Given

ONGC Offer
Initial Payment 60
Post Oil Discovery 600

Revenue and Cost

Cost of Own Exploration 100
Profit 2000
Total Revenue 2100

Cost of engaging Oil Finders 2

P(Oil) 0.6
P(No Oil) 0.4

P(Gas/Oil) 0.7
P(No gas/Oil) 0.3

P(Gas/No Oil) 0.1

P(No gas/No Oil) 0.9

Bayes theorem
P(Oil/Gas)= P(Gas/Oil)*P(Oil)/{P(Gas/Oil)*P(Oil)+P(Gas/No Oil)*P(No Oil)}
0.91
P(No Oil/Gas)= 0.09

P(Oil/No Gas)= P(No Gas/Oil)*P(Oil)/{P(No Gas/Oil)*P(Oil)+P(No Gas/No Oil)*P(No Oil)}

0.33
P(No Oil/No Gas)= 0.67

P(Gas)= P(Gas/Oil)*P(Oil)+P(Gas/Dry)*P(Dry)
0.46 1160
P(No Gas) 0.54
 0.91
Oil Discovered

Explore 2100

-100 1809 0.09

No Oil
0.46
Gas 0

0 1809 0.91
Oil Discovered

Sell 600

60 604 0.09
No Oil
Oil Finders
0
-2 1151.28
0.33
Oil Discovered

Explore 2100

-100 591 0.67

0.54 No Oil
No Gas
0
0 591

Cannot sell

0 -2

0.6
Oil Discovered

Explore 2100 2000

-100 1160 0.4

No Oil

No Oil Finders 0 -100

0 1160 0.6
Oil Discovered

Sell 600 660

60 420 0.4
No Oil

0 60
Oil Discovered
1998
1998

-102
-102

Oil Discovered
658
658

58
58

Oil Discovered
1998
1998

-102
-102

-2

2000

-100
660

60
ID PARENT TYPE ROW COL LABEL VALUE
1 3T 2 17 Oil Discove 2100
2 3T 7 17 No Oil 0
3 7E 4 13 Explore -100
4 6T 12 17 Oil Discove 600
5 6T 17 17 No Oil 0
6 7E 14 13 Sell 60
7 13 D 9 9 Gas 0
8 10 T 22 17 Oil Discove 2100
9 10 T 27 17 No Oil 0
10 12 E 24 13 Explore -100
11 12 T 32 13 Cannot sell 0
12 13 D 28 9 No Gas 0
13 21 E 18 5 Oil Finders -2
14 16 T 37 13 Oil Discove 2100
15 16 T 42 13 No Oil 0
16 20 E 39 9 Explore -100
17 19 T 47 13 Event 17 0
18 19 T 52 13 Event 18 0
19 20 E 49 9 Sell 60
20 21 D 44 5 No Oil Find 0
21 0D 31 1 Event 3 0
PROP
0.91
0.09
0.5
0.91
0.09
0.5
0.46
0.33
0.67
0.5
0.5
0.54
0.5
0.6
0.4
0.5
0.5
0.5
0.5
0.5
1