Due diligence responsibilities of the professional geologist
- 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-; CODEN: AABUD; TRN: 92-007558
- Journal Information:
- AAPG Bulletin (American Association of Petroleum Geologists); (United States), Vol. 75:3; Conference: Annual meeting of the American Association of Petroleum Geologists (AAPG), Dallas, TX (United States), 7-10 Apr 1991; ISSN 0149-1423
- Country of Publication:
- United States
- Language:
- English
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