Exploration Strategy

1. Global Basin Analysis

Complete Basin Studies

Acquire New Exploration Licenses

2. Develop Play Concepts

The Prospect Evaluation

3. Define Exploration
Play Areas

Compile Full Lead &

Prospect Inventory

4. Evaluate Prospects
Drillable
Prospects/
Well proposals

5. Identify Drillable
Prospects

Drill
Exploration
Wells

6. Drill Exploration
Wells
= New Resources

Evaluation
Basin Scale Assessment
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?

1.
2.

Probability of Success

Basin-scale Play assessment:

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
1)

US Drilling Success Rates for Oil and Gas Wells

1978-1997

Example
100%

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

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1978

1980

1982

1984

Exploratory

1986

1988

1990

1992

1994

1996

Development

(EIA, 1997)

More Detailed Risk Factors

Number of Wells

Oil Price

$120.00

100000
90000

$100.00

80000
70000

$80.00

60000
$60.00

50000
40000

$40.00

30000
20000

Number of Wells

10000

Inflation-adjusted
Price

0
1978

1983

$20.00
$0.00

1988

1993

Basin-wide Play Map

Hydrocarbon charge
Source Rock Quality (TOC, Kerogen type)
Maturity of Source Rock
Migration Pathways
Reservoir
Porosity
Permeability
Trap
Closure (Trap volume)
Seal (Trapping efficiency)
Timing

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%)

HAMLET PLAY

Fairway Map
Jurassic

Claudius Play

Gertrude Play

Polonius Play

CI = 300m
CI = 500m

CI = 500m

50 m

Hamlet

Probability Distribution
GEOMETRY:

Every risk element of a prospect is imperfectly

known before drilling.

ESTIMATED RESERVES:
Risk Elements x Res. Potential

Most
Likely

P50 = 138 billion scm (gas)

RISK ELEMENTS:
Source Presence =
Source Maturity =

.34

P90

P10

200km2

340km2

Pay Thickness =
* (Multizone)
Porosity =

750m

1050m

7%

15 %

Saturation =

40 %

60 %

Min

Reservoir Quality* =

.6

Trap Quality =

.8

Migration/Trap Timing =

RESERVOIR
POTENTIAL:
Pay Aerial Extent =

.7

Max

411 Billion scm

Volumetric calculation

Cumulative Probability

Min

Most
likely

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

Max

Volumetric Example
Formation Volume Factor

Change in volume from reservoir to surface

conditions
Depends on Reservoir Temp, Pressure and gas-oil
ratio
1 to 1.7
High shrinkage oil Boi= 1.4
Low Shrinkage oil Boi = 1.2

Thickness: 48 ft
Net/Gross: 0.40

GERTRUDE PLAY

Gertrude
GEOMETRY:
ESTIMATED RESERVES:

Risk Elements x Res. Potential

?

?
P50 = 0.80 billion scm
RISK ELEMENTS:
Source Presence =

CI = 50m

.12

.8

Source Maturity =

.6

Reservoir Quality =

.7

Trap Quality =

.7

Migration/Trap Timing =

.5

RESERVOIR
POTENTIAL:
Pay Aerial Extent =

25km2

27km2

Pay Thickness =

140m

150m

P90

P10

Porosity =

9%

11 %

Saturationc =

70 %

80 %

6.84 Billion scm