Abstract:

Evaluation and selection of prospects to drill is one of the main tasks for the decision-makers of oil companies.Based on the principles of risk analysis and portfolio management, in combination with the Chinese technical criteria of prospect evaluation, a system of evaluation, optimization and decision has been built for prospects to drill.1)A management system of prospects with graphs, images, numbers, forms and texts integrated is established to perform basic data management, outcomes data management, graphics management and document management.2)Considering the geological process of petroleum accumulation and trapping, the discovery probability of hydrocarbon is defined.The general guidelines of evaluation are used to assign probability to each individual geological factor involved with respect to database reliability.At the same time, the distributions of resource amount of a prospect and a group of prospects are simulated and predicted by Monte Carlo, and three methods of reality checks have been provided to help evaluate those predictions.And then the economic characteristics of the resources of the prospects are valued by the conventional discounted cash-flow based on the whole process of petroleum exploration and production.3)'Risk analysis vs.economic value’ method is proposed for selection of the favorable prospects to drill, including prospect screening, wildcat well selecting, prospect ranking by expected return and risked value, and portfolio optimization.4) A post-drill assessment system is set up to monitor the wildcat drilling projects and improve the predictive performance, which consists of four parts: comparison between pre-and post-drill estimates of resource/reserve, comparison between predictive and actual results of key geological factors, calibration of hydrocarbon probability and analysis of the causes for the failure.This system has been successfully applied to decision-making of wildcat drilling programs in different geologic provinces.

Key words: prospect to drill, risk analysis, valuation and optimization, decision of drilling, post-drill assessment