Abstract
For a given oilfield in which a company can invest to drill untapped horizons for profit, the influences of value, cost, success probability and corporate risk tolerance provide an optimal working interest that should be taken in the opportunity in order to maximize the risk adjusted value. When several horizons are available, but when the total budget is insufficient to take optimal working interest in each, an analytic procedure is given for optimizing the risk adjusted value of the total portfolio; the relevant working interests are also derived based on a cost exposure constraint. Several numerical illustrations exhibit use of the method under different budget conditions, and with different numbers of available horizons. The result is that the computations of portfolio balancing can be done quickly utilizing the analytical expressions presented here, thereby providing rapid assessments of undrilled horizons and their worth.