PETROLEUM RISKS and DECISION ANALYSIS

Course Instructor

John Schuyler

Foundation

# Who Should Attend

Geologists, engineers, geophysicists, managers, and planning analysts

You Will Learn

How to approach all three types of evaluation problems; ranking, valuing, and optimizing

How to use decision trees and Monte Carlo simulation (in exercises with your hand calculator) to calculate expected values

To think and model probabilistically

How to measuring shareholder value and handle incorporate other criteria (such as HSE: health, safety and the environment)

About decision policy and popular criteria  which work and which do not work well with probabilities

How to use probability distributions and basic statistics, useful in project evaluation

About low-cost PC software tools for decision analysis

How to value additional information (e.g., geophysical survey) and control (e.g., higher safety margins)

Decision-making is perhaps the most important skill for a successful business or career. Good technical and business deciญsions are based on superior analyses of costs, benefits, and risks of projects. Attendees learn pracญtiญcal, systematic ways to analyze decisions under conditions of risk and uncertainty.

Participants learn how to design and solve decision trees and payoff tables, popular decision modeling techญniques. These methods proญvide clear communications and the basis for valuing each alternative. Judgments about risks and uncertainties are expressed as probability distributions. Monte Carlo simuญlaญtion, another powerful technique, is also presented. Four basic probability concepts provide the foundation for the calculations. The mathematics is straightforward and mostly involves only common algebra.

There are no prerequisites other than a general familiarity with the geologic, engineering, and business aspects of the petroleum industry. Participants learn how many real-world problems can be solved with a sciญentific or business hand calculator (which they bring to the course), three reference textbooks, and the 700+ page course notebook. The emญphaญsis is on practical techniques for immediate application.

# Course Content

Decision Tree Analysis: Calculation procedures; valuing additional information and control; advantages and limitations contrasted with Monte Carlo simulation

Monte Carlo Simulation: Sampling techniques; solution accuracy and stopping rules; Latin hypercube sampling; correlation; considerations for portfolio problems and optimization; advantages and limitations

Decision Criteria: Value measures; decision rules; decisions with multiple objectives; discrediting intuition; advantages of the decision analysis approach; dealing with capital constraint and risk aversion; portfolios

Modeling the Investment Opportunity: The ten-step Decision Precision problem-solving process; real options analysis; operations, earnings and cash-flow model structures; modeling tools, including influence diagrams (briefly); deal structures; sensitivity analysis; scenario analysis

Basic Probability and Statistics: Four fundamental probability rules, including Bayes theorem; types and uses of distributions applicable to the petroleum industry, especially exploration; gamblers ruin concept; alternate ways to represent correlation between variables; common misconceptions about probabilities

Risk Analysis and Expected Value Concept: Quantitative estimates of risk and uncertainty; capturing expert judgments; recognizing and avoiding biases and errors

Analysis Methods in the Petroleum Industry: Characteristic risks of exploration, field development, EOR, transport, and plant investments; risk mitigation methods

Implementing Decision Analysis: Interpreting decision analysis results from a management perญspective; facilitating team analyses; low-cost computer tools; establishing credibility in the analysis

Team Workshop: Evaluate a multi-pay prospect using trees and the probability concepts learned in the course; solving again using Monte Carlo simulation

Examples

Participants are encouraged to bring examples from their work for discussion. Please contact OGCI Training if you wish to submit a problem in advance for possible use as a class exercise.

2004-5 SCHEDULE and TUITION                                                          5 DAYS

LONDON, ENGLAND

Oct.25-29, 2004.     US\$2,200

HOUSTON, TEXAS

Dec. 6-10, 2004.     US\$1,900

LONDON, ENGLAND

Apr. 25-29, 2005.    US\$2,450

HOUSTON, TEXAS

June 13-17, 2005    US\$2,100

Aug. 22-26, 2005    US\$2,100

DUBAI, UNITED ARAB EMIRATES

Sep. 10-14, 2005 (Sat.-Wed.)   US\$2,750

KUALA LUMPUR, SELANGOR, MALAYSIA

Sept. 19-23, 2005...       US\$2,825

LONDON, ENGLAND

Oct.24-28, 2005.     US\$2,450

HOUSTON, TEXAS

Dec. 12-16, 2005.   US\$2,100

JOHN SCHUYLER, CAM CCE CMA CMC CPIM PMP and PE, is a decision analyst and evaluation engineer. He founded his consulting practice, Decision Precision, in 1988. He has over 29 years of experience in analysis, consulting, and management, primarily in the energy industry. He has presented almost 220 courses in 25 countries since 1990. His focus has been in feasibility analysis, appraisals, corporate planning, and evaluation software development. He was vice president and petroleum engineer with Security Pacific National Bank, planning and evaluation analyst and (later) manager of business systems for Cities Service Co., and seญnior management consultant with a national accounting firm. John is a member in eight professional organญiญzaญtions and is a frequent author and speaker on modern analysis practices. He holds a BS and an MS in mineral-engineering physics from Colorado School of Mines and an MBA from the University of Colorado. John is the revision author of Decision Analysis for Petroleum Exploration, 2nd ed., author of Risk and Decision Analysis in Projects, 2nd ed., and has written over 40 articles and handbook chapters. His Web site is http://www.maxvalue.com.

# In-House Presentations

All courses are available for in-house presentation to individual organizations.  In-house courses may be structured the same as the public versions or tailored to meet your requirements.  Special courses on virtually any petroleum-related subject can be arranged specifically for in-house presentation.  For further information, contact our In-House Training Coordinator at one of the numbers listed below.

Telephone              1-800-821-5933 toll-free in North America

Or 1-918-828-2512

Facsimile              1-918-828-2580

E-Mail                    inhouse@ogci.com

## Public Course Presentations

How to Contact PetroSkills, LLC/ OGCI Training, Inc.

Telephone              1-877-541-2500 or 1-800-821-5933 toll-free in North America or

1-918-828-2540 for PetroSkills

1-918-828-2500 for OGCI Training

Facsimile               1-918-828-2580

E-Mail                   registrations@ogci.com

World Wide Web

Address                 P.O. Box 35448    Tulsa, Oklahoma 74153-0448    U.S.A.