Decision and Risk Analysis (PBM01)


DATE	LOCATION	FEES		REGISTRATION


2011	tba		tba

Instructor

Reidar Bratvold

Course Level: Intermediate

Strategic and tactical decisions about your company’s future – lease or company acquisitions, oil and gas field developments, selecting drilling locations, initiating seismic and reservoir studies, R&D investments – are often complex and have highly uncertain outcomes and consequences. Acquiring decision quality in such situations means making properly framed decision with clear alternatives, appropriate information, considered preferences, and impeccable logic. You know quality has been achieved when you have clarity of action. Sometimes clarity of action is obtained immediately, for example, when you are asked whether you would like a free, no-strings-attached $100 bill. However, in most situations in the E&P world we begin with “confusion.” Should we acquire the right to explore a new area with highly uncertain reserves? How much should we be willing to pay for more information? What’s the value of building extra flexibility into a development? Should we continue or terminate a R&D program? How should we balance the corporate portfolio of investments? What share of a risky project is right for our company? What partners should we seek?

The objective is to introduce the participants to techniques and methodologies that clarify thinking and choice in complex petroleum decision situations as well as to avoid the pitfalls of intuitive decision making. The course participants will find the concepts and techniques stimulating and beneficial - enabling them to apply risk and decision making concepts to their jobs . . . immediately.

The course format combines lectures, group work, and individual study. A number of examples and practical decision problems will be addressed – both in the lectures as well as in the practice sessions. Microsoft Excel will be used for many of the examples and exercises.

OUTLINE

Decisions under uncertainty
Decision quality
Uncertainty and probability
Attitudes towards risk taking
Decision structuring
- Decision trees
- Influence diagrams
Dealing with uncertainty - Value of Information and Value of Flexibility
Describing uncertainty – Monte Carlo simulation
Behavioral challenges in decision making

WHO SHOULD ATTEND
The techniques presented in this course are applicable to all aspects of petroleum exploration and production - prospect evaluation, resource allocation, diversification, risk sharing, and corporate planning. The course is designed for anyone involved in asset valuation: executives, managers or technical experts; producers or users of valuations. It is suitable for people with a range of technical experience, from those who have not been exposed to advanced valuation methods to those who may have explored the use of the latest in valuation ideas.

COURSE VENUE

INSTRUCTOR

Reidar Bratvold