Due diligence responsibilities of the professional geologist

Conference · Fri Mar 01 04:00:00 EST 1991 · AAPG Bulletin (American Association of Petroleum Geologists); (United States)

OSTI ID:5793435

Hobbs, G W ^[1]

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1. Ammonite Resources, New Canaan, CT (United States)

Whether in the role of independent consultant or company employee, a geologist has certain professional obligations in the evaluation of an oil and gas submittal from a third party. 'Due diligence' is the term used to describe the analysis of an investment opportunity. Due diligence involves a multidisciplinary examination of both the technical and business aspects of a submittal. In addition to the obvious geological considerations, prospect evaluations should include relevant details about the specific technical documentation reviewed, information sources, and how the data were verified. Full disclosure of ownership, technical risks, and negative aspects of the prospect should be included along with the positive elements. After the geological analysis is completed, the economic merits of the prospect should be analyzed, incorporating all lease burdens and terms of participation into the calculations. Estimated exploration, development, and operating costs, together with projected annual production, cash flow, and reserves must be examined as to their reasonableness. Finally, the due diligence review should include a thorough check on the reputation, financial condition, technical and managerial expertise, and prior track record of the operator. Bank, trade, legal, and prior partner references should be contacted. The successful professional geologist in today's competitive world must have multidisciplinary skills. A solid background in geology and geophysics, a basic understanding of the principles of petroleum engineering and economics, and the wits of a private eye are needed for good due diligence work.

• OSTI ID: 5793435
• Report Number(s): CONF-910403--
• Conference Information: Journal Name: AAPG Bulletin (American Association of Petroleum Geologists); (United States) Journal Volume: 75:3
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700* -- Petroleum-- Economics
Industrial
& Business Aspects
03 NATURAL GAS
030600 -- Natural Gas-- Economic
Industrial
& Business Aspects
BUDGETS
CAPITALIZED COST
COST
ECONOMIC ANALYSIS
ECONOMICS
EXPLORATION
GEOLOGIC DEPOSITS
INDUSTRY
MINERAL RESOURCES
NATURAL GAS DEPOSITS
NATURAL GAS INDUSTRY
OPERATING COST
PERSONNEL
PETROLEUM DEPOSITS
PETROLEUM INDUSTRY
PROFESSIONAL PERSONNEL
RECOMMENDATIONS
RESOURCE DEVELOPMENT
RESOURCES