Prospective Resources Assessments
Background and Approach
DeGolyer and MacNaughton is an industry leader in the evaluation of prospective resources.
D&M has prepared prospective resources reports that have been used for multi-billion dollar initial public offerings (Rosneft, OGX, HRT, and Cobalt), as guides for projects worldwide for national oil companies, privatizations, certifications, financial consortiums, and as substantiation for loans totaling billions of dollars. D&M has a high level of expertise in the valuation of prospective resources, and this has led D&M to make presentations and seminars to explorationists, national oil companies, and investors around the world. Moreover, D&M has trained multinational company staff in the usage of the probabilistic resources approach in evaluating and ranking potential accumulations and newly discovered opportunities.
The firm uses the latest technology, tools, and industry standard methods to quantify and evaluate the risk and uncertainty of prospective resources within the new Society of Petroleum Engineers’ Petroleum Resources Management System (PRMS) and NI 51-101 guidelines/framework. These analyses have varied in scope from large portfolio level appraisals encompassing many countries and basins to volumetric estimates of prospect(s) in one license block. Critical to these types of analyses is the objective quantification of the various geologic chance factors (trap, reservoir, migration, and source) and range of volumetric uncertainty. Moreover, an understanding of the engineering and economic chance factors is crucial to developing an integrated analysis that is consistent with the PRMS and NI 51-101 guidelines. D&M is frequently involved in these types of estimations, and has recently quantified the geologic and/or economic chance factors and volumetric uncertainties associated with the probabilistic estimation of potential hydrocarbon volumes and values for projects in more than 100 countries.
SYPHER - SYstematic Prospective Hydrocarbon Evaluation Routine
D&M currently uses @RISK and SYPHER to develop probabilistic models for potential volumes and potential value of prospects and accumulations. @RISK is a decision tool software package provided by the Palisade Corporation.
SYPHER is proprietary software developed by D&M. It probabilistically integrates all phases of the prospective resources appraisal process: potential volumes, geologic and economic chance factors, minimum economic field size, potential development plans, capex-opex-price uncertainty, and discounted cash flows associated with probabilistically derived potential production profiles.
SYPHER inputs include potential rock and fluid properties, probabilistic prospective resources volumes, various chance factors, potential development plans, potential cost scheduling, and the relevant fiscal regime.
These inputs are used to simulate potential reservoir performance outputting potential production profiles, monthly cash flows, and recovery factor ranges predicated on actual rock and fluid physics via “full-field” simulation. The D&M methodology is a unique fully integrated probabilistic approach.
D&M reports tabulate several technical and economic metrics:
- Probabilistic geologic and economic chance factor assessment
- Probabilistic volumes estimations
- Probabilistic portfolio appraisal estimations (fully risked potential present worth at various discount factors)
For appraisal estimations, the D&M clients are provided with a holistic product – done probabilistically, and based on full-field simulation, encompassing critical input metric variance. Results are tabulated and organized and defined specifically to be compliant with PRMS, NI 51-101 guidelines, Competent Person's Reports (CPRs), as well as for filings with various stock exchanges: London Stock Exchange – Alternative Investment Market (AIM), Toronto Stock Exchange (TSX), Australian Securities Exchange (ASX), Singapore Stock Exchange (SGX), Hong Kong Stock Exchange (HKEX), and the São Paulo Stock Exchange (BOVESPA).
D&M is unique in that the firm has extensive global experience gained from evaluating resources portfolios in more than 100 countries. The D&M prospective resources reports are recognized by global financial institutions and have set a high standard of quality for such reporting. The D&M reports are unique in that all phases and stages of the work are probabilistic in approach, covering geology, engineering and economics. The reports are preferred by the financial and petroleum industry because of consistency in approach, application of unique tools and experienced exploration staff, technical objectivity, and compliant reporting formats.