Risk Types

Mechanical

Depletion

Geologic
Risk Mechanical

Number of abandonments in field/area/formation due to mechanical

failure

Number of mechanical failures within the company

Evidence of company practices

Are you trying new equipment? Technology? Or process?

Relates to learning curve

Best practices
Risk Mechanical

Equipment condition?

Low risk
New high quality tubulars

used, but infrequently

$$
used frequently in corrosive harsh
environment
High risk
Risk Mechanical

Services?

Low risk
high level of expertise in area,
condition of equipment is excellent

$$

old, worn equipment,

High risk
novice crews
Risk Depletion

Number and distance of offset wellsinfill or stepout?

obtain pi best

obtain current pr
worst
Time since discovery or time to abandonment (% recovery of OIP or
GIP)

Impact of drive mechanism on recovery

Previous experience in area

Risk Geologic

Development or exploratory?

Infill or stepout? Existence of trap? Source? Seal?

Sufficient hydrocarbon storage and flow capacity?

fh
kh Range of uncertainty
Sw
Probability
Development area
Probability of EUR from existing wells
Assume proposed well will have similar results
Adjust for pay quality, pressure,
30%

25%

20%
P(x)

15%

10%

5%

0%
0 1-40 41-80 81-120 121-160
EUR range, MBO