The Prospect Evaluation

Exploration Strategy Exploration Strategy

1. Global Basin Analysis
2. Develop Play Concepts
3. Define Exploration
Play Areas
4. Evaluate Prospects
5. Identify Drillable
Prospects
6. Drill Exploration
Wells
Complete Basin Studies
Acquire New Exploration Licenses
Compile Full Lead &
Prospect Inventory
Drillable
Prospects/
Well proposals
Drill
Exploration
Wells
= New Resources
Evaluation
1. Basin Scale Assessment
2. Estimation of undiscovered potential within each Play
3. Assessment of Prospect-Specific Risk
4. Volumetric Calculations (Reserve estimates)
5. Economic Analysis
Infrastructure
Market
Price
Taxes and royalties
Political Risks
To drill or not to drill?
Basin-scale Play assessment:
1) Identify areas of a basin where there are: source
rocks, reservoirs and traps
2) Identify prospects in those areas
3) Rank the prospects by risk
4) Drill the best one, then re-evaluate the others
Probability of Success
Risk Factor Risk (0-1)
Probability hydrocarbon charge 0.80
Probability of reservoir 0.80
Probability of a trap 0.70
Chance of Success 0.44
Example
US Drilling Success Rates for Oil and Gas Wells
1978-1997
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996
Exploratory Development
(EIA, 1997)
Number of Wells
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
1978 1983 1988 1993
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Oil Price
Number of Wells
Inflation-adjusted
Price
More Detailed Risk Factors
Hydrocarbon charge
Source Rock Quality (TOC, Kerogentype)
Maturity of Source Rock
Migration Pathways
Reservoir
Porosity
Permeability
Trap
Closure (Trap volume)
Seal (Trapping efficiency)
Timing
Basin-wide Play Map
Probability of Success
A. Everything is cool
(100%)
B. No structural traps
(20%)
C. Long migration
required (50%)
D. Long migration
and bad reservoir
(30%)
E. Poor source (50%)
Fairway Map
Jurassic
Polonius Play
Gertrude Play
Claudius Play
CI =300m
HAMLET PLAY
CI =500m
50m
CI =500m
?
Hamlet
RISK ELEMENTS:
Source Presence =
Source Maturity =
Reservoir Quality* =
Trap Quality =
Migration/Trap Timing =
1
1
.6
.8
.7
RESERVOIR
POTENTIAL:
Pay Aerial Extent =
Pay Thickness =
*
(Multizone)
Porosity =
Saturation =
200km
2
340km
2
750m 1050m
7 % 15 %
40 % 60 %
ESTIMATED RESERVES:
Risk Elements x Res. Potential
P
50
= 138 billion scm(gas)
P
90
P
10
GEOMETRY:
?
.34
411 Billion scm
Probability Distribution
Most
Likely
Max
Min
Every risk element of a prospect is imperfectly
known before drilling.
Cumulative Probability
Min
Most
likely
Max
Volumetric calculation
Reserves=
Area of trap) x
Thickness of reservoir unit x
Net to gross ratio of reservoir x
Porosity x
Hydrocarbon saturation x
Recovery factor x
Formation volume factor
Formation Volume Factor
Change in volume fromreservoir to surface
conditions
Depends on Reservoir Temp, Pressureand gas-oil
ratio
1 to 1.7
High shrinkage oil B
oi
=1.4
Low Shrinkage oil B
oi
=1.2
Volumetric Example
Thickness: 48 ft
Net/Gross: 0.40
GERTRUDE PLAY
CI =50m
?
?
Gertrude
RISK ELEMENTS:
Source Presence =
Source Maturity =
Reservoir Quality =
Trap Quality =
Migration/Trap Timing =
.8
.6
.7
.7
.5
GEOMETRY:
RESERVOIR
POTENTIAL:
Pay Aerial Extent =
Pay Thickness =
Porosity =
Saturation
c
=
25km
2
27km
2
140m 150m
9 % 11 %
70 % 80 %
P
90
P
10
ESTIMATED RESERVES:
Risk Elements x Res. Potential
P
50
= 0.80 billion scm
?
.12
6.84 Billion scm