David Laughton Consulting Ltd. Real Asset Risk Analytics
Industrial PictureThe analysis of the selection and management of possible interventions, designed to extend the economic life of an oil field as it nears the end of that life, provides a relatively simple example of using the Banff Taxonomy to compare different methods of estimating asset value.

Do financial markets have anything to tell us
about the design and management of real assets?
Using end-of-life oil field management as an example

A presentation deck is available in .pdf (11.6MB) - here.

Comments, questions and suggestions are all welcome.

This deck supports a presentation that in part reports on the work I have posted on another publications page on the use of Banff taxonomy to compare different methods of estimating asset value.

Slides 1-10, 13-50, 54-55, 62-66 and 164-176 refer to the content of the paper posted there.

The rest of the deck presents DCF and MBV analyses of the value of an oil field that faces declining oil and increasing water production (and thus increasing unit costs). One (or none) of four interventions to extend the economic life of the field may be undertaken. Each intervention would reduce fluids production, water more than oil, thus reducing unit costs. The interventions are classified by their timing (early and late) and size (large and small). Two types of analysis are undertaken, where:

  • all decisions must be taken unconditionally at the time of analysis; or
  • any decision may depend on events occurring until a choice is made.

This work was commissioned by Benoit Couet and Bill Bailey at Schlumberger-Doll Research.

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The photo, taken by Dr. Laughton, is of Moraine Lake, Banff National Park.

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