Abstract
The influence of uncertainties in costs, value, success probability, risk tolerance and mandated working interest are evaluated for their impact on assessing probable ranges of uncertainty on risk adjusted value, RAV, using different models. The relative importance of different factors in contributing to the uncertainty in RAV in analyzed, as is the influence of different probability distributions for the intrinsic variables entering the RAV model formulae.
Numerical illustrations indicate how the RAV probabilities depend not only on the model functions (Cozzolino, hyperbolic tangent) used to provide RAV estimates, but also on the intrinsic shapes of the probability distributions from which are drawn input parameter values for Monte Carlo simulations.
In addition, a mandated range of working interest can be addressed as an extra variable contributing to the probabilistic range of RAV; while negative RAV values for a high-cost project can be used to assess the probable buy-out amount one should be prepared to pay depending on corporate risk philosophy.
Also, the procedures illustrate how the relative contributions of scientific factors influence uncertainty of reserve assessments, allowing one to determine where to concentrate effort to improve the ranges of uncertainty.
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