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Exploration portfolio optimization for increase of investment effectiveness

UDK: 336.6:622.276
DOI: 10.24887/0028-2448-2017-12-10-13
Key words: exploration, portfolio analysis, planning, investment, optimal portfolio, optimization
Authors: A.A. Vashkevich, V.A. Shashel (Gazprom Neft PJSC, RF, Saint-Petersburg), A.S. Bochkov, V.V. Zhukov, S.A. Pogrebnuk, R.R. Gazaliev, P.U. Kiselev, E.G. Fedorov, A.V. Sizykh (Gazpromneft NTC LLC, RF, Saint-Petersburg)

Portfolio analysis is an investment optimization tool and it is successfully used in various organizations and companies. While basics and principles of analysis have been known for a long time, its application in oil industry is limited. Exploration projects typically are described by high degree of uncertainty of the reservoir which defines usability of following methodology for selecting optimal set of projects for achieving certain aims. It is important to understand that portfolio analysis creates base for selecting various scenarios of Company development and balanced risk diversification, however, final portfolio is yet to be formed. Resulting scenarios are adjusted by including projects in crucial for Company regions of presence, or projects that are mandatory for implementation. Similarly, projects may be implemented which are shown as highly promising by results of scoring ranging, but are not included in portfolio. This work focuses on approbation of portfolio analysis methodology for creating flexible base for decision making in exploration. Perimeter of work includes 45 exploration projects in several subsidiary companies of Gazprom Neft. All of projects are described in terms of probabilistic approach, which allows estimation of range of key project parameters (oil initially in place, production profile, economic parameters, etc.). Theoretical base for methodology is described, and resulting portfolio is formed on base of suggested limits and aims.

References

1. Back M., Guercio C., Portfolio management for strategic planning and operational optimization, SPE 134339-MS, 2010.

2. Wang Z., Guo X., Zhai G. et al., Portfolio optimization and restructuring strategies for NOC under the declining oil price environment, SPE 176236-MS, 2015.

3. Hdadou H., McVay D.A., The value of assessing uncertainty in oil and gas portfolio optimization, SPE 169836-MS, 2014.

4. Simpson G.S., Lamb F.E., Finch J.H., Dinnie N.C., The application of probabilistic and qualitative methods to asset management decision making, SPEВ  59455, 2000.

5. Rose P.R., Risk analysis and management of petroleum exploration ventures,В  AAPG, 2012.

6. Willigers B.J.A., Majou F., Creating efficient portfolios that match competing corporate strategies, SPE 129259-MS, 2010.

Portfolio analysis is an investment optimization tool and it is successfully used in various organizations and companies. While basics and principles of analysis have been known for a long time, its application in oil industry is limited. Exploration projects typically are described by high degree of uncertainty of the reservoir which defines usability of following methodology for selecting optimal set of projects for achieving certain aims. It is important to understand that portfolio analysis creates base for selecting various scenarios of Company development and balanced risk diversification, however, final portfolio is yet to be formed. Resulting scenarios are adjusted by including projects in crucial for Company regions of presence, or projects that are mandatory for implementation. Similarly, projects may be implemented which are shown as highly promising by results of scoring ranging, but are not included in portfolio. This work focuses on approbation of portfolio analysis methodology for creating flexible base for decision making in exploration. Perimeter of work includes 45 exploration projects in several subsidiary companies of Gazprom Neft. All of projects are described in terms of probabilistic approach, which allows estimation of range of key project parameters (oil initially in place, production profile, economic parameters, etc.). Theoretical base for methodology is described, and resulting portfolio is formed on base of suggested limits and aims.

References

1. Back M., Guercio C., Portfolio management for strategic planning and operational optimization, SPE 134339-MS, 2010.

2. Wang Z., Guo X., Zhai G. et al., Portfolio optimization and restructuring strategies for NOC under the declining oil price environment, SPE 176236-MS, 2015.

3. Hdadou H., McVay D.A., The value of assessing uncertainty in oil and gas portfolio optimization, SPE 169836-MS, 2014.

4. Simpson G.S., Lamb F.E., Finch J.H., Dinnie N.C., The application of probabilistic and qualitative methods to asset management decision making, SPEВ  59455, 2000.

5. Rose P.R., Risk analysis and management of petroleum exploration ventures,В  AAPG, 2012.

6. Willigers B.J.A., Majou F., Creating efficient portfolios that match competing corporate strategies, SPE 129259-MS, 2010.



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