Abstract: A Five Year Look-Back at Exploration Value-Added

Robert M. Otis

Feedback from Chevron's Exploration Evaluation Process, which was used to evaluate all exploration prospects over the period 1990 through 1994, indicates consistency between actual results and pre-drill assessments of geologic risk and estimates of volumetric distributions. This consistency would imply that economic results would be consistent with the those originally used to make decisions to invest. Economic feedback indicates the net value added each year through exploration was within the range expected, given the uncertainties of volumes and geologic risk, and, most importantly, a positive, net value was returned to the company. (+Net value is considered to be +full cost or the difference between the value added through drilling, i.e., commercial discoveries, and th total expenditures on exploration.) However, closer examination showed that different classes of wells within the total program had strikingly different contributions to the overall positive, net value added. Wells drilled in known, producing areas consistently added value each year, while those drilled in frontier or non-producing areas consistently destroyed value. These results are currently being incorporated into an evaluation of the processes used to implement Chevron's international exploration strategy.

AAPG Search and Discovery Article #90951©1996 AAPG International Conference and Exhibition, Caracas, Venezuela