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Risk Analysis Prospect Evaluation and Exploration Economics (PBM27)


    The course covers all phases of exploration decision-making. With a strong practical orientation and abundant use of realistic exercises, we illustrate the applications and mechanics of the various concepts and analytical procedures involved in the evaluation and investment analysis of exploration prospects. Practical application of concepts and methods is demonstrated for participants using real prospects and abundant learning opportunities in which the course participants can win or lose small amounts of (play) money.

    Decision-making is perhaps the most important skill for a successful business or career. Good technical and business decisions are based on superior analyses of costs, benefits and risks of projects. Participants learn practical, systematic ways to analyse decisions under conditions of risk and uncertainty.
    Participants learn how to design and solve decision trees and influence diagrams, popular decision modelling techniques. These methods provide clear communications and the basis for valuing each alternative. Judgments about uncertainties are expressed as probability distributions. Monte Carlo simulation is also presented and its application in the context of prospect evaluation and exploration economics is extensively illustrated and discussed. A review of basic probability concepts provides the foundation for the calculations.
    The emphasis is on practical techniques for immediate application.

    Course Level: Foundation / Skill
    Duration: 4 days
    Instructor: Reidar Bratvold

    Designed for you, if you are...

    • A geologist, engineer, geophysicist, manager or planning analyst

    How we build your confidence

    The training methodologies are based on active learning methodologies which provide a challenge for the course participants and develop their skills. A large portion of the course is applying activity based learning including case studies, group work, practical applications and interactive application of computer models.

    The benefits from attending

    • Making decisions to yield optimal returns on the allocation of human and financial resources is a key component of most technical and managerial jobs. The objective of this course is to teach you a working knowledge of the main techniques (qualitative and quantitative) and processes for decision-making under uncertainty, and for analysing and managing associated risks.
    • Learn decision and risk analysis (D&RA) concepts & terminology that are most used in the petroleum industry
    • Understand the impact of uncertainty in decision-making
    • Learn specific tools & processes for analysing & making decisions - useful both professionally and personally
    • Practice using these tools & processes in Excel
    • Develop a critical-thinking, problem-solving, value-creating approach to decision-making
    • Illustrate how people often actually make decisions as opposed to how they should
    • Demonstrate D&RA software commonly used by industry
    • Ancillary
      - Review relevant probability & statistics, and introduce new ideas as necessary to support this course
      - Further develop and practice general Excel skills


    • Decision tree analysis
      - Calculation procedures
      - Valuing additional information and control
      - Advantages and limitations contrasted with Monte Carlo simulation
    • Monte Carlo simulation
      - Sampling techniques
      - Solution accuracy and stopping rules
      - Latin hypercube sampling
      - Correlations
      - Considerations for portfolio problems and optimization
      - Advantages and limitations
    • Decision criteria
      - Value measures
      - Decision rules
      - Decisions with multiple objectives
      - Discrediting intuition
      - Advantages of the decision analysis approach
      - Dealing with capital constraint and risk aversion
      - Portfolios
    • Modelling the investment opportunity
      - Cash-flow model structures
      - Modelling tools, sensitivity analysis
      - Scenario analysis
    • Basic probability and statistics
      - Bayes’ theorem
      - Types and uses of distributions applicable to the petroleum industry, especially exploration
      - “Gambler’s ruin” concept
      - Alternate ways to represent correlation between variables
      - Common misconceptions about probabilities
    • Risk analysis and expected value concept
      - Quantitative estimates of risk and uncertainty
      - Capturing expert judgments
      - Recognising and avoiding biases and errors
    • Analysis methods in the petroleum industry
      - Characteristic risks of exploration, field development
      - Risk mitigation methods
    • Implementing decision analysis
      - Interpreting decision analysis results from a management perspective
      - Facilitating team analyses
      - Low-cost computer tools
      - Establishing credibility in the analysis

    Customer Feedback

    "The topics covered in the course are very relevant and can be implemented immediately." - Geoscientist at Pakistan Petroleum

    "The instructor was quite knowledgeable and helpful. I have learned a lot when it comes to decision making." - Geologist at Pakistan Petroleum

    "I liked the trainer's command over the subject.His depth in the area and profile are unmatched in the industry." - Risk Officer at Pakistan Petroleum

    "The course helped me to understand the basics of Economics and Decision Analysis process." - Senior Geologist at Pakistan Petroleum

    "I liked the sheer simplicity of the material and the impact little & structured thinking can have on the quality of decision making." - Risk Officer at Pakistan Petroleum
    "It is an excellent course and worthy to be attended." - Development Geologist at Pakistan Petroleum



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