PROSPECT EVALUATION GUIDELINES

V.1-JUN 2021

Exploration Department

PLUSPETROL S.A. Lima 339, CABA, Argentina

Prospect Evaluation Guidelines

Pluspetrol- Exploration Department
Contents
PART ONE: VOLUMETRICS ANALYSIS ..................................................................................................................... 3
A. KEY DEFINITIONS ............................................................................................................................................... 3
1.- GENERAL DEFINITIONS ...............................................................................................................................................3
2.-PROSPECT EVALUATION DEFINITIONS .............................................................................................................................4
3.- COMPUTATION METHOD DEFINITIONS ..........................................................................................................................6
4.- ENLARGED DEFINITIONS, PLAYS AND PROSPECTS ............................................................................................................10
B. PROSPECT VOLUMETRIC EVALUATION - SINGLE PROSPECTIVE ZONE “ZONE” .................................................. 14
1.- GENERAL PRINCIPLES................................................................................................................................................14
2.-GROSS ROCK VOLUME ASSESSMENT .............................................................................................................................19
Definition and Estimation Methods ....................................................................................................................19
Structural uncertainty .........................................................................................................................................21
Gross thickness uncertainty ................................................................................................................................22
Reservoir extension uncertainty ..........................................................................................................................23
HC contact uncertainties .....................................................................................................................................24
3.- NET TO GROSS........................................................................................................................................................25
Consistency check on NTG to be performed........................................................................................................27
Net thickness verification ....................................................................................................................................27
4.- POROSITY ..............................................................................................................................................................28
Effective porosity: ...............................................................................................................................................28
Consistency checks to be performed on porosity ................................................................................................29
5.- HYDROCARBON SATURATION .....................................................................................................................................29
Consistency check on Shc ....................................................................................................................................31
6.- OIL COMPRESSIBILITY (BO) / GAS EXPANSION (BG) / CGR FACTORS .................................................................................31
Definitions ...........................................................................................................................................................31
Key drivers ...........................................................................................................................................................32
To note ................................................................................................................................................................33
GOR and GCR ......................................................................................................................................................33
Other methods for Bo/GOR and Bg/GCR: ...........................................................................................................34
Consistency checks on Bo and Bg ........................................................................................................................34
7.- RECOVERY FACTOR ..................................................................................................................................................35
Definitions ...........................................................................................................................................................35
To note ................................................................................................................................................................36
8.- PROSPECTIVE RESOURCE ESTIMATION – STANDARD CASE: ................................................................................................36
RF estimation - Data room type or very preliminary estimate:...........................................................................37
Special case of gas recovery ................................................................................................................................37
Special case of critical fluid recovery...................................................................................................................38
Consistency check ...............................................................................................................................................38
C. PROSPECT VOLUMETRIC EVALUATION; MULTIPLE SCENARIOS AND COMPLEX TRAPS................................. 39
1.-MULTI-SCENARIO PRINCIPLES .....................................................................................................................................39
Multi-hypothesis thinking guidelines ..................................................................................................................39
2.- COMPLEX TRAPS CONFIGURATION ...............................................................................................................................40
Tree of cases and probabilities of occurrence .....................................................................................................41
3.- MULTI-PROSPECTIVE ZONE PROSPECT ..........................................................................................................................43
Definition and principles .....................................................................................................................................43
Impact of shared risks .........................................................................................................................................45
To note ................................................................................................................................................................47
Impact of correlations between volume parameters ..........................................................................................47

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 Exploration Well Resources and Risks .................................................................................................................48
PART TWO: RISK ANALYSIS .................................................................................................................................. 49
A. PROSPECT RISKING .......................................................................................................................................... 49
RISKING MATRIX...........................................................................................................................................................50
Principles .............................................................................................................................................................50
Consistency check ...............................................................................................................................................51
B. MODIFICATION OF PG IN PRESENCE OF A DHI ................................................................................................. 53
PART THREE: GLOSSARY & ACRONYMS................................................................................................................ 56

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 PROSPECT EVALUATION GUIDELINES

PART ONE: VOLUMETRICS ANALYSIS

A. KEY DEFINITIONS
1.- General Definitions

Hydrocarbons (HC)
Any of organic compounds containing only carbon and hydrogen (often associated with carbon dioxide,
nitrogen, hydrogen sulfide and sulfurs).

Petroleum system
A petroleum system encompasses a pod of active SR (source rock) and all genetically related oil and gas
accumulations. It includes all the geologic elements and processes that are essential for an oil and gas
accumulation to exist (taken from AAPG Memoir 60, 1994).

Accumulation (OOIP & OGIP)

Naturally occurring petroleum in a reservoir. The terms OOIP and OGIP (original oil in place and original
gas in place) define the volume calculated in surface conditions of an accumulation prior to any
production.

Prospective resources
Volumes of petroleum estimated as of a given date, to be potentially recoverable from undiscovered
accumulations by application of future development projects and with a given extraction technology
(Figure 1).

Discovery
A drilled accumulation with proven presence of producible Hydrocarbons

Contingent resources
Volumes on discovered accumulations for which commerciality has not yet been established.
1C/2C/3C terms refer to the low/best/high estimates of resources. A probability of occurrence (PO) is
associated with the project to reflect the chances of reaching the commercial stage (Figure 1).

Reserves
Commercial volumes on discovered accumulation (Figure 1).
1P/2P/3P reserves refer to the low/best/high estimates:
• 1P = proved reserves
• 2P = proved + probable reserves
• 3P = proved + probable + possible reserves

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Figure 1: Resources classification system modified from SPE-AAPG-WPC 2001.

2.-Prospect Evaluation Definitions

Play
Group of known, supposed, or postulated hydrocarbon accumulations sharing common geology,
geography, timing of generation, and other properties, such as source rock, charge and fluid type, gross
depositional environment, regional bounding/local seals and trapping mechanism. Within a play,
geological objects (i.e. concepts, leads, prospects) share common geological play elements (Figure 2).

Trap Concept
A spatially undefined, notional accumulation in a geological basin. A concept’s existence is inferred by
analogy in the same play or by extrapolating play statistics from an analogous play.

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Lead
A spatially defined, potential accumulation in a geological basin. A lead may exist even if insufficient data
are available to map the objective. A notional resource range and a notional Pg. can be calculated or
estimated for a lead to perform strategic and economical decisions. Requires more data acquisition and/or
evaluation in order to be classified as a prospect. A lead could disappear with new data.

Prospect
Potential HC accumulation sufficiently well-defined with fit for purpose data to allow specific resource
and risk assessment. The targeted reservoir/s can reasonably be defined with a specific top reservoir
structural map. Prospects can be immature, those were additional work can modify the expected value
significantly enough to affect drilling decision; or mature, in cases where additional work would not
modify the expected value. However, in any case the prospect cannot disappear (Figure 2).

Objective
A single reservoir layer or group of reservoir layers, associated with an ultimate top seal, sharing the same
trap, the same HC charge, similar depositional and diagenetic history and which are in a common pressure
unit.

Prospective Zone
A prospective zone describes an objective within a prospect, in a defined area, and is the “elementary
unit” of a prospect assessment in MMRA Spreadsheet. This is the basic unit for volumetric assessments.
Prospects can be composed of single or multiple prospective zones (Figure 2).

Geological prospective zone/prospect scenario

A complete static and dynamic representation of a prospective zone or a prospect, with an associated
development case.

Complex trap
Traps in which a number of different trapping elements have to work simultaneously in order to reach the
full HC volume potential of the prospect. This is not a multiple-prospective zone prospect.

Seismic anomalies (brightening, dimming, flat events, etc.)

Local seismic amplitude increases or decreases compared to average amplitude background. It can be
related to lithological or fluid content changes but also to geophysical acquisition or processing artefacts.

DHI
Direct Hydrocarbon Indicator: A geophysical measurement (seismic amplitude, bright spot, dim spot, flat
spot, phase change) that is interpreted as to be directly caused by the presence of subsurface HCs.

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Figure 2: Definition of Prospect, play and zones. A schematic cross-section illustrating a
hypothetical prospect Alpha which includes three proven plays present in an area (Pg for
each play=1). Prospect Alpha will be tested by the Exploration well 1 whose targets are
zones 1, 2 and 4, but not zone 3. Each zone contains different reservoirs. The geological Pg
for the prospect (0.78) is higher than geological Pg values for individual zones, because
some risks for the zones are independent (e.g., stratigraphic trap, structure and seals of
zone 1 is independent from fault-bounded trap in zone 3). The geological Pg for the well 1
(0.65) is lower than the geological Pg for the prospect (0.78) because the well does not
target all the segments and because it is not located in the crestal position for zones 1 and
4. Modified from Milkov, 2015.

3.- Computation Method Definitions

Outcome
The result of a trial of a probability assessment.

Uncertainty
The inability to precisely predict future outcomes. Refers to an inability to define something exactly. That
the something exists is not in questions. In a prospect evaluation, the estimated range of volumes
describes all geologically plausible outcomes of a volumetric estimate in the success case. Each volumetric
parameter is represented by a range of values from minimum to maximum and a distribution type (Figures
3 and 4).
Most of the parameters which we use for analysis contain uncertainty, which is due to effects: The first is
the inaccuracy with which we measure and interpret the parameter (direct measure error), and the other
limited number or measure point which we use to interpret how the value of the parameter varies away
from the measured point (representative mistake for size, heterogeneity, etc.)

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RISK = To miss the target UNCERTAINTY = Target value
Figure 3: Uncertainty versus risk analogy.

Uncertainty represents the “unknown”, not the “known”. A few wells do not sample all possibilities
(THINK WIDE!).
Probability
Refers to the chance of attaining a defined value (eg. receiving at least three hours of sunshine in a day,
or obtain a value of 5 on a dice). The language of probability (chance) therefore applies both to discussions
of uncertainties and discussions of risk, Uncertainties ranges are implicitly linked with a spread of
associated probabilities. A specific risk will have a specific probability (Palmer 2010).
Probabilistic model
Mathematical model to describe a distribution of possible outcomes of an experiment obtained by the
combination of a number of parameters. Each parameter quantitatively defined by a “minimum”, a
“maximum” and a distribution type.
Distribution
An orderly representation of related data samples selected from a population. A specific type of
distribution is defined for each input parameter in the volumetric assessment of prospects. Most
important geotechnical parameters involved with oil and gas occurrence are associated with lognormal,
normal and beta distributions. Geoscientists who are aware of the prevalence of lognormality will tend
to make better predictions of most parameters having to do with oil and gas reserves. In our distribution
P10 is a large numeric value such that there is a 10% chance of finding that value or more and P90 is a
small numeric value such that there is a 90% chance of finding that value or more, (Taken from Rose
MMRA Software)

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Minimum
The minimum is the lowest value of a distribution. It is compatible with technical success and it changes
according to the type of distribution. For lognormal distribution lowest value refers to the P99. For Beta
distribution is P100.

Maximum
The maximum is the highest value of distribution. It depends of the type of distribution. For lognormal
distribution highest value refers to the P01. For Beta distribution is P0.

Monte Carlo simulation

Mathematical approach to solve probabilistic problems by running a computation numerous times with a
random selection from the input distributions for each intervening variable. The result is a probabilistic
distribution of outcomes.

Risk
Possibility of loss or injury. Case of failure in a probabilistic model whereby the outcome is not described
in the expected outcome distribution. In oil and gas exploration it represents the chances that the
outcome falls below the minimum expected volume in the prospect evaluation probability distribution
(Figure 3 and 4).

Table 1. Chance Check list according P Rose in MMRA software

Technical success
The prospective zone holds recoverable HCs in quantities that could be recovered through a stabilized
flow for at least 24 hours with no relation to economics. In cased wells, it is considering for a minimum of
4 feet of HC tested or not. (For more discussion about technical success well, see definitions in Rose, P.
2001, Studies #12)i

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Figure 4: Uncertainty versus risk definitions associated with a well drilling.

Pg
The geological probability to obtain a technical success, i.e. the prospective zone holds recoverable HCs.
All five geological factors (SR, MT (migration-timing), reservoir, geometry, seal) succeed simultaneously.
Pg is computed as the product of their individual probabilities of success (in this case, chance of falling
within the distribution curve used to define each volumetric variable).
In the resources distribution, The minimum value (P90 to P99) could be very small. For that reasons, the
explorer must pay special attention to the volumes distributions. Although the geological or the technical
chance of success were suitable the volumes must be significate enough. A good practice is to consider if
Mode value (the most frequent value of the distribution) is in order of our expectation.
Also, a very wide distribution implies big uncertainties, always seek additional or complementary
information to constrain the distribution range.

Pg-DHI
The probability of success of a prospective zone is modified if a valid DHI is recognized. In that case, Pg is
affected by a factor that represents an estimation of the DHI validity.

Economic resources threshold (MEFS: minimum economic field size)

The minimum amount of resources that need to be discovered to make a specific prospect an economical
success.

Pe
The chance to obtain a positive economic outcome after exploratory drilling: this is, to discover enough
resources to lead to a development that meets the company’s investment criteria. It is obtained by
multiplying the probability of success (Pg) of the prospect by the percentile of the economic resources
threshold (MEFS) determined from the resources distribution curve.

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Pc
The chance to obtain a commercial outcome after exploratory drilling: this is, to discover enough
resources to complete a well and launch the subsequent development. This action can lead to a marginal
gain in a forward vision. However, it does not necessarily cover the past expenses leading to the
completion (G&G, seismic, drilling cost). Pc is larger or equal to Pe,
However; For a future development the well must pay your own cost & the extension of facilities for future
developments.

4.- Enlarged definitions, plays and prospects

Play Definition
A play is a group of known, supposed, or postulated hydrocarbon accumulations sharing common geology,
geography, timing of generation, and other properties, such as source rock, charge and fluid type, and
trapping mechanism. Within a play, geological objects (i.e. concepts, leads, prospects) share common
mappable geological play elements. A play is associated with a geological model necessary for HC
accumulations to occur within a geographically limited area.
Play analysis is used to identify and highlight common geological characteristics of leads and prospects.
One of the key drivers of this analysis is to create an inventory of all possible plays in order to open
technical discussion within the teams and avoid the “forgotten play” scenario.
A play map represents the geographical extent of the elements that constitute a play. Play maps support
the exploration strategy and the work program definition. In addition, they allow basin, block and prospect
ranking as well as providing a useful tool to communicate with management. Play maps should be
presented during internal technical reviews to summarize the regional context of the prospect evaluation.
ArcGIS is the recommended software to create play maps. (For more information to New Ventures Best
Practice Report)

Play elements
A set of key elements can be used to describe a play:
• Charge: a mature kitchen or source-rock active pod that is connected to the geological objects of
the play. Several source rocks may charge a reservoir prospect prospective zone.
• Presence of reservoir rocks (from paleogeographic, burial and diagenesis considerations).
• Presence of a regional seal (capacity and integrity).
• Basin tectonic elements: main structural trends and their timing of deformation.
• Presence and nature of a trapping geometry (trap styles).
• Play Fairway: The Geographic area over which is thought to extend and is usually determinate by
geological elements like erosional truncations reservoirs pinches out, etc.

For each of these elements, a map or a set of maps and graphs should be generated (Figures 5 and 6).

Play Maps
Play maps, are constructed based on regional basin studies, summarizing geological knowledge for each
play component. They show where the play elements can coincide to make the play work (eg. Subandean
Tupambi Tarija Play Fig 5). The maps should also highlight the reliability of the information, depending on

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the available data and the quality of their interpretation. Each component of the play will be treated with
one or several maps and graphs highlighting database quality, critical risks and uncertainties (Figure 6).

Certain elements are needed to explain how the play works, such as:
• Trap type or types that define the play (structural, stratigraphic, etc.).
• Petroleum and post mortem results to show where the play works or not.
• Prospects and leads to show their position relative to the different play elements.
• Any other relevant information to characterize the play: regional pressure trends, regional water
flushing, regional CO2 risk, etc.

Play boundaries should be placed where significant geological changes are observed or interpreted. Play
maps are “alive” and must be updated as relevant new data become available (Figure 6).

Figure 5: Southern subandean “Tupambi-Tarija” play.

Differences between Common Risk Segment Map and Play Map

In CRS map the geological information is translated into quantitative probability polygons but the
geological basis is removed. Play mapping makes the geological control on prospectively explicit and
expresses risk only qualitatively (Figure 7).

Italian flag (qualitive, information confidence), traffic-light (qualitative, prospectivity) and CRS
(quantitative, risk distribution) maps can provide a summary of a play analysis. But they should always be
supported by individual play elements maps including: source rock, migration paths, existing wells and
fields, structural elements, regional structure, reservoir/seal distribution, trap fairways. Block ranking
maps could also be part of a play summary map.

A link between play and prospect probability is expected, and consistency between both should be
verified. Play maps remains the main tool to highlight the potential prospective areas. (For more
information refer to New Ventures Best Practice Report)

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Figure 6: Tupambi – Tarija Play map of Southern Subandean Ranges by the time of first
discoveries. The play is 4 way or fault closure detachments anticlines with Tupambi or Lower
Tarija SS as reservoir filled with oil with 35 API degrees. This HC was generated in the Upper
Los Monos Formation and migration was vertical during the Upper Cenozoic. It is a shallow
accumulation less than 1500 m burial, and the main seal is the Tarija diamictite. Different
plays in the area are: same reservoirs in downthrown block fault sealed and big gas bearing
in deeper Devonian Fractured Quartzite in fault bend folds or propagation fold anticlines.

Figure 7: Common risk segment map versus play map of Voring basin, Norway.

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Concept & Lead
A concept is a notional accumulation, whose existence is inferred by a geological model or analogy, when
very little data is available or when you begin to know the regional geology of the basin. The concept does
not have a physical geographical place. It is just conceptual,
A lead conversely, is a potential accumulation belonging to a play, spatially located. It has low grade of
confidence and further work could be done to improve their mapping, volumetric and risk assessment.

For both, concepts and leads, the resource ranges are notional and can be estimated from analogs for
concepts and in case of lead for analogs or with scarce data non well defined may be useful to estimate a
rough economical threshold. A notional Pg could be calculated for a lead, for these reasons a gross
hypothetical expected value can be calculated.

Leads can evolve into prospects as additional data are integrated into their assessment. A lead evaluation
should include a detail of data acquisition and work to be carried out to be able to be upgraded to prospect
level.

Prospect
A prospect is a potential petroleum accumulation sufficiently well-defined to allow specific resource and
risk assessments. It can be reasonably defined and mapped with a top reservoir structure map. A prospect
can be a combination of multiple prospective zones.

Main steps of prospect evaluations are:

• Define the prospect by integrating all available data and place it into the regional framework.
• Evaluate:
- Range of prospective resources.
- Key uncertainties impacting volume evaluations or risk considerations.
- Probability of encountering a technical success case Pg .
- The minimum economic volume and associated probability Pe.

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B. PROSPECT VOLUMETRIC EVALUATION - Single Prospective Zone “Zone”

1.- General principles

The objective of a prospect volumetric evaluation is to describe the full range of resources without
economical consideration in the first stage. Here, only matrix reservoirs are addressed. Fractured
reservoirs and unconventional resources evaluations are not included.
Prospective in place volumes
In-place volumes of a prospective zone are generally estimated with the following equation and treated
probabilistically in MMRA Spreadsheet:

PROSPECTIVE IN-PLACE = GRV x NTG x Phi x Shc x 1/(Bhc)

The parameters are:

• GRV is the HC-bearing gross rock volume (Mm³)
• NTG is the ratio between net and gross reservoir thickness
• Phi is the porosity (%)
• Shc is the saturation of HCs (%)
• Bhc is the compressibility factor for the considered HC, Bo and Bg, respectively for oil and gas (no
unit). It converts in-situ accumulations to surface conditions.

The evaluation of the prospective zone in-place volumes is derived using a Monte Carlo probabilistic
approach which generates a range of volumes. Each of the input and output parameters are characterized
by a distribution, incorporating existing geological knowledge and reflecting associated uncertainty.
In all cases it is recommended that saturations and compressibility are estimated in collaboration with
reservoir engineers.

Prospective resources
In the exploration process, prospective resources evaluation is often summarized using the following
equation:

PROSPECTIVE RESOURCES = GRV x NTG x Phi x Shc x 1/(Bhc) x RF

Where RF is the recovery factor (%) (resources/in place volumes).
Both RF and prospective resources should be related to a hydrocarbon production mechanism based on
a development scheme. Different workflows are used depending on the data available.

Prospect study, including profiles and economics

Prospective resources are calculated from production profiles and well performance:

PROSPECTIVE RESOURCES = Σwell count (resources/well)

RESOURCES/Well = Σyears (production profiles)

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They are evaluated relatively to a project development strategy, based on dynamic, subsurface and
surface assumptions. A stochastic run is carried out to determine a distribution of production profiles and
a range of recovery factors (P90-P50-P10).

Well studies (well path, completion, stimulation, productivity, well count, well resources, development
area, phasing), production mechanisms and facility constraints (surface and/or subsea, export) should be
associated to evaluate a reasonable range of RF for the studied prospect.

The well and facility studies are performed by reservoir engineers and development engineers to ensure
an overall consistency of the proposed development scheme. Specific data from the geological-
geophysical studies are required in order to address the well performance: P, T, Kh (Permeability sl),
aquifer presence, HuPhiSo maps, etc.

Fast track evaluation

Fast track prospective resources can be estimated by the full probabilistic equation of MMRA Spreadsheet
with the use of a RF range estimated based on analogs. This must be done in collaboration with reservoir
engineers, and in agreement with anticipated or most probable recovery mechanism. Development area
can be checked to potentially discount for non-recoverable parts of the prospect.

Probabilistic representation of input geological parameters and workflow

The volumetric parameters (GRV, NTG, PHI, Shc, 1/Bhc, RF) that are input in the resources equation are
quantitatively defined by a range of values associated with a distribution which represents the
uncertainty, based on existing data, knowledge, technology and interpretation.

The 3 following points should be verified:

• The minimum (P99) and maximum (P01) values should be geologically plausible end-members and
still correspond to a technical success case (allowing recoverable HC flow).
• Key quantiles P90 to P10 are important to examine as the range between them represents 80%
confidence interval (Figure 8).
• P50 represents the equal chance to be above or below these values (Median).
When geologically and/or statistically justified, the input of a P50 or a mode (most frequently occurring
value) will guide the shape distribution. It may require iterating by adjusting input quantiles, skew and/or
type of distribution.

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Figure 8: Net pay distribution shape and key quantiles.

Common types of distribution are described below (Figure 9, as used in MMRA Spreadsheet)

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Figure 9: Classical distribution types for input parameters.

Input parameters check list

The following points should be kept in mind in order to provide an adequate range of uncertainty.

• Data analysis: the distribution range is based on the analysis of all available geological/geophysical
data, interpretation and analogs.

• Uncertainty: the absence/lack of knowledge regarding a parameter. Beware that human mind tends
to anchor on the known data, inducing often narrow deterministic thinking.

• Scenario: all geologically plausible scenarios should be envisaged.

• Average: the range of each quantitative parameter to be averaged should be representative and
applicable to the entire HC bearing volume.

• Producibility: Pminimun value of each input parameter should be consistent with a producible
character of the reservoir (technical success- see definitions section).

• Consistency: all input parameters of the resource equations should be consistent (not only the 6
parameters used in static equation but also parameters such as GOR, permeability…).

• Stability: the final uncertainty range should not be able to be changed unless new data is integrated
into the prospect evaluation: it should not be narrowed or enlarged without new data.

• Distribution shape: avoid abrupt changes in distributions: they should not be truncated, except for
very specific cases.

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 • Common bias from the interpreters (selected from Rose, 2001 and Milkov, 2015)
- Affect heuristic: tendency to ignore odds in favor of the gut feeling.
- Anchoring of an evaluation by attaching it to a reference value.
- Availability: overestimating the likelihood of events that are more memorable.
- Base rate neglect: never value new or specific information at the expense of base rate (statistical) data.
- Confirmation: searching for and interpreting data in a way that confirms our beliefs.
- Conservatism: tendency to underestimate high values and overestimate low values.
- Expectation: tendency to believe data that agree with expected results.
- Implicit conditioning: basing interpretations on ingrained beliefs and experiences.
- Information: having a distorted assessment of information and its significance.
- Motivational: taking actions or decisions based on a desire for a particular outcome.
- Optimism: tendency to overestimate favorable or pleasing outcomes.
- Overconfidence: overestimating the accuracy of one’s own interpretation or ability.

Correlations
Correlations can be used to represent some geological relationship between parameters to obtain more
geological Monte Carlo simulations. However, correlations between input parameters are quite rare and
generally “soft” (classical example: oil saturation correlates with porosity – in fact saturation correlates
with permeability which correlates with porosity). For stratigraphic traps, there is a stronger direct
correlation between input parameters such as area, gross thickness and net pay.
Input parameters can be correlated more interestingly with other parameters (ex: Bo is fully linked to
GOR, Poro to Shc...).
If some specific or unusual correlations are introduced to better represent the geological context of the
studied prospect, they will have to be fully documented.

Resource outputs and reality checks to be performed

• Skewness of the output distribution.
• Output ranges of volumes (in-place and recoverable resources) tend towards a lognormal
distribution (probabilistic property). Check that the output range is positively skewed
(mode<P50<mean) or if not, explain the reason.
• P10/P90 resources ratio in line with play maturity: the P10/P90 resource ratio gives an indication of
how wide the resource uncertainty is. Low ratios are expected in mature exploration domains.
Ratios are significantly higher in emerging and frontier domains as regional knowledge and data are
fewer. As a general rule, the ratio will be ≤10 in mature areas and several times greater in frontier
areas. This ratio will be reduced in the presence of a DHI.
• Prospective resource range and HC density (Mboe/km2).
• The prospective resource range and HC density should be compared regional base rate- statistical
field-size distribution. Comparisons with producing fields or sanctioned developments should be
favored.
• Documentation required: it is recommended to show the distribution for each parameter of the
resources equation and an associated “Tornado” chart.

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2.-Gross rock volume assessment

The HC bearing reservoir volume estimation is the first step of the resources assessment workflow and is
oftentimes the major uncertainty.
Definition and Estimation Methods
Reservoir top and base define reservoir gross thickness and bulk rock volume. However, gross rock volume
(GRV) is defined by a reservoir top and base above the HC/water contact. It varies in relation to several
types of uncertainties summarized here below (Table 2 & Figure 10).

Main GRV uncertainty factors Drivers

Structural uncertainty & mapping
Reservoir gross thickness & extension
HC column
Table 2: Key drivers for GRV uncertainty.
- seismic resolution, interpretation and gridding
- time/depth conversion or depth imaging
- reservoir distribution mapping over the prospect area
- sedimentological model
- trap leakage point identification (structural spill point,
reservoir juxtaposition, waste zone)
- seal retention efficiency
- regional statistics on HC columns or filling ratio
- generating system efficiency in the drainage area

These uncertainties must be treated independently and multiplied with a probabilistic calculation to
obtain the final range of GRV.

The GRV distribution can be estimated using four main methods:

1- Area vs. Depth from top and base reservoir depth maps. For each depth, to capture the mapping
uncertainty a range of area is given (Figure 10). In general, 10-15 area-depth pairs are enough to
estimate the bulk rock volume of the prospective zone. This is the recommended method as it allows
independent stochastic integration of mapping, gross thickness, reservoir extension and HC column
uncertainties.

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Figure 10: Summary of GRV uncertainties for a combined trap in a faulted anticline.

2- Volume vs. Depth is recommended when an external module has been used to fully evaluate
geometrical uncertainties but not the HC column, recommended with geocelular software (Petrel ex).

3- Geometrical factor: not recommended but used when no contoured top reservoir map is available
(data room/very sparse data context). GRV is approached by the formula:
GRV = Area (A) x Gross Thickness (GT) x Geometrical factor (GF).
The GF depends on the ratio between crestal reservoir GT and Column H. There is a dependency with the
structure shape. It can be approximated by GF = 1 – GT/2H. General rules (Gehman et al., 1970):
• Gross thickness > Column height GF ≈ 0.33 to 0.50
• Gross thickness ≈ 1/2 Column height GF ≈ 0.60 to 0.75
• Gross thickness << Column height GF ≈ 0.80 to 0.95

Another method is the estimation of geometric factor by using of the chart of figure 11 based on white
1987:

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Figure 11: Geometric correction factor estimation (modified from subsurface wiki).

Another method is the estimation of geometric factor by using the PR Software Toolbook V5 (2016)
4- Direct estimation of GRV distribution is sometimes the only solution when available information is very
limited but does not allow to document the different geological uncertainties.

Structural uncertainty
The structural uncertainty integrates all uncertainties related to alternative mapping, considering seismic
picking options (horizons and faults), seismic resolution, time to depth conversion and gridding methods
• When several alternative maps (low, best, high) are available depending on picking options or depth
conversion, they should be used to define the “area vs. depth” range (Figure 12).
• When only one top reservoir depth structure map is available, the uncertainty around this “base case”
or “P50 map” can be roughly captured by a percentage variation (typically 10 to 20%).

21
Figure 12: Area-depth ranges from structural mapping uncertainties.

Figure 13: Global uncertainty for structural interpretation of horizons and faults.

Usually a single structural interpretation is shown, but different interpreters will produce different
horizons and fault picking from the same seismic and wells data sets. For that reason, interpretation
uncertainty should include all the realizations (Figure 13).

Gross thickness uncertainty

The gross thickness range can be derived from seismic interpretation, well calibration or regional analogs.
When seismic data quality allows the picking of top and base reservoir over the entire prospect, the
derived gross thickness can be used to calculate the reservoir bulk volume. In that case, the main pitfalls
are linked to the uncertainty on the reservoir interval velocity and/or a wrong seismic calibration such as
mistiest between seismic markers and geological horizons or tuning effects.

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Reservoir extension uncertainty
When supported by seismic attributes mapping or by geological concepts on sediment body size, non-
reservoir rock volumes should be excluded from the GRV computation. A typical example is the mapping
of a turbidite fairway within a large structure.

If the reservoir does not cover the entire structure or if its extension is not accurately defined, a reservoir
extension uncertainty should be introduced. It will be addressed in MMRA Spreadsheet by entering
several (low, high) areas vs. depth uncertainties corresponding to the different reservoir outline
assumptions (Figure 14). Special care should be taken when this uncertainty impacts the crest of the
prospective zone (stratigraphic traps).

This process is independent from facies distribution which will be addressed below.

Figure 14: Reservoir extension uncertainty in a combined trap.

23
HC contact uncertainties
Three approaches can be used to address this uncertainty:
• Hc-water contact depth distribution
• HC column height distribution
• HC Column height in relation with filling ratio distribution

The interpreter must define HC columns ranges based on all pertinent information about the prospect.
• Deterministic estimates of prospective zones for initial hydrocarbon in place calculations are
represented by the low, medium (or best) and high cases. They are commonly expressed as
respective P90, P50, and P10 areas.
• All sizeable HC accumulations have spill points. This is the depth of maximum trap fill by HC. A
spill point corresponds to the free-water level of any potential accumulation. This is, a potential
leakage point that controls the prospective zone being analyzed (structural spill point, reservoir
to reservoir fault-juxtaposition, seal erosion, maximum seal capacity…). As a simplification for
computations, the spill-point is considered an indicator of HC-W contact despite the minor
difference, due to capillary properties of the reservoirs, between fluid contacts and the free water
level.
• Uncertainty on the HC contacts should normally define a Beta type distribution defined by P90-
P50 and P10 cases.
• The interpreter should define the largest structural spill point, based on a geological concept, and
base case map, and consider this to be a P10 case (Figure 15).
• The preferred geological model, with most “comfortably” closing depth-contour or clear fault
juxtaposition, preferred fill case, or base-case seal capacity should represent the P50 case. If there
are more than one possible trapping components, the complex trap approach should be used (see
below). Recommended best practice for hydrocarbon in place calculation is to perform a thorough
examination of the best case (P50) trap definition and its geological sense. The P50 case can make
the Beta distribution more or less asymmetrical, given P90 and P10 defined.
• The P90 case would represent a robust closure with minimum trap fill case, due to structural, seal
or fill cases. It should allow the P100 to remain a technical success case.
• The maximum, P00 contact case, is considered as the contact should picking, T-D conversion,
seismic resolution, and other GRV uncertainties work (all) positively. Its value should remain
within expected range of analogs or on trend discoveries.
• When a seismic anomaly is interpreted to represent a DHI, the base case map is taken as P50 and
the uncertainty on DHI depth and in the interpretation are used to define P90 and P10 cases,
normally yielding a narrow Stretch Beta distribution (Figure 16).

24
Figure 15: prospective area distribution for a general base-case map.

Figure 16: prospective area distribution for a DHI base-case map.

In addition, it is recommended that the interpreter performs the following consistency checks:
• P100 remains within technical success case.
• P0 is within analog field size distribution range, and can be consistent with mapped horizon plus
depth & other uncertainties related with interpretation.
3.- Net to Gross

Once the GRV range has been estimated, a NTG ratio is applied to discount the non-reservoir volume from
the GRV in order to estimate the NRV. The NTG represents the level of heterogeneity of a reservoir within
the entire GRV. Its purpose is to determine the reservoir volume that may contribute to production (Figure
17).

NTG depends on:

• The gross interval picked to define the GRV.
• The type of depositional environment.
- For clastics, main factors to be considered are:
Sediment load type (i.e. sand rich vs. mud rich systems);
Depositional process (wave dominated, tide dominated, flood dominated, etc);
Eustatic effects.

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 - For most of carbonates, NTG is not much impacted by the sediment flux, but more by
other factors, such as stratigraphic context, paleo-climatic conditions, efficiency of the
carbonate factory and diagenetic (post-depositional) evolution.
• The diagenetic (post-depositional) evolution.

In MMRA Spreadsheet the NTG is managed in 2 steps:

1. The “net sand” fraction, which can be estimated directly from well logs or indirectly from analogs.
2. Then the “net reservoir” fraction, which is evaluated by applying a cut-off on petrophysics
parameters in order to keep only the vertical reservoir intervals where HCs might flow.

When reservoir heterogeneity or limits cannot be precisely mapped at the scale of the prospect, a rough
approximation can be made introducing a spatial NTG (replacing the net sand fraction parameter in
MMRA Spreadsheet). This spatial NTG (Figure 18) refers to the proportion (%) between areas of the
prospective zone where reservoir is present and the impregnated prospective zone closure. This spatial
NTG is then combined to the net reservoir fraction and must represent an average within the entire GRV
of the zone under evaluation.

Figure 17: Original Hydrocarbon in Place deterministic calculation. Different types of

volume calculations and main parameters are shown. Net to gross ratio is applied to
discount the non-reservoir volume from the Gross Rock Volume in order to estimate the Net
reservoir or sand Volume.

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Consistency check on NTG to be performed
Net thickness verification
To allow the NTG ratio to be used as an element of comparison in prospect evaluations, the top and base
of the interval used to compute the GRV should be as close as possible to the actual top and base of the
reservoir. NTG should be taken cautiously when used as an analog for other prospect evaluations. As a
general rule, use only net reservoir thickness/volumes when comparing analogs for clastic
sedimentological bodies.

In case gross thickness is only roughly defined (limited well information or too poor seismic quality) and
when the expected net thickness can be assessed (ex: from analogs, outcrops), it is recommended to
capture the range of net reservoir thickness and ensure that recomputed NTG ratios are adequate average
value on the whole HC bearing area in line with the geological constrain.

• Petrophysical cut-offs should be evaluated with petrophysicists and documented.

• Strict coherency should be ensured between net/gross values, and associated porosities and
saturations, with description of the correlation between parameters where relevant.
• For carbonates, the NTG may be close to 100%, especially in highly aggrading systems (reefs and
build-ups mainly exposed) and in highly fractured contexts (foothills), particularly when the cut-
off is very low comparing to the porosity values of the reservoir.
• Make sure the N/G used in computations represents the uncertainty range of the average N/G
over the entire GRV (beware when extrapolating single well N/G) (Fig 18).

Figure 18: Spatial NTG approximation, horizontal split in gross reservoir extent.

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4.- Porosity

The porosity to be used is the average porosity representative of the entire HC bearing NRV defined
above

The following geological parameters may impact the porosity values and their behavior at the
prospective zone scale should be addressed. They might be assessed from basin knowledge, reference
wells and analogs:
• Texture of the primary facies, which is controlled by is paleogeographic setting It defines the initial
porosity type (intergranular, micritic...) and the initial relative ranges.
• Porosity/depth relationship. Generally, porosity decreases with increasing effective stress and
burial (mechanical grain compaction at first stage, chemical compaction, associated to
dissolution/recrystallization at second stage). Specific burial history, early hydrocarbon charge,
overpressure regime and thermal conditions in the basin may induce better preservation of initial
depositional porosities in the prospect. A depth versus porosity or preferably an effective pressure
vs. porosity curve may address these evolutions in each basin. (Early Migration, etc)
• Diagenesis effects, such as dissolution and/or cementation, mineralogical transformations with
temperature, karstification, re-crystallization. They may be linked to geological events (eustasy,
tectonics) or burial and charge history. Pluri-phased diagenesis is common in many basins. They
can improve or degrade significantly the initial porosity.

Effective porosity:
The porosity parameter to be considered is the effective porosity, (calculated from log interpretation,
excluding clays) and not the total porosity as measured on rocks samples (Figure 19). The effective
porosity is filled with irreducible water and free water or HC (free water and HC in transition zone). As
it is not applied by all in the oil industry, be careful when addressing the porosity average from analogs.

Figure 19: Component of a reservoir. Fluids and rock component are shown. Effective
porosity is differentiated from total porosity.

Cut-off: when addressing the Phie distribution from regional calibration wells and analogs, cut-offs should
be consistent as they have an impact on the average Phie in the net thickness. Figure 19 shows how much
a cut off may impact the average Phie value in the net interval.

28
Mixed facies: a range of Phie needs to be defined for each anticipated facies in the prospective zone and
expressed versus the effective pressure/burial of the considered basin. Beware of erosions in the basin
and their impact in the burial curve; they can be calibrated using compaction curves. Notions of facies
distribution in the net volume will help to address the global porosity range and the distribution shape
depending on facies volume weighting.

For instance, in the case of a carbonate build up, address both the Phie range for reefal facies and for the
sub-cropping platform, and the possible apron.

Some documents should be provided to illustrate the porosity ranges and distribution:
• Paleogeography illustrating the facies/environment distribution in each prospective zone. For
carbonates, diagenetic overprint mapping if possible.
• Relevant information from worldwide databases.
• Phi versus effective stress/burial curves from analogs fields/wells in the basin.
• Phie versus Kh plot to illustrate the overall reservoir facies quality, and to constrain the
dynamic prospect evaluation.

Consistency checks to be performed on porosity

Porosity distribution (shape and end points) should be consistent with basin or area information. Outlier
points should be reviewed for their potential impact on the distribution.

Check that the minimum porosity (P100) value of the distribution (averaged in the considered net
thickness), is at least a value equivalent to the porosity of a producible interval in a similar geological and
dynamic context (lithotype, fluid scenario, recovery mechanism, pressure behavior).

5.- Hydrocarbon saturation

HC saturation impacts both the in-place evaluation and the production mechanism. It is strongly
recommended to perform this evaluation in close collaboration with a reservoir engineer.

HC saturation is deduced from Sw which is the true parameter estimated from data acquisition (Shc = 1 –
Sw).

The HC fluid saturation in a reservoir is the result of several phenomena:

• The wettability of the lithology which characterizes its affinity to a specific fluid. Most rocks
are “water-wet”, gas is always the “non-wetting” phase. Carbonates are oftentimes oil-wet.
• The interface fluid tension (IFT) which describes the deformation of the interface between
two fluids in the porous medium.

The capillary pressure (PC) is the result of these two phenomena and corresponds to the pressure
difference between water and HC fluid in the porous medium. As a consequence, PC can be transformed
into height above the water contact (or capillary height).

29
Over the transition zone the initial Sw decreases continuously from 100 % at the FWL to a much lower Sw
values higher in the Hc column (Figure 20).

Figure 20: Link between water saturation, capillary pressure, relative permeability and
mobile range of HC.

The impact of capillarity is limited when the HC column is much bigger than the transition zone, but it is
of prime importance when a major part of the net pay is within the transition zone.

The average saturation has to include the integration of the PC curve along the reservoir thickness.
The petrophysical coherency of porosity and saturation input is essential. It should be checked that both
parameters are consistently either effective values or total values.

It is essential to assess the impact of the transition zone, especially when the height of the transition zone
is not negligible compared to HC column height.

In the general case when no geomodel exists, it is recommended to create a table of Sw vs. height. Three
main methods are recommended:
• The best estimation is the “Wright-Woody-Johnson” correlation: where Sw is estimated as a
function of permeability.
• Another correlation commonly used is the J function which relies on Sw, Phi and permeability
for a single facies family/rock type.
• Finally, available laws of Pc vs. Sw for analog facies/rock types can be used and converted into
Sw vs. height.

The Sw to feed the table may be estimated from various sources of information:
• Regional database (petrophysical syntheses/Sw laws per facies, phi, permeability).
• Logs from analog wells, paying a special attention to the transition zone.
• Measurements from plugs/cores on analog wells keeping in mind total vs. effective porosity.

30
Sw vs. height table ranges can be directly entered in MMRA Spreadsheet to pilot the saturation
uncertainty, especially when the transition zone should not be neglected.

Case with a simulation model: the Sw range can be directly extracted from the grid population to generate
the adequate global distribution.

Case with little or no data: the Sw range is directly entered in MMRA Spreadsheet, constrained by the
porosity and permeability ranges. It is recommended to use the same distribution as for porosity. This
method is quite simplistic and should be avoided as much as possible because the link with lithology,
facies and capillarity is difficult to capture and document.

Consistency check on Shc

The Sw distribution (consequently HC saturation distribution) may impact the production mechanism and
therefore the recovery factor. In this way, the Sw has an impact on prospect assessment beyond just the
in-place volume distribution.

The range of saturations should therefore be illustrated by a regional petrophysical synthesis or analogs,
suitable reference data plots and take into account the PC correction. It is important to check that the
P100 saturation is compatible with a realistic production mechanism.

6.- Oil Compressibility (Bo) / Gas Expansion (Bg) / CGR factors

The fluids volume variation should be evaluated by reservoir engineers of the exploration team.
Definitions
The 1/Bo, 1/Bg or 1/Bg’, GOR and CGR factors convert the HC volumes (oil or gas) at reservoir levels into
volumes at surface conditions: 15°C, 1 bar (Figure 21)

Figure 21: Notions of 1/Bo, 1/Bg and 1/Bg’.

31
The reciprocal of Bo and Bg factors are the oil and gas “formation volume factors”, respectively Bo and Bg
(or Bg’), commonly used in reservoir engineering.

1/Bo = [Surface Oil Volume (no gas) ] / [Down-hole Oil Volume incl. Solution Gas]
1/Bg = [Surface Raw Gas Volume] / [Down-hole Raw Gas Volume]
1/Bg’ = [Surface Dry Gas Volume] / [Down-hole Raw Gas Volume] (= Fg/Bg)
Fg = [Dry gas] / [Raw gas] both at surface conditions

In MMRA Spreadsheet, GLR = GOR = GCR, GCR = 1/CGR (G for Gas, O for Oil, L for Liquid, C for Condensate).

Key drivers
Bo (oil)
Oil is subject to various physical phenomena when travelling from the reservoir to surface conditions. The
most important of these phenomena is gas liberation (expressed by the GOR factor). This explains why
the correlation between the GOR and the Bo is so strong (Figure 22).

Figure 22: Correlation between 1/Bo and GOR.

Bg (gas)
Bg is a direct function of:
• Reservoir pressure and temperature, which should always be estimated and properly
documented.
• Gas compressibility, Z-factor (dependent on pressure, temperature and gas composition).

CGR (condensate yield)

CGR represents the quantity of condensate vaporized in the reservoir gas phase.

32
To note
Bo (oil)
In the context of exploration, it is recommended to use the strong global correlation between GOR and
Bo and beware when using local data, as they can be anomalous due to sampling and measurement
deviations. This unless strong, well-documented local data support results that differ from the global
trends.

Bg (gas)
Bg is directly calculated from the Z-factor, pressure and temperature.
Gas composition can be estimated from 2 successive steps (Figure 23):
• Use the “strong” correlation between C1 fraction and GLR hypothesis;
• Use “good” correlations between the other components and C1 fraction.

Figure 23: Gas composition estimation.

If good quality local data is available, it is advised to check the validity of the correlations in the study area
as different source rocks may cause some compositional differences.

Finally, the Z-factor is estimated from pressure, temperature, gas composition, and the physical constants
of the gas components. Note that a strong correlation between GCR and 1/Bg exists.

GOR and GCR

These parameters are the most difficult parameters to estimate. A good approach is to look for analogs
in the same basin and local context (SR, reservoir sequence, burial, migration path and timing …). For CGR,
the analogy could be less robust than for GOR, as during migration the gas composition may evolve
dramatically due to gas stripping, gas leak controlled by cap rock permeability, etc.

33
The “Tulip” plot (Figure 24) can be a useful data analysis and visualization tool where compositional trends
of hydrocarbons of a basin or play can be displayed and characterized.

Special care should be paid to fluids over 400-450 bars (5800-6500 PSI):
• The fluid is supposed to be critical (yellow “critical root”), hence the GLR range can be taken at
600 - 900 - 1200 v/v.
• Nevertheless, it has been proven in some areas that a mixing process may result in a “gas
condensate” fluid with higher GLR range. It is thus strongly recommended to check if such a mixing
process is applicable in the prospect area.

Figure 24: Tulip plot for fluid production. Saturation pressure is plot against gas to liquid
ratio.

Other methods for Bo/GOR and Bg/GCR:

• Specialized reservoir software as Mbal or Prosper (pressure losses) can provide Bo/Bg ranges from
GOR/GCR hypotheses.
• The output of a basin modeling study performed over the area of interest provides all necessary
information.
• Plots of 1/Bg versus pressure exist for some areas. This method is not recommended as the
difficulty is to apply a correct temperature gradient.

Consistency checks on Bo and Bg

Consistency relies on the correct estimation of pressure, temperature and GOR or GLR ranges.

Bo / GOR: The graphs of 1/Bo vs. GOR and GOR vs. pressure (Tulip plot) should be validated over the
prospect area using data from analogs.

34
 Bg / Bg’ / GLR: The same validation check over the prospect area applies to the graph of GLR vs.
pressure and C1 fraction. This is particularly important in case of specific fluids with high content of
some pollutant gases.

For pressures above 400 bars (5800 PSI), a hypothesis has to be made by the interpreter to choose
between free gas and critical fluid; no correlation can solve this issue, only a good knowledge of the
context can help on this choice.
7.- Recovery factor
Recovery factor relates to the quantity of HC that are planned to be produced over time. Depending
on the type of evaluation, the RF can be estimated through different processes, from less to more
complex. It is strongly recommended that RF is evaluated in close collaboration with a reservoir
engineer.
Definitions
The RF is the ratio of recoverable HC resources over the HC in-place.
Recoverable HC resources are the sum of the cumulative well production estimations, or in other
words the sum of the predicted production profiles over time. As a consequence, the recoverable HC
resources depend on all constraints specific to the studied prospect in terms of static description and
properties, mechanism of production, technology used, development perimeter, well count and
properties, contractual conditions (end of license for instance) and economical model.

Usually, for development studies, the resources (therefore RF) are estimated through complex
dynamic simulations, where development constrains are introduced to assess the fluid displacement,
the well efficiency and the capacities of the production facilities.

This process is rarely done in Exploration where the two following approaches should be used:
• The standard process estimates the resources based on production profiles and concludes with
an economic evaluation. It is essential in this case to estimate resources (not RF) from dynamic
parameters and the development constraints identified to provide all valuable information to
development engineers and economists.
• For a light process, where no profiles or economic study are performed, the RF is estimated based
on a variable number of analog fields, and entered in MMRA Spreadsheet to obtain the
probabilistic resource evaluation.

The use of the standard process allows playing with all parameters (dynamic, facilities, etc) to reach
an economic development concept, while the direct estimation of RF would not allow such kind of
analytical process. In the context of prospect studies, each HC fluid should have its associated
resources and RF range. Oil, condensate, and Fg have their specific evaluations. By simplification, the
solution gas in the oil phase (AG) has the same RF as for oil. The gas-cap overlying the oil section, if
any, is generally assumed not being recovered, or much later after final oil recovery (blow down
stage), so that no RF is generally considered for the gas-cap.
All internal parameters describing the rocks (structural and stratigraphic components), the fluids and their
interactions should form the basis for the recovery assessment. The external constraints such as
development perimeter, well count and productivity, recovery mechanism (primary, secondary, tertiary)
and applied technology should be fully integrated in the study to define the recoverable resources.

35
The main key drivers are summarized below (non-exhaustive list):
• Recovery mechanism: “Secondary” recovery (gas or water (re-)injection) is often the first
approach. Well spacing and injection pattern should be defined. The possibility of recovery
improvement through EOR techniques could be evaluated as possible incremental.
• Sedimentology: facies distribution, vertical and lateral heterogeneities and impact on net
distribution.
• Structural scheme and fault pattern which impact the communication between prospective
zones.
• HuPhiShc distribution which impacts the wells pattern. It should be mapped through a 3D
geomodel assessment, if possible.
• Geometry: thickness, structural dip, lateral extension, distance to aquifer and gas-cap.
• Permeability: it is the main driver of the fluid displacement within the reservoir units.
• PVT parameters:
- Oil viscosity as the capacity of a fluid to move within a porous medium; it controls the
mobility (K/viscosity) and multiphase displacement (relative permeability).
- Gas composition (Z factor) and GLR which impact all volumetric calculations.
• Energy balance: GLR (internal energy), aquifer activity (external energy), abandonment pressure
(magnitude of depletion – constraint from facility).
• Well options (which could become limiting factors when not optimized): well count, productivity,
drainage area, well path, completion efficiency, well design, etc...
• Economic optimization.

To note
In the prospect study, the economic evaluation of a possible development should be examined early in
the process.

As the resource estimation is based on various dynamic and development hypotheses & considerations,
optimization loops may occur to reach an economical level. Recovery factors are then deduced, and the
necessary distribution is generated inside MMRA Spreadsheet to reproduce the 3 final deterministic
resources estimates.

The fluid characterization (PVT) is important to assess the fluid parameters, which will impact the
recovery: viscosity, GOR (energy and well eruptivity), CGR (detrimental in case of very low permeability)
are the most significant parameters. The WAT, asphaltic content, and percentage of pollutant gases may
indirectly limit the recovery and impact the design of facilities.

8.- Prospective resource estimation – standard case:

Depending on the importance of the prospect study and available time, various softwares can be used
from simple specialized software such as Mbal to complex dynamic simulators as eclipse (3G model
needed).

Some profile generators such as Excel spreadsheet or the dedicated “PetroVR” tool can provide good
estimates. Parameters such as well productivity, resource per well, well drainage area, resource density,
production mechanism, water-cut evolution should be evaluated with specialized software, analytic
formula or by analogy from internal/external databases.

36
Reservoir maps with the water contact hypotheses and Hu * Phi * Shc maps are strongly recommended
to define the best possible well locations. This step is essential to fix the suitable development area and
its associated resources (full area or sweet spot).

RF estimation - Data room type or very preliminary estimate:

In this case the range of RF can be estimated based on notional production mechanism/analogs and then
used in the full probabilistic equation of prospective resources. The distribution type will most often be a
beta or normal type or may be set to uniform in the rare case when no analogy is possible (as in frontier
domains).

The RF range should be consistent with the production mechanism. Analogs from all possible sources
should be looked at to find reliable estimates. It is best to use RF from already producing analogs or
sanctioned projects.

The use of a structural reservoir map completed by Hu.Phi.Shc map (in place density, distribution) is
strongly recommended to define correct initial resources estimates, especially in relation with
development area and well count. Those maps are easily obtained via a 3D geomodel and should be used
in discovery appraisal phase.

It should be reminded that RF is derived from the dynamic properties and the development hypotheses
and there is no way to simply forecast a relation between RF and in place volumes.

Special case of gas recovery

Assessment of gas recovery is easier than for oil and a simple Mbal can provide a good estimate. The base
case production mechanism is natural depletion as water injection is rarely applied (extra costs) and gas
injection is only considered when a gas-cycling project is valuable.

The recovery of condensates is more complex to estimate and should be the object of a specific study. A
constant CGR factor on gas profile should not be used in this case.

Based on economic considerations, it can be chosen to produce less gas in order to optimize condensate
recovery. In the case of an LNG project, additional constraints will apply, such as daily contracted quantity
(DCQ), additional gas rate capability above DCQ, project duration…

Additional parameters that will play a major role in gas recovery and that should be specifically
documented, are:
• Abandonment pressure, which defines the range of potential depletion.
• Gas Z factor which constrains the gas volume.
• Activity of the aquifer for which the justification and impact should be properly documented
through a geological-geophysical study.
• Presence of non-HC gas.

37
Special case of critical fluid recovery
The most important step is to decide if the critical fluid will be recovered under oil or gas type
development. Both options are technically possible but the recovery factors per fluid will be very different.
Business in the area will orient the strategy. The development options for critical fluids are generally more
complex.

In oil type development, the reservoir is generally depleted and is produced from the base of the HC
column to maximize recovery.

In gas type development, the reservoir is generally produced from the top, possibly under gas re-injection
to maintain pressure and maximize recovery of the liquid vaporized in the gas.
Consistency check
The correlations or analogy used (well characteristics, PVT, aquifer, maps) should be properly documented
to demonstrate the extent of their relevance.

The most impacting parameters are case dependent and should be identified in each study.

RF distribution in MMRA Spreadsheet should be consistent with development assumptions.

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C. PROSPECT VOLUMETRIC EVALUATION; Multiple scenarios and complex
traps

1.-Multi-scenario principles
When interpreting an object (prospect/lead), focusing on a single geological model may not describe the
full range of potential outcomes, especially in the early exploration stages, when data are limited and
several hypotheses are still possible. In order to capture all plausible interpretations, avoid bias and
remain flexible to adjust strategy, multi scenario thinking is recommended.

Some examples which may require such an approach are:

• Uncertainty on fluid type (oil, gas, GOR, oil biodegradation, CO2 content….).
• Lithological alternatives such as: carbonates vs. sandstones, alternatives facies or petrophysics,
presence of fractures etc.
• Optional trapping mechanisms due to different plausible structural interpretations or uncertainty
on the seal, i.e. multi layers or superimposed channels/lobes with potentially leaking seals (local
seals vs regional ones), complex traps…

The multi-scenario approach will impact the prospect/lead evaluation at 3 main levels:
• Risk: some alternatives might be attached to the dry branch (high CO2 content, very low API, poor
reservoir facies….). It will then affect the overall Pg of prospects or leads.
• Uncertainty: a wider resource distribution in the success branch becomes necessary in order to
describe the full range of possible success outcomes for a prospect and the full uncertainties
related to the multi scenario (ie: range of petrophysics, alternatives on the location of the spills in
case of possible connection of the 2 prospective zones etc.).
• Development options/economic evaluation: multi scenario approach will allow a more efficient
analysis and will reduce the anchoring bias on a pre-defined deterministic model. Different
success-case options and economic cut offs will then be defined to assess as the most
representative cases of the geological and developments risks and uncertainties. This should be
performed in close collaboration between subsurface and development engineers´ teams.

Multi-hypothesis thinking guidelines

The development of a multi-scenario approach is encouraged and should be part of the uncertainty and
risk analysis. The following guidelines should be considered.

• Whenever a continuum between scenarios is possible, use appropriate uncertainty analysis tools:
wider distributions, multiple uncertainty aggregation (if available), or complex trap approach
(MMRA Spreadsheet) to describe the range of possible outcomes.

If multiple scenarios are used a PO (Probability of Occurrence) will be defined, and should be limited to
cases when discrete scenarios are mutually exclusive such as geological models, oil vs. gas, CO2….
• Each scenario and all inputs should be geologically plausible.
• Simplification is preferred. As a best practice it is recommended to limit the numbers of scenarios
employed (max two) and avoid using complex considerations, such as non-standard parameter
correlations

39
 • For the biodegradation scenario it is important to present and discuss if the alternative will be
treated as an uncertainty (range of GOR and viscosity still corresponding to a potential possible
development) or as a risk attached to Migration and Timing.

In this approach, the objective is to describe the full range of possible success outcomes in order to have
a better understanding and description of the prospect.

The process should be properly documented in order to keep a record of the different hypotheses used
during the evaluation. The selection of the deterministic cases should also be clearly explained.

2.- Complex traps configuration

Complex traps are common but it is difficult to intuitively implement the usual prospect evaluation
approach because of incremental trap risk situations.

In a complex trap a number of different trapping mechanism have to work favorably and simultaneously
in order to allow access to the full HC volume potential of the prospect (Figure 25). The traps need to
share the same crest (for instance the typical case of a 3-way trap which includes 4-way closure).

It is recommended to test/check the individual distribution of each success scenario to ensure selected
cases are not to be eliminated because they are volumetrically irrelevant. In some cases, the 4-way
trapping might be very small compared to the 3-way trap. In this case, simplification is needed and only
3-way trap could be considered (make sure however the 4-way trap is captured in the P90 of the
distribution)

When 3-way and 4-way resources are both significant, the complex trap methodology described should
be applied. The method will combine the chance-weighted distributions of each of the trapping styles to
assess representative resource distributions and meaningful exceedance probability curves.

In order to avoid misunderstanding when presenting a complex trap, it is essential to illustrate on relevant
maps the key elements (contact & trapping mechanism) in order to:
• Clearly identify and isolate the critical points of a prospect.
• Better understand the impact of those critical points in terms of probability of occurrence and
resulting HC distribution.

In all cases global combined distributions should be properly documented with the parameters and
scenario selection rationale of each deterministic case used for development and economical valorization.

40
Figure 25: Simple to complex trap styles examples. In complex traps, trapping mechanism
have to work favorably and simultaneously in order to allow access to the full HC volume
potential of the prospect.

The following example illustrates the typical workflow in the evaluation of complex traps.

Tree of cases and probabilities of occurrence

• Identify the different possible trapping elements (Figure 26).

41
Figure 26: Identification of trapping elements in the evaluation of complex traps.

• Evaluate the Pg of the whole structure: it corresponds to the Pg of the crestal trap. The potential
failure of additional trapping elements down-dip from the crestal trap will not modify the crestal
trap Pg and hence the chance of technical success. Rather, they will influence the probability of
deeper HC-water contacts and larger volumes of HCs.

• Evaluate the risk of each trapping element independently: it should be done as if it was the only
one. For example, it should be assumed that there is no dependency between faults, meaning
that if one fault fails as a seal there is no increased probability of failure of the second fault (Table
3).

Seal type P P (successful seal) P (seal failure)

Top seal 80% 20%
NE fault seal 40% 60%
SW fault seal 70% 30%
Table 3: individual trapping element risk.

Define the “Tree of cases”

• All possible combinations of trapping elements starting from the crest of the prospect are
depicted as individual branches (Figure 27).
• The first 2 branches are the prospect success (weight =Pg) and Failure (weight =1-Pg) (Figure 27).
• The “weight” of each branch is then calculated by multiplying the probabilities of the events
leading to the particular branch.

42
 Figure 27: case-combination decision tree.

• Summarize cases, and deduce unconditional probabilities (= risked case probabilities):

- Ʃ (success &failure cases) = 1
- Multiply the probabilities of the events leading to each particular branch.

• Deduce conditional probabilities (= success case probabilities), by dividing each unconditional

success probability by the chance of success (Pg):
- Ʃ (success cases) = 1
- The fractions calculated for each success case correspond to their weight according to
their PO.
-
The weight of each case may have counter intuitive values: without determining all possible scenarios it
is not intuitively obvious that a deep leak point can be statistically more likely to occur than a leak point
higher up the structure, although the deeper leak point requires more elements to seal simultaneously.

The modelled HC columns should be defined, for each case, from the minimum closure to the spill. The
distribution type/shape should be consistent with the regional geological knowledge and the attached
degree of uncertainty. The definition of the minimum should be the same for all trapping scenario. It is
important not to mix up the uncertainty related to the structure (the trap and its possible leak points)
from the uncertainty related to the HC charge capacity (HC quantity that can migrate into the trap).

3.- Multi-prospective zone prospect

Definition and principles
A prospect represents either an individual potential accumulation (one prospective zone), or the
combination of several potential accumulations (vertically superimposed and/or adjacent with possible
communications).

The aim of the multi-prospective zones approach (or aggregation methodology) is to assess the full global
range of resources and a complete evaluation of the risks associated to the prospect.

43
The result of the aggregation will be a stochastic estimation of the technical success volumes (unrisked
mean resources) and of the Pg_aggregate which is the probability of success associated to a prospect that
contains a set of prospective zones. The workflow is illustrated in a simple 2 prospective zones example
in (Figure 28).

Pg is the chance that at least one of the prospective zones in the prospect is a technical success and
contains producible HCs when all the prospective zones in the prospect are drilled out.
The main input is the identification of all prospective zones to be aggregated in the prospect. Each
prospective zone needs to be risked independently and evaluated in terms of resources and risk before
aggregation. Risk and volume dependencies between prospective zones should be carefully analyzed as
they may have a significant impact on the global prospect resources.

Figure 28: Multi-prospective zone prospect workflow (example with 2 prospective zones).

More generally this method will allow aggregating on a wider scale, several prospective zones or prospects
for a given project with for example dispersed accumulations providing a global evaluation of the
resources and economic value of a wider project.

44
In any case the resources estimation corresponding to aggregated prospective zones or prospects should
always be consistent with corresponding exploration strategy, development schemes and economical
studies.

Impact of shared risks

One of the major reasons why the addition of prospective zones sometimes leads to errors in prospect
resource estimations or in prospect chance of success, is that prospective zones usually share many
geological parameters (reservoir, trap, seal, source and/or migration) and their associated risk. Different
levels of shared risks or risk dependencies can be defined.
Independent prospective zone: this choice indicates that the success of failure of one prospective zone
has no impact on success or failure of another prospective zone.
Dependent prospective zone: in this case if one prospective zone succeeds another prospective zone is
more likely to succeed with the following types of dependencies:
• Partial dependency: the prospective zones are more likely to succeed or fail together but one
prospective zone may succeed without the other.
• Total dependency: if Pgs are identical, both prospective zones will succeed or fail together.
Nevertheless, two prospective zone could have total dependency but different Pgs. In this case a
low Pg prospective zone cannot succeed unless a high Pg prospective zone succeeds (i.e. fill and
spill structures).

Dependency extends the range of resources and increases the unrisked mean resources (Figure 29). In
parallel, with increased dependency, if one prospective zone fails, the other prospective zone(s) is more
likely to fail leading to the decrease of the prospect Pg aggregate (Figure 30). However, the risked mean
resources stay the same.

Figure 29: Dependency impact on resources distribution.

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The setting of dependencies has a first order impact on prospect resources and risk, as illustrated by the
prospect sheet example on (Figure 30).

Figure 30: Dependencies impact on prospect resources and risk for fully independent and
fully dependent zones of a prospect.

46
Independent prospective zones (unrisked) aggregate mean resources is 7.7 Mboe with Pg_aggregate at
51%. The probability to have the two prospective zones being both positive is 9% (Figure 30). With
dependency on geometry, Trap, reservoir and seal the aggregate mean resources increased to 13.3 Mboe
but the Pg aggregate decreased to 25%. The probability to have the two prospective zones being both
positive is 25% (Figure 30).

To note
It is recommended to consider only significant prospective zones in the aggregation process. The others
can be regrouped in one prospective zone when sharing the same risks or ignored if too small. In this
process it is recommended to consider a maximum of 3 prospective zones.

The level of dependency between the prospective zones should be carefully assessed and documented.
Depending on the geological context each risk factor may vary from highly dependent (for example
geometry in case of shared trapping or identical SR/fetch area) to rather independent if for example the
reservoirs belong to distinctly different depositional environments.

Impact of correlations between volume parameters

Relevant correlations between volume parameters of each prospective zone can be implemented.
The volume dependencies are associated with the risk factor as prospective zones with common
geological elements usually share risk and volume dependencies. For example, if two or more prospective
zones share the same depositional model, there is a strong likelihood that the reservoir parameters are
correlated.

Common volume dependencies associated with the different risk factors are the geometry, the reservoir
and the seal. Volumetric parameters that could be correlated are listed at Table 4.

Risk factor Correlated volumetric parameters

Geometry Area, gross rock volume, depth-dependent area, depth-dependent volume
and geometric factor
Reservoir Net reservoir thickness, reservoir thickness, net reservoir fraction, net sand
fraction, thickness, net/gross ratio, porosity, saturations, RF,
Seal Depth of crest, spill point depth
Table 4: Risk factors and correlated volumetric parameters.

The correlation input is used to define the link between variables within one or several prospective zones
(for example: West prospective zone porosity vs. East prospective zone porosity, NTG W prospective zone
vs. NTG East prospective zone at Figure 31. All input parameter relationships not explicitly listed in the
correlation table in MMRA Spreadsheet are assumed to be uncorrelated.
Usually, the volume dependency impact is of second order compared to the risk dependency.

47
Figure 31: Impact of correlation between volumetric parameters.

Exploration Well Resources and Risks

When a prospect is considered to be drilled, the difference between the prospect stakes and the well
stakes need to be clearly defined and documented. The following points should be analyzed:
The reason for drilling the well and which uncertainties (geosciences and/or business) should be covered
with the proposed drilling.
The well location justification: it is recommended to work on several locations, evaluating the pros and
cons of each taking into account the following points:
Exploration/Geosciences potential interests.
Impact on appraisal strategy in case of success.
Well cost.
Operational difficulties with risk of drifting of timing/cost.
The range & uncertainties on resources targeted at the retained well location with a comparison to the
minimum economic volume.
In the case of a multiple objectives and if the proposed well cannot target all objectives associated to a
given prospect, a specific aggregation needs to be presented, reflecting the restricted resources targeted
by the well.
Details should be given on the future acquisition program with the uncertainties reduction targeted.

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 PROSPECT EVALUATION GUIDELINES

PART TWO: RISK ANALYSIS

A. Prospect Risking
Geological risk assessment requires the evaluation of all variables that are critical to the discovery of
recoverable quantities of hydrocarbons. Five independent geological risk factors are considered: Source
Rock, Migration-Timing, Reservoir, Closure and Containment (Table 6).
The Geological probability (Pg) corresponds to the chance to obtain a technical success (Figure 32). It is
computed by multiplying the probability of five independent risk factors.
PG= SR x MT x Res x Closure x Containment
Each individual probability (PS, probability of success) represents the chances that the variable considered
in the risk factor will be found within the expected range values, and consequently will not be the cause
of failure. The PS represents the chance of reaching a minimum case of that factor used in volumetric
estimations. This minimum value can correspond to the P99 or P90 cases, depending on the variable
considered (Table 6).
In case of a DHI supported prospect, the prospect chance of success is given by the Pg_DHI (see below).
There is no commercial or economical consideration attached to Pg.

P99 P01 Hc Volume

(MMBOE)
Figure 32: Prospect resource distribution and Technical and Economic success.

In a probabilistic evaluation, PG can be assigned to any given probability case (and its corresponding
volume) by factoring against the given P-case in the exceedance resources curve (Figure 21).
Each geological factor is evaluated with respect to its presence, quality, effectiveness, and preservation
(Table 5).

49
 Risk Factor Description and qualifiers (subfactors f/Rose)
Source Rock- Risk P99 case Probability of existence of source rock(s) in the
fetch area with adequate quality and maturity.
a) Quantity and volume for technical
success
b) Quality
c) Maturation
Timing and Migration- Risk P99 case Probability to charge trap with adequate timing
and preservation.
a) Timing of trap formation
b) Timing of expulsion
c) Migration pathways
Reservoir presence and performance- Risk P90 Probability of existence of a reservoir capable to
case produce hydrocarbons at a stabilized flow.
a) Presence
b) Quality and volume
c) Reservoir performance

Closure Geometry- Risk P90 case Probability of existence of an efficient trap with
the geometry described.
a) Map reliability and control
b) Presence
c) Data quality
Containment- Seal- Risk P99 case Probability of existence of efficient sealing
components to trap and retain Hcs.
a) Top seal presence & effectiveness:
lithology and thickness of seal layers
b) Lateral seal effectiveness
c) Pressure regime, depletion and seal
integrity
d) Preservation from degradation/flushing
e) Seal complexity (>1 seal)
Table 5: Independent risk factors: definition and qualities to be considered. Risk case:
estimated PS refers to chances to get at least the indicated percentile.

A “PS-Fluid” must be added in cases where chances of finding a different-than-expected fluid can be a
cause of failure. This could lead to compute two or more fluid scenarios (Oil, G&C, Gas), or to consider
just a case of failure (eg. CO2 or SH2 more than expected).

Risking matrix
Principles
The key drivers to consider when defining chance of success of these risk factors are:
• The level of adequacy of both dataset and knowledge.

50
 • Focus on the most likely cause for failure.
• Avoid mixing uncertainty and risk, leading to double dipping and/or misrepresentation of resource
distribution.
The assessment of the probabilities for the five individual geological risk factors may easily be driven by
subjective judgments. In order to ensure more objective, homogeneous and documented evaluations a
risking grid guide is used (Figure 33). It is based on:
• The level of adequacy of the dataset refers to data quantity, quality, relevance to address the
subject and the level of geological knowledge.
• The model-derived success likelihood refers to the chance of the outcome for the given geological
risk factor. It addresses the level of confidence that the risk factor will not be (one of) the reason(s)
of failure.
For each geological risk factor, the expected range of chance of success must be checked against the
combination of these two knowledge conditions.

Figure 33: Risk adequacy matrix: what risk range for the data-knowledge and success
likelihood applies to a given risk factor?

The analysis of extreme cases can help understand the constraint of data adequacy on the choice of the
probability value:
• With the best appropriate dataset on a given factor, interpreters are able to assess with high
certainty the success likelihood of this factor. The resulting probability can then be very low
(certain that it will fail), or very high (certain that it will succeed).
• With an inadequate dataset (poor quality, or not dedicated to targeted objective), interpreters
are not given sufficient information to properly assess the success likelihood of the given factor.
The resulting probability should therefore not be far from 50% (coin toss), and both low and high
risk factor values are inconsistent.

The risking matrix presents “white zones” where a range of consistent probability values are proposed to
the interpreters, and “grey zones” where the level of confidence in the model seems inconsistent with
the adequacy of the dataset & level of knowledge.
In some specific cases, it is possible to select probabilities in the grey zone but it should be justified by the
interpreters based on geological or geophysical arguments.

Consistency check
In order to gain consistency amongst prospect evaluations in dissimilar geological contexts, some frequent
examples are listed in Table 6. This list is not exhaustive and could be amended, but in all cases divergences
should be technically justified and discussed.

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 Consistency Check
Source Rock Frontier: PS ≤ 70% Emerging: PS ≤ 90% Mature: PS up to
100%
Timing and Frontier & Emerging: PS ≤ Mature: PS up to 100%
Migration 80%
Reservoir Limited data, poor Limited well data, good Mature and good
well/outcrop control: PS ≤ seismic: PS ≤ 80 data: PS up to 100%
60%
Closure Geometry Subsalt - Tectonized salt: PS Fold Belts- Poor Near field, good
≤ 70% Seismic: PS ≤ 70% seismic: PS up tp
100%
Containment-Seal 2 or 3 sealing mechanisms: 3-ways or struct-strat 4-way dip closure: PS
PS ≤ 50% traps: PS ≤ 80% up to 100%

Table 6: Non-exhaustive risk-factor consistency checks for selected cases.

Petroleum system: consistency on source rock parameter is directly linked to the exploration context
(Frontier, Emerging, Mature) *, whereas for the Migration-Timing parameter, distinction between
Frontier and Emerging is less pronounced.
Reservoir: consistency on reservoir risk is mainly linked to the reference well or outcrop data base (control
points), the seismic quality (reservoir seismic characterization) and the well to seismic calibration. The
data adequacy is therefore the main criterion for the chosen geological model.
The most common inconsistency to avoid is when there is no or few well data to constrain the reservoir
presence/effectiveness while the seismic imaging is considered good enough to allow the interpretation
of reservoir facies (i.e. reefal carbonates, turbiditic lobes…). In this case, the lack of control points should
not be over-emphasized and data adequacy should be rated at the least as “average” (Probability ≤ 80%).
Trap geometry: some typical pitfalls are:
• When data adequacy is low (no analog, few or no calibration data) and success likelihood is considered
high (cognitive bias: “I believe in it”), there is inconsistency with the risk matrix (grey area). In this
case, at the most, success likelihood should be “Av high” (Probability Geom ≤ 70%).
• When the play is proven (Subsalt GOM, fold belts…) and prospects themselves are poorly defined,
there is a tendency to be over-optimistic. A reality check with success/failure statistics in the basin or
similar environment is necessary, i.e.:
o Subsalt domain (existing discoveries but seismic imaging could be misleading): Probability
Geom ≤ 70% at the most.
o Foothills (data adequacy is low, no/very poor imagery, but play proven with discoveries):
Probability Geom ≤ 70% at the most.
o In both cases, trap presence-in the way described- could simply be less likely than expected.
It should be reflected in the success likelihood grading (Av low to Av high).
Containment-Seal: consistency on seal risk evaluation is mainly linked to the trapping mechanism (4 ways
vs. 3 ways/stratigraphic) and to a lesser extent to the top seal lithology (e.g. waste zone).

52
However, failure cases attributed to the seal might be related to sub seismic events (faults or thief beds)
or unpredictable causes (lithology/ mineralogy/ pore pressure) which are difficult or impossible to detect
on seismic.
Concerning the trapping mechanism component, the following points should be considered:
• 3 way or stratigraphic traps may have 1, 2 or 3 critical sealing components (i.e. top and lateral,
associated with fault or facies changes) and should be ranked riskier- unless strongly justified by
analogs or basin statistics in the same structural configuration (mature/ near-by exploration).
• 4 way dip closures with only one seal component to consider correspond to the most favorable
situation with a probability of up to 100% (i.e. Top seal = salt or hemipelagites).

B. Modification of Pg in presence of a DHI

Some anomalies identified on seismic such as bright spots, flat spots, changes in pre-stack data amplitude
versus offset (AVO), can be caused by the presence of hydrocarbon (mostly gas or very light oil) in
reservoirs. This group of anomalies are known as Direct Hydrocarbon Indicators (DHI), and have reduced
risk and driven the successful exploration of many hydrocarbon discoveries. However, pseudo DHIs, could
be wrongly interpreted as hydrocarbon accumulations but are related to seismic acquisition or processing
issues or even geological features (i.e.: abrupt lithological changes). DHIs are not 100% reliable and in
some cases a misinterpretation (known as “pitfalls”) can lead to wrong conclusions (the worst-case
scenario: drilling a dry well): A seismic DHI is defined as an anomalous seismic attribute or pattern that is
explained by the presence of hydrocarbons. As a rule of thumb, the most reliable seismic anomaly is
represented by an amplitude conformance with the structural map in depth, whereas non-conformance
amplitude anomalies or non-calibrated positive AVO response can be observed due to large number of
lithological or seismic processing/interpretation related phenomena.
Derisking with DHIs: It mainly consist on applying a DHI quality factor (scalar) to the original geological
chance of success (Pg) in order to objectively set a chance of success to an exploratory project. Bayesian
approach, provides the mathematical mechanism by which we adjust our initial hypothesis (Pg) using
evidence related to that hypothesis (the DHI to success statistical model). Using Bayes’ theorem, we can
describe the probability of an event when given some a priori information related to that event.

1
1 1

Where, P(A): Probability apriority, Pfneg: probability of false-negative, Pfpos: probability false-positive.
The best way to introduce the theorem is to consider an example. Bayes´ rule is commonly used in medical
testing. For example, the prior risk of a Caucasian male between ages of 60 and 70 having prostate cancer
is 3.363%. There is a medical test (namely “TEST A”) for prostate cancer which is particularly unreliable.
Typically, there are 15% false positives (15% of those without cancer will test positive) and 25% false
negatives (25% of those with cancer will test negative). In case that a male individual tests positive, we
can apply the Bayes’ theorem and calculate the updated risk of having cancer is now 14.8%.
Using the same statistical concept, we can update the chance of success (Pg) based on a prior information
(DHIs):

53
 1
1 1

Usually, this a prior information (false negative or false positive) lacks of absolute certainty; otherwise it
could be used directly to infer the outcome (new Pg based on the DHI). In our particular case, the DHI at
a prospect is included in the risk assessment by considering how the DHI will affects the initial geological
chance of success (Pg) across the basin and play. The expression of false negative and false positive
follows. Since a false negative (DHI), represents the probability of not identifying a DHI nonetheless finding
hydrocarbons, and a DHI false positive (pitfall) is the probability of having a DHI but not finding
hydrocarbons, then:

| ∴ 1 |

and

Bayes’ theorem is more consistent to subjective risking with a DHI because it considers the chance of a
DHI being a False positive and in the counter case, the chance that the absence of a DHI does not preclude
the presence of hydrocarbons (False negative). The generalized Bayes´s rule estimates a new posterior
probability of success using previous probabilistic information and therefore, the posterior Pg using DHI
probability is:

|
| 1 |

In some cases, the prior information is taken from the historical records of wells drilled based on DHIs.
Always bear in mind that the actual values of a false positive or a false negative, it is related to a specific
basin and play. It is therefore necessary to be able to build a reliable database with the wells that have
been drilled based on DHI interpretation. Due to lack in examples, it is not very common that exploration
companies produce reliable databases, Therefore, given the lack of statistically representative number of
cases in order to estimate the probability function (P(dhi|hc) and P(dhi|nohc)), we can use a customized
check list in order to have an approximation of these variables. For instance, for P(dhi|hc) we can include
the following topics (each one of them with a specific weight):
• DATA QUALITY
• WELL CONTROL/ANALOGUES/CONFIDENCE ON THE PLAY
• AMPLITUDE RELATIONSHIP
• CONFORMANCE OF AMPLITUDE TO STRUCTURE

54
 • FLAT SPOT
• PLAY MATURITY AND GEOLOGICAL KNOWLEDGE

For instance, for P(dhi|nohc) we can include the following topics (each one of them with a specific weight):
• LOW SATURATION RESIDUAL GAS
• LITHOLOGICAL AND DIAGENETIC EFFECTS
• CROSS-CUTTING MULTIPLE ENERGY
• UNCONFORMITY SURFACE
• GAS HYDRATES
• MANIPULATION OF COLOUR BAR DYNAMIC RANGE OR INAPPROPRIATE WINDOWING OF
ATTRIBUTES
• BRIGHTENING DUE TO SEISMIC TUNING
• SHALE ON SHALE AVO
• BRINE SAND GIVES CLASS 3 AVO RESPONSE

The workflow for a Pg_DHI estimation follows (Figure 34):

Figure 34: A spreadsheet is available in order to estimate the prior information for the
Bayesian approach (please follow the link PG_DHI).

55
 PROSPECT EVALUATION GUIDELINES-
PART THREE: GLOSSARY & ACRONYMS
AG: Associated Gas
API: American Association of Petroleum
Bg: gas expansion
Bhc: HC compressibility factor
Bo: oil shrinkage
CAPEX: Capital Expenditure
CGR: condensate-gas ratio
CSEM: Control Source Electro Magnetic
DCQ: Daily contracted quantity
DHI: Direct Hydrocarbon Indicator
DQ: Data Quality
DST: Drill Stem Test
EIR Exploration Investment Review
EOR: Enhanced Oil Recovery
Fg: free gas
FID: Final Investment Decision
GCR: Gas Condensate Ratio
GF: Geometrical Factor
GLR: Gas Liquid Ratio
GOR: Gas-Oil Ratio
GRV: Gross Rock Volume
GT: Gross Thickness
H: Height
HC: Hydrocarbon
HuPhiSo: net height by porosity by Oil saturation: net oil pay
IFT: Interfacial Tension
IGIP: Initial Gas In Place
IRR: Internal Rate of Return
Kh: transmissibility
LNG: Liquefied Natural Gas
Mbal: Material Balance
MEFS: Minimum economic field size
NPV: Net Present Value
NRV: Net Rock Volume

56
NTG: Net and Gross reservoir thickness
OOIP: Original Oil In Place
OPEX: Operating Expenses
P: pressure
PC: Capillary pressure
Pc: Probability of commercial success
Pe: Probability of economic success
Pg: Geological probability
Pg_DHI: probability of success of a DHI supported prospect
Phi: porosity
Phie: effective porosity
Phit: total porosity
PO: Probability of Occurrence
PVT; Pressure Volume Temperature analysis
QCR: Quality Consistency Review
RF: Recovery Factor
SAA: Seismic Amplitude Anomaly
SAC: Seismic Anomaly Confidence
Shc: Saturation of hydrocarbons
SR: Source Rock
Sw: Water Saturation
SWirr: irreducible water saturation
T: temperature
WAT: Wax Appearance Temperature

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