, production sharing and discounting.
Mathematical methods include expected value theory, probability theory
and Monte Carlo simulation. All is put toget her in the form of a
computer data input sheet, as a single procedure with the purpose of
giving the answer is expected profit from a potential prospect big
enough to justify the risk and money invested in exploration.