Customer Challenge
After a significant offshore discovery, an investor faced a challenging trilemma: determining the most beneficial decision to maximize the asset’s value. The options included fast-tracking a two-phase Field Development Plan (FDP), conducting appraisal drilling to confirm the reservoir’s extent and quality beforehand, or acquiring broad-band seismic data to verify the reservoir’s characteristics before proceeding with either fast-tracking or appraisal. To assist the investor in making the most advantageous decision, Vulcania Energy was enlisted to conduct an extensive multi-scenario outcome evaluation and estimate the value of information for each decision scenario.
Solution
To ensure a comprehensive representation of possibilities, Vulcania Energy selected five critical cases (P1, P10, P50, P90, P99) out of 54 scenarios and 500 stochastic realizations. Detailed CAPEX, OPEX, cash flow analysis, NPVs, payback times, ROI, and IRR assessments were subsequently carried out for each FDP option, leading to a total of 33 distinct economic outcomes. Employing Swanson’s rules, each NPV was assigned a chance of occurrence, and a decision tree was structured to evaluate the benefits of acquiring or delaying the investment decision project.
Outcome & Value Delivery
Through the multi-scenario economics modeling approach, it became evident that the fast-track strategy (comprising WHP + up to 10 wells) yielded the most favorable financials and returns, effectively maximizing the asset’s value. Depending on the range of uncertainties considered (P1-P50-P99 vs. P10-P50-P90), Vulcania Energy estimated that the investor could preserve as much as M50$+ of the asset’s value. With a probability exceeding 95% that the fast-track NPV0 is positive and a 93% chance that the fast-track NPV10 surpasses the worst-case appraisal scenario, the accelerated FDP option significantly outweighed the risk of a negative outcome. The outcome evaluation facilitated by Vulcania Energy’s comprehensive analysis allowed the investor to make a well-informed, risk-based decision that optimized the asset’s value and potential returns.
