This 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.

Autorentext

Babak Jafarizadeh is a faculty member of petroleum engineering in the Institute of Geo-Energy Engineering at Heriot-Watt University. His teaching and research interests in the energy industry's investment decision making have led his works towards improving the practice of economic decision analysis. He has worked as a senior economic analyst in industry and holds a PhD degree in Investment and Decision Analysis from the University of Stavanger.

Zusammenfassung

This 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.

Inhalt

Chapter 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