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Exploration Business Management

Competency Statement:

Upon successful completion of this module you will understand, and have used, key methodologies and business processes involved in the approval of an exploration well, and other projects, by a company's exploration and senior management. These include a critical technical and economic review of an exploration prospect and its risked and unrisked economic analyses in the context of both the corporate economic measure of merit hurdles required to be cleared in order to receive funding support and the potential for company exploration budget constraints. The learner will have experienced ways to address project uncertainties and followed the sequence of internal company and partner decision and approval processes before exploration drilling preparations can start. Finally, you will understand the importance of aligning exploration efforts with company strategy and will have an insight into host government strategies to attract exploration.

Learning Objective:

Upon successfully completing Learning Module 4, you should be able to:

  • Perform a critical technical review of an exploration prospect.
  • Perform a critical economic review of an exploration prospect.
  • Use discounted cash flow techniques and calculate a range of different economic measures of merit when capital is rationed.
  • Utilize economic thresholds in investment decision making.
  • Address project uncertainty in the decision making process.
  • Incorporate risk analysis in investment decision making.
  • Identify the key components and stages of the decision process to approve well activities.
  • Review oil company and host country exploration strategies.
  • Align exploration acreage acquisition efforts with company strategy.

Read all the reference material included under the Reference Selector, and References and Field Data tabs.

Assignment Instruction:

Your company, the Greque Oil Company, is a successful and ambitious oil company. In Assignments 1 and 2, the company has entered into an agreement to explore a 1,500 square kilometer offshore block in a foreign country. As a member of the Executive Review Board, you will conduct critical technical reviews of an exploration prospect at two different stages (one year apart) of its maturity.

In Assignment Page 3, the Greque Oil Company has four wells in one of its fields, each with investment opportunities. You are asked to maximize the value of these potential projects under the company's current capital rationing constraints, prioritizing the well activities appropriately.

In Assignment Page 4, you will address the risks and uncertainties in these well projects as part of the investment decision making process.

In Assignment Page 5, you will follow the key stages of the decision processes required in order for the Executive Review Board to approve well activities.

In Assignment Page 6, you will experience matching exploration acreage acquisition targets to the company strategy as defined by the Executive Review Board.