Role of geologist in estimating value of projects and assets
Conference
·
· AAPG (Am. Assoc. Pet. Geol.) Bull.; (United States)
OSTI ID:6252604
During this period of depressed oil prices, the economic viability of many capital projects has become marginal at best. When considering new drilling or property acquisition, it is essential that a sound financial analysis be performed. Unless the geologist understands the theoretic basis and operational significance of the engineer's role and the financial concepts, the final evaluation will not be as accurate as it should be. Geologists should understand all of the steps in a property evaluation as they no longer can rely on increasing prices to bail out poor investments. Five essential steps in performing a complete property evaluation are (1) geologic review, (2) engineering review, (3) economic premises, (4) development plan, and (5) financial analysis. It is crucial that the geologist and engineer cooperate in describing the physical and chemical character of the reservoir and the trapped fluids. Only in this way can one be satisfied that the estimated future production stream is maximized yet realistic. Oil in the ground is not reserves unless it can be extracted at a profit. The technical and financial personnel will need to cooperate to determine which proposed wells are economically viable and then to rank them. The construction of the best possible development plan requires input from the financial analyst as well as geologists and engineers. When the best possible development plan has been generated, it is then possible to perform the calculations required to determine the most likely value of a property or decide which new well(s) to drill.
- Research Organization:
- CalGeo Resources, Inc., Ventura, CA
- OSTI ID:
- 6252604
- Report Number(s):
- CONF-870606-
- Conference Information:
- Journal Name: AAPG (Am. Assoc. Pet. Geol.) Bull.; (United States) Journal Volume: 71:5
- Country of Publication:
- United States
- Language:
- English
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