Transcript Slide 1

Portfolio Analysis Decision Making
With Spotfire® and BlitzPort™
Dr. Stephen M. Rasey, Director and CFO, WiserWays, LLC
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
February 10, 2004 – Spotfire Energy Forum – Houston, TX
Year
Confidence
Slide:1
Spotfire Energy Forum, Feb. 10, 2004
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Investment Opportunities
• Projects where you have an opportunity to invest
capital with estimated, but uncertain, profitable
returns in the future.
• Example here: Exploration Projects
Develop
Produce
Tax
Expl Wells
G&G
Drill?
estimated but Uncertain Success
Fail
Write Off G&G & DH
Write Off G&G
Invest?
Slide:2
NPV = 0
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
The Prize!
NPV >0
Cash Flow >0
Earnings >0
 A Prospect Inventory
• Which Projects have
data good enough to
trust building
Portfolios?
 Data Quality Control
Slide:3
Spotfire Energy Forum, Feb. 10, 2004
Ultimate Reserves MMBOE
Decisions in the Portfolio Management Process
Available Prospects
• What Projects should
we consider for
investment?
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
WiserWays BlitzPort™ Process for Portfolio Analysis
What Strategies create Portfolios that deliver the best results measured by
– Short Term Requirements – Long Term Goals – High Confidence Results
Prospect Inventory
Database
RIGS
CAPEX
PERFORMANCE
Minimum
Acceptable
Results
Economics
Strategies
DECIDE ! ACT
!
+
Make Thousands of Portfolios
Per HOUR!
Slide:4
Spotfire Energy Forum, Feb. 10, 2004
A list of
Projects
funded in the
good
Portfolos.
=
Apply Constraints
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
A Few Good
Portfolios
Building a Candidate Portfolio
More
Prob
Prob
100% MMBOE
100% NPV
ProjectID Project
AcquireName
Success P10L P50
P90H P10L P50
P90H Fail
359
1
0.102
97
145
218
107
156
228
-17
360
1
0.449
97
117
140
198
230
268
-13
361
1
0.083
291
437
655
398
543
762
-10
362
1
0.457
107
128
154
42
63
89
-45
364
1
0.475
75
90
108
70
85
103
-48
365
1
0.220
237
308
401
261
332
424
-67
366
1
0.056
335
586
1026
160
411
851
-9
368
1
0.125
249
374
561
644
829 1105
-21
369
1
0.209
205
266
346
187
249
329
-36
370
1
0.327
244
293
351
383
444
518
-94
371
1
0.126
76
114
171
110
148
205
-4
373
1
0.200
227
295
383
596
725
892
-21
Slide:5
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Confidence of At Least X Reserves
Confidence of > X Reserves
100%
Prob
100% MMBOE
100% NPV
ProjectID Project
Success
Name
P10L P50
P90H P10L P50
P90H Fail
373
0.102
97
145
218
107
156
228
-17
80%
A 1 well Portfolio
60%
WiserWays Confidence Curve
Calculator a tool that will quickly compute
40%
the inverse cumulative probability curve
(a “Confidence Curve”)
of 1 or more wells of a portfolio.
20%
0%
0
200
400
Risked
Mean
Slide:6
Spotfire Energy Forum, Feb. 10, 2004
600
800
1000
1200
MMBOE Reserves
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
1400
373
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Expected
Confidence of At Least X Reserves
Confidence of > X Reserves
100%
Prob
100% MMBOE
100% NPV
ProjectID Project
Success
Name
P10L P50
P90H P10L P50
P90H Fail
373
0.102
97
145
218
107
156
228
-17
371
0.449
97
117
140
198
230
268
-13
370
0.083
291
437
655
398
543
762
-10
80%
A 3 well Portfolio
60%
Note big high
side at low
probability
40%
20%
0%
0
200
400
Risked
Mean
Slide:7
Spotfire Energy Forum, Feb. 10, 2004
600
800
1000
1200
MMBOE Reserves
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
1400
373
371
370
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Expected
Confidence of At Least X Reserves
Confidence of > X Reserves
100%
Prob
100% MMBOE
100% NPV
ProjectID Project
Success
Name
P10L P50
P90H P10L P50
P90H Fail
373
0.102
97
145
218
107
156
228
-17
371
0.449
97
117
140
198
230
268
-13
370
0.083
291
437
655
398
543
762
-10
369
0.457
107
128
154
42
63
89
-45
368
0.475
75
90
108
70
85
103
-48
366
0.220
237
308
401
261
332
424
-67
365
0.056
335
586
1026
160
411
851
-9
364
0.125
249
374
561
644
829 1105
-21
80%
60%
An 8 well Portfolio,
but notice: we also have
each portfolio leading to this
one – 8 portfolios at different
funding levels.
40%
20%
0%
0
200
400
Risked
Mean
Slide:8
Spotfire Energy Forum, Feb. 10, 2004
600
800
1000
1200
MMBOE Reserves
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
1400
373
371
370
369
368
366
365
364
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Expected
Portfolio Risk and Reward
P99
P90
Candidate
Portfolio
Prosp 1
Prosp 2
Prosp 5
Prosp 7
Prosp 8
Prosp 11
Prosp 13
Prosp BB
Prosp 21
Prosp 25
P50
P10
“Confidence
Curve”
Cumulative
Probability
Curve
“Downside
RISK”
How much
you miss the
Reward &
Probability
you miss it.
Mean
Media
“REWARD”
P01
Performance Measure (Reserves, NPV, Prod.)
Slide:9
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
P99
P90
“Confidence
Curve”
Cumulative
Probability
Curve
P50
P10
REWARD
We Plot the Portfolio
as ONE POINT
(Risk, Reward)
Higher is better
“Downside
RISK”
How much
you miss the
Reward &
Probability
you miss it.
Mean
Media
“REWARD
”
P01
Performance Measure (Reserves, NPV, Prod.)
RISK
Lower is better
Slide:10
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Definitions
• Efficient Portfolio:
A portfolio that
provides the
greatest expected
return for a given
level of risk.
• Which is Lowest
Risk for a given
expected return.
Better
(Source: http://www.investorwords.com)
Slide:11
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
• Efficient Frontier:
The line on a riskreward graph
comprised of all
efficient portfolios.
Reward
Definitions
This is the Frontier for
all portfolios with
Capex limited to
under 500 MMUSD.
So the Frontier is
dependent on Budget
and Goals
(Source: http://www.investorwords.com)
Risk
Slide:12
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Confidence of At Least X Reserves
Confidence of > X Reserves
100%
Prob
100% MMBOE
100% NPV
ProjectID Project
Success
Name
P10L P50
P90H P10L P50
P90H Fail
373
0.102
97
145
218
107
156
228
-17
371
0.449
97
117
140
198
230
268
-13
370
0.083
291
437
655
398
543
762
-10
369
0.457
107
128
154
42
63
89
-45
368
0.475
75
90
108
70
85
103
-48
366
0.220
237
308
401
261
332
424
-67
365
0.056
335
586
1026
160
411
851
-9
364
0.125
249
374
561
644
829 1105
-21
80%
60%
A common measure of Portfolio Risk is to
Integrate the Area between the Confidence
Curve and the Mean Value
40%
Call this “Downside Risk”
Plot (Mean, Downside Risk) as an (X,Y) Pair
20%
( 352, 111 )
.
0%
0
200
400
Risked
Mean
Slide:13
Spotfire Energy Forum, Feb. 10, 2004
600
800
1000
1200
MMBOE Reserves
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
1400
373
371
370
369
368
366
365
364
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Expected
Risk Reward Plot for an 8 well Portfolio Trace
(111, 352)
Each stacked curve has its own (X,Y)
Risk Reward point.
400
Reward (Mean MMBOE)
350
300
I call this
cumulative
Portfolio Build a
Portfolio Trace.
250
200
150
Each point is a
Portfolio at
increasing Capex
100
50
0
0
20
40
60
80
100
Downside Risk
Slide:14
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
120
Confidence of At Least X Reserves
Confidence of > X Reserves
100%
Prob
100% MMBOE
100% NPV
ProjectID Project
Success
Name
P10L P50
P90H P10L P50
P90H Fail
373
0.102
97
145
218
107
156
228
-17
371
0.449
97
117
140
198
230
268
-13
370
0.083
291
437
655
398
543
762
-10
369
0.457
107
128
154
42
63
89
-45
368
0.475
75
90
108
70
85
103
-48
366
0.220
237
308
401
261
332
424
-67
365
0.056
335
586
1026
160
411
851
-9
364
0.125
249
374
561
644
829 1105
-21
80%
60%
To do Portfolio Analysis, we
must change which projects
are funded and their working
interests.
40%
20%
0%
0
200
400
Risked
Mean
Slide:15
Spotfire Energy Forum, Feb. 10, 2004
600
800
1000
1200
MMBOE Reserves
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
1400
373
371
370
369
368
366
365
364
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Expected
Confidence of At Least X Reserves
Confidence of > X Reserves
100%
Prob
100% MMBOE
100% NPV
ProjectID Project
Success
Name
P10L P50
P90H P10L P50
P90H Fail
359
0.200
227
295
383
596
725
892
-21
364
0.125
249
374
561
644
829 1105
-21
371
0.449
97
117
140
198
230
268
-13
360
0.126
76
114
171
110
148
205
-4
361
0.327
244
293
351
383
444
518
-94
365
0.056
335
586
1026
160
411
851
-9
368
0.475
75
90
108
70
85
103
-48
373
0.102
97
145
218
107
156
228
-17
80%
60%
We calculate a set of
Confidence curves for a new
portfolio in under 10 seconds!
This allows us to build
THOUSANDS of candidate
portfolios cheaply
40%
20%
0%
0
200
400
600
800
1000
1200
MMBOE Reserves
Slide:16
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
1400
359
364
371
360
361
365
368
373
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Expected
WiserWays BlitzPort™ Confidence Curve Calculator
• The largest version can handle
–
–
–
–
a 5000 Project inventory,
Up to 150 funded at any one portfolio
Up to 3 discrete working interest per project
“Rank and Cut” driven by customizable strategies and goals.
• Each trace calculates has up to 150 Portfolio points.
• Each Portfolio point has FIVE confidence curves at
isotiles (every 5%) written to the database.
• Process time: 15 seconds per trace including writing to
the Database. -- 10 Portfolios per second. (2.4Ghz Pentium IV)
• Confidence Curves calculated directly without simulation
• Available for sale from WiserWays.
Slide:17
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
WiserWays MultiField Confidence Curve Calculator
Superior to Monte Carlo Simulation
• Calculation speed is 20 seconds. Monte Carlo
simulation could take 200 to 2000 seconds.
• Repeatable. No random numbers used.
• Output of Monte Carlo simulation always have a
statistical uncertainty in the result.
MultiField has no such error.
• MultiField automatically writes results to a database.
Most Monte Carlo applications us manual processes to
write to separate spreadsheets.
• Input Distributions are not limited to Log-Normal
assumptions.
Slide:18
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Slide:19
Spotfire Energy Forum, Feb. 10, 2004
0%
20%
40%
60%
80%
100%
0
500
1000
1500
2500
3000
3500
4000
4500
Excel (rotated)
MMBOE Reserves
2000
Confidence of At Least X Reserves
Chontapa-1
Amatan-1
Carpa-101
Kanche-1
Monolito-1
Canton-1
Abolengo-1
Chuktah-201
Luhua-1
Saramako-1
Sakil-1
Balsar-1
Pemal-1
Lankahuasa-DL1
Tsuk-1
Tototl-1
Yaxkin-1
Xotem-1
Ficus-1
PEP-1
Caxtic-1
Sihil DLJK-1
Leek-1
Garito-1
Marro-1
Rama-1
Sihil-5
Jacaranda-1
Tintorera-101
Sihil-8
Chaca-1
Tecolli-1
Mu-1
Chamila-1
Barraco-1
Playas-1
Gueta-1
Sihil DL-7
LankahuasaNorte-1
Chortal-1
Ayaknak-1
Colorada-1
Xihuitl-1
Namaca-1
Holkan-1
Xochime-1
Jaguarin-1
Taklil-1
Mat-1
Peñitas-1
Expected
Confidence Curves in Excel and Spotfire
Spotfire Profile Chart
MMBOE Conf
4500
4000
3500
3000
Portfolios at
400 MMUSD
300 MMUSD
200 MMUSD
2500
2000
1500
1000
500
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Confidence of > X Reserves
MMBOE Risk Reward Trace 1007
Each Portfolio Point on the Risk Reward Plot
Maps to a Confidence curve
MMBOE Conf
BOE DSRisk
2750
2000
2500
1750
2250
2000
1500
1750
1250
1500
1250
1000
1000
750
750
500
500
250
250
0
0
50
100
150
200
C.BOE.DSRisk
Slide:20
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Efficient Frontiers can also
compare trade-offs between conflicting goals
ROCE vs NPV - C.NPV.Mean vs. ROCE-2006w
Here we compare
Return on Capital
Employed in 2006 vs
Portfolio NPV (in
2003)
0.15
Better
0.2
The selected points
(red-blue) are
constrained by
CumCapex between
450 and 515 $MM
0.1
0.05
0
Better
0
500
1000
1500
2000
2500
C.NPV.Mean
Slide:21
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Are there any Companies using this Portfolio System?
¡Sí!
At the April 2002 AAPG Convention, Pemex presented their processes
for Risk Analysis and outlines of their Prospect Inventory. They reported
they had over 1000 prospects.
Brett Edwards of Custer Resources saw a version of this Portfolio
Analysis presentation from the May 2003 London Spotfire User’s
Conference. We made a proposal to Pemex Exploration Executive
Management on July 20. We got an immediate go-ahead.
By October 8 we generated over 1,500,000 portfolios.
Slide:22
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Case Study: Select 2003 Exploration Portfolios
based upon Reserves, Finding Cost,
Development Capex and Production.
Year
Confidence
Slide:23
Spotfire Energy Forum, Feb. 10, 2004
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Out of Millions of Portfolios in the database,
Find 2000-60000 Portfolios to analyze
Slide:24
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
T2S1: 1. Select a Named Set of Portfolios to send to Spotfire
Slide:25
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
T2S1 – Step2: Choose Canned Queries to send to Spotfire
Choose the
Query
Choose a
Spotfire
Template that is
compatible with
the query
Launch the
Query
Choose the Set
of Portfolios to
Spotfire Energy Forum, Feb. 10, 2004
Slide:26 Plot
Use an existing
instance of
Spotfire or create
a new one
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Case Study: Select 2003 Exploration Portfolios
based upon Reserves, Finding Cost,
Development Capex and Production.
Year
Confidence
Slide:27
Spotfire Energy Forum, Feb. 10, 2004
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
MMBOE Mean
NPV Mean $MM
Orientation: What are the Plots in the Display?
MMBOE and NPV vs Cumulative Capex
Capex $MM
Y axis: Mean Portfolio Risked
Net Present Value ($MM 2004)
X axis: Exploration Drill Capex
(cumulative) ($MM)
Color by 90% Confidence NPV
(Low Red, High Green)
Capex $MM
Y axis: Mean Portfolio Reserves
Discovered (MMBOE)
X axis: Exploration Drill Capex
(cumulative) ($MM)
Color by 90% Confidence
MMBOE
(Low Red, High Blue)
Slide:28
Spotfire Energy Forum, Feb. 10, 2004
Having “Binned” the
CumCapex, we show here
only Portfolos between 600
and 700 MM Drill Capex.
We show “deselected”
portfolios in a pale green
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Color by 90% Confidence NPV
(Low Red, High Green)
ROCE 2007
Y axis: Return on Capital
Employed in 2007
X axis: Mean Portfolio Risked Net
Present Value ($MM 2004)
Gas Prod BCF
2007
Orientation: What are the Plots in the Display?
ROCE-2007 vs NPV; 2007 Gas Production vs Oil Production
NPV Mean
Oil Prod
MMBO 2007
Y axis: Mean Gas Production in
2007 (BCF/yr)
X axis: Mean Liquid Production
in 2007 (MMBO/yr)
Color by 90% Confidence NPV
(Low Red, High Green)
Slide:29
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Orientation: What are the Plots in the Display?
Finding Cost vs Capex; Finding Cost vs Development Cost
Y axis: Total Finding Cost per
BOE of Reserves. ($/BOE)
X axis: Mean Risked
Development Cost per BOE of
Reserves ($/BOE)
Color by 90% Confidence NPV
(Low Red, High Green)
Slide:30
Spotfire Energy Forum, Feb. 10, 2004
X axis: Exploration Drill Capex
(cumulative) ($MM)
Color by 90% Confidence NPV
(Low Red, High Green)
Finding Cost
$/BOE
The left one shows a potential
trade off between Exploration
Finding cost per BOE and the
Development Cost per BOE
Finding Cost
$/BOE
The Y-axis of
these two plots are the same.
Y axis: Total Finding Cost per
BOE of Reserves. ($/BOE)
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Orientation: What are the Plots in the Display?
Cash Flow by Year; NPV Confidence
A Cash Flow Profile Plot:
Y axis: Cash Flow After Tax ($MM)
X axis: Year
Color by NPV mean
(Low: Cyan, High: Blue)
Cash Flow AT $MM
NPV $MM
Note: in a Profile Plot, one
Portfolio shows up as a LINE.
The NPV Confidence Curve
Y axis: Risked NPV ($MM 2004)
X axis: The Confidence level that
we will exceed the Y value.
Year
Confidence
Slide:31
Spotfire Energy Forum, Feb. 10, 2004
Color is constant pale blue.
Deselected portfolios are NOT
shown
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Gas Prod BCF
2007
(Ctrl-R)
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 1: Display all the available Portfolios.
Year
Confidence
Slide:32
Spotfire Energy Forum, Feb. 10, 2004
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 2: Apply a minimum Mean Reserves Required.
Year
Confidence
Slide:33
Spotfire Energy Forum, Feb. 10, 2004
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Gas Prod BCF
2007
YES.
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 3: If we require portfolios with a
99% Confidence of >0 NPV, are there good portfolios?
Year
Confidence
Slide:34
Spotfire Energy Forum, Feb. 10, 2004
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Gas Prod BCF
2007
YES.
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 3: If we require portfolios with a
99% Confidence of >0 NPV, are there good portfolios?
Year
Confidence
Slide:35
Spotfire Energy Forum, Feb. 10, 2004
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 4: Require that 99% Confidence of NPV >0
Year
Confidence
Slide:36
Spotfire Energy Forum, Feb. 10, 2004
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
MMBOE Mean
Step 4: Require that 99% Confidence of NPV >0
Applying a constraint to a measure at a specific
confidence level is hard to impossible in most
optimization processes.
The BlitzPort approach using Spotfire allows us
to set and adjust a NON-LINEAR constraint
(NPV.C99>0) very quickly and easily.
Finding Cost
$/BOE
Finding Cost
$/BOE
Cash Flow AT $MM
NPV $MM
Capex $MM
Year
Confidence
Slide:37
Spotfire Energy Forum, Feb. 10, 2004
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 5: Top quartile performance means
Exploration Finding Cost must be <= 1.25
Year
Confidence
Slide:38
Spotfire Energy Forum, Feb. 10, 2004
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 5: Top quartile performance means
Exploration Finding Cost must be <= 1.25
Year
Confidence
Dev Cost $/BOE
We have a Portfolio that spends $400 MM (Drill
cost) that meets these requirements so far:
Slide:39
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Mean Gas Production (BCF by Year)
Cumulative Mean After Tax Cash Flow
($MM by year)
Cash Flow AT $MM
Cumul Cash Flow
AT $MM
Year
Slide:40
Spotfire Energy Forum, Feb. 10, 2004
Year
Year
Mean BCF/Yr
We look at some new plots (overlaid
on the other profile plots)
Mean Oil Production (MMBO by Year)
Mean MMBO/Yr
Step 6: Place Limits on
Total Negative Cash Flow
Year
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Cumul Cash Flow
AT $MM
Year
Slide:41
Spotfire Energy Forum, Feb. 10, 2004
Year
Mean BCF/Yr
Suppose we limit mean cumulative
Cash Flow to be no worse than
$1500 MM
Mean MMBO/Yr
Step 6: Place Limits on
Total Negative Cash Flow
Year
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Cumul Cash Flow
AT $MM
Year
Slide:42
Spotfire Energy Forum, Feb. 10, 2004
Year
Mean BCF/Yr
Suppose we limit mean cumulative
Cash Flow to be no worse than
$-1500 MM
OUCH! That does not leave us many
options. Let’s relax it to $-2000
Mean MMBO/Yr
Step 6: Place Limits on
Total Negative Cash Flow
Year
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Cumul Cash Flow
AT $MM
Year
Slide:43
Spotfire Energy Forum, Feb. 10, 2004
Year
Mean BCF/Yr
That’s better. We may have to tweak
some schedules later, but good
enough to continue.
Now constrain Year 2006 to >-2500
Mean MMBO/Yr
Step 6: Place Limits on
Total Negative Cash Flow
Year
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Cumul Cash Flow
AT $MM
Year
Slide:44
Spotfire Energy Forum, Feb. 10, 2004
Year
Mean BCF/Yr
Good
Let’s also insist that the mean Cash
Flow in 2007 is Positive.
Mean MMBO/Yr
Step 6: Place Limits on
Total Negative Cash Flow
Year
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Mean MMBO/Yr
Year
Capex $MM
Cumul Cash Flow
AT $MM
Year
Mean BCF/Yr
MMBOE Mean
NPV Mean $MM
Step 6: Place Limits on
Total Negative Cash Flow
Year
Now zoom into some of the plots to
see the portfolios in greater detail.
Also, lets establish minimums on 2007
Production
Slide:45
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 7: Zoomed in.
Choose Best 2007 Production requirements
Year
Confidence
Dev Cost $/BOE
Of the Portfolios that are left, we
choose the best half in terms of near
term production: 2007 Oil and Gas
Slide:46
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 7: Zoomed in.
Choose Best 2007 Production requirements
Year
Confidence
Dev Cost $/BOE
Select These (Ctrl-M)
Now choose the best half for
NPV vs Capex.
Slide:47
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 8: Zoomed in.
Choose Best half of NPV vs Capex
Year
Confidence
Dev Cost $/BOE
Now choose the best half for
NPV vs Capex.
Slide:48
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
Cash Flow AT $MM
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 8: Zoomed in.
Choose Best half of NPV vs Capex
Year
Confidence
Dev Cost $/BOE
Select These portfolios (Ctrl-M)
Slide:49
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Confidence
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
MMBOE
Confidence
Gas Prod BCF
2007
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 9: Zoomed in.
Choose Best half of Reserves vs Capex
Dev Cost $/BOE
Choose the best half of these (Lowest
Capex for the same Reserves.
We are show Reserve confidence.
Slide:50
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Confidence
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
MMBOE
Confidence
Gas Prod BCF
2007
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 9: Zoomed in.
Choose Best half of Reserves vs Capex
Dev Cost $/BOE
Select these.
Finally of the remaining, choose the
best ROCE.
Slide:51
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Confidence
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
MMBOE
Confidence
Gas Prod BCF
2007
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 10: Zoomed in.
Choose Best half of ROCE vs NPV
Dev Cost $/BOE
Select these.
.
Slide:52
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Confidence
Spotfire Energy Forum, Feb. 10, 2004
Gas Prod BCF
2007
Oil Prod
MMBO 2007
NPV Mean
Finding Cost
$/BOE
NPV $MM
MMBOE
Confidence
Slide:53
ROCE 2007
Capex $MM
Capex $MM
Finding Cost
$/BOE
MMBOE Mean
NPV Mean $MM
Step 11: Zoomed in.
Choose the Best Portfolios at different capex levels
Dev Cost $/BOE
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Capex $MM
Step 12: Use the Project Census tool find which Projects
are funded in the selected portfolios.
Expl. Capex where Opportunity was funded
By Portfolio Trace
635
547
501
465
423
C.NPV.Mean
1745
1624
1610
1514
1435
Capex:
Order Desc
Oport
Clave
Oportunidad
578 Jackson
561 Williams
498 Gehrig
422 Rickey
564 Chance
541 Appling
440 Johnson
446 Yount
590 Clemens
556 Aaron
512 Clemente
429 Hornsby
490 Palmer
436 Marichal
557 Griffey, Jr.
563 Bench
546 Smith
492 Hubbell
520 Alexander
479 Cobb
582 Robinson
412 DiMaggio
464 Kaline
508 Reggie
475 Fingers
569 Heilmann
481 Young
601 Waner
571 Dickey
Count
4
4
4
4
3
3
3
3
3
3
3
3
3
2
2
2
2
2
2
2
2
2
2
2
2
2
2
1
1
709
8
47
269
293
9
27
145
292
331
283
394
486
623
54
58
595
5
65
129
200
6
173
198
614
5
65
174
298
614
5
65
174
298
45
111
220
212
287
45
111
220
212
287
360
349
454
77
224
199
286
302
576
98
88
215
300
222
250
415
97
245
97
245
241
407
387
319
407
387
319
388
445
461
555
8
67
153
156
9
74
445
351
323
400
547
569
501
572
501
572
365
620
231
258
We will zoom into this part of the table
to describe it in detail.
Slide:54
Spotfire Energy Forum, Feb. 10, 2004
Capex:
Order Desc
C.NPV.Mean
Oport
Clave
Oportunidad
Count
518 Lajoie
1
517 Terry
1
528 Collins
1
600 Brock
1
585 Simmons
1
480 Schmidt
1
411 Cochrane
1
567 Boggs
1
530 Berra
1
410 Seaver
1
598 Ripken, Jr.
1
419 Mize
1
455 Baker
1
607 Wagner
1
510 Plank
1
602 Faber
1
448 Ryan
1
504 Stargell
1
478 Eckersley
1
418 Ford
1
507 Campanella
1
499 Yastrzemski
1
606 Gibson
1
608 Foxx
1
450 Ott
1
548 Paige
1
570 Gwynn
1
0
0
By Portfolio Trace
635
547
1745
1624
709
595
501
1610
614
330
465
1514
614
330
423
1435
555
355
395
423
426
438
438
462
479
462
479
485
485
492
492
450
480
491
491
495
525
525
526
530
542
542
567
568
568
596
611
623
635
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
568
What the Project Census Drill down tells us….
The Census is an Excel workbook with VBA
NPV vs Capex subroutines that reads which records are marked in
Spotfire.
CumCapex vs.
It then creates an SQL query to retrieve the funded
projects for those portfolios, organizes and formats
the report.
Expl. Capex where Opportunity was funded
By Portfolio Trace
635
547
C.NPV.Mean
1745
1624
Capex:
Order Desc
Oport
Clave
Oportunidad
578 Jackson
561 Williams
498 Gehrig
422 Rickey
564 Chance
541 Appling
440 Johnson
446 Yount
590 Clemens
556 Aaron
512 Clemente
429 Hornsby
490 Palmer
436 Marichal
557 Griffey, Jr.
563 Bench
546 Smith
Slide:55
Count
4
4
4
4
3
3
3
3
3
3
3
3
3
2
2
2
2
709
8
47
269
293
9
27
145
292
331
283
394
486
623
54
58
595
5
65
129
200
6
173
198
501
1610
465
1514
614
5
65
174
298
614
5
65
174
298
45
111
220
212
287
45
111
220
212
287
97
245
97
245
360
349
454
77
423
1435
555
8
67
153
156
9
74
224
199
286
302
576
1800
1700
1600
1500
709
614
595
614
555
1400
1300
1200
1100
98
88
215
Spotfire Energy Forum, Feb. 10, 2004
CumCapex
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
What the Project Census Drill down tells us….
Portfolios (by Trace Number and Capex)
Ordered by NPV decending left to right
Expl. Capex where Opportunity was funded
By Portfolio Trace
635
547
501
465
423
C.NPV.Mean
1745
1624
1610
1514
1435
Capex:
Order Desc
Oport
Clave
Oportunidad
578 Jackson
561 Williams
498 Gehrig
422 Rickey
564 Chance
541 Appling
440 Johnson
446 Yount
590 Clemens
556 Aaron
512 Clemente
429 Hornsby
490 Palmer
436 Marichal
557 Griffey, Jr.
563 Bench
546 Smith
Slide:56
Count
4
4
4
4
3
3
3
3
3
3
3
3
3
2
2
2
2
709
8
47
269
293
9
27
145
292
331
283
394
486
623
54
58
595
5
65
129
200
6
173
198
614
5
65
174
298
614
5
65
174
298
45
111
220
212
287
45
111
220
212
287
360
349
454
77
555
8
67
153
156
9
74
224
199
286
302
576
98
88
215
Spotfire Energy Forum, Feb. 10, 2004
97
245
97
245
Portfolio Capex
NPV of Portfolio
Trace Number.
The 5 Portfolio points
come from 4 Portfolio
Traces.
Trace 614 was picked
at two Portfolios with
different Capex Levels.
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
What the Project Census Drill down tells us….
Portfolios (by Trace Number and Capex)
Ordered by NPV decending left to right
Expl. Capex where Opportunity was funded
By Portfolio Trace
635
547
501
465
423
C.NPV.Mean
1745
1624
1610
1514
1435
Capex:
Order Desc
Oport
Clave
Oportunidad
578 Jackson
561 Williams
498 Gehrig
422 Rickey
564 Chance
541 Appling
440 Johnson
446 Yount
590 Clemens
556 Aaron
512 Clemente
429 Hornsby
490 Palmer
436 Marichal
557 Griffey, Jr.
563 Bench
546 Smith
Slide:57
Count
4
4
4
4
3
3
3
3
3
3
3
3
3
2
2
2
2
709
8
47
269
293
9
27
145
292
331
283
394
486
623
54
58
595
5
65
129
200
6
173
198
614
5
65
174
298
614
5
65
174
298
45
111
220
212
287
45
111
220
212
287
360
349
454
77
555
8
67
153
156
9
74
224
199
286
302
576
98
88
215
Spotfire Energy Forum, Feb. 10, 2004
97
245
97
245
Projects are in Rows
The cells show the
Capex level where that
Project is funded in
that Portfolio.
The Lower the number,
the stronger the
project.
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
The Higher up in the list,
the better the project helps meat your goals….
Portfolios (by Trace Number and Capex)
Ordered by NPV decending left to right
Expl. Capex where Opportunity was funded
By Portfolio Trace
635
547
501
465
423
C.NPV.Mean
1745
1624
1610
1514
1435
Capex:
Order Desc
Oport
Clave
Oportunidad
578 Jackson
561 Williams
498 Gehrig
422 Rickey
564 Chance
541 Appling
440 Johnson
446 Yount
590 Clemens
556 Aaron
512 Clemente
429 Hornsby
490 Palmer
436 Marichal
557 Griffey, Jr.
563 Bench
546 Smith
Slide:58
Count
4
4
4
4
3
3
3
3
3
3
3
3
3
2
2
2
2
709
8
47
269
293
9
27
145
292
331
283
394
486
623
54
58
595
5
65
129
200
6
173
198
614
5
65
174
298
614
5
65
174
298
45
111
220
212
287
45
111
220
212
287
360
349
454
77
555
8
67
153
156
9
74
224
199
286
302
576
The Projects are
sorted first by the
Number of Traces that
Fund the project.
Next by the average
Capex level that
funded the project.
These 4 projects were
funded in all four
Traces.
These 9 Projects were
funded in 3 of 4 traces.
98
88
215
Spotfire Energy Forum, Feb. 10, 2004
97
245
97
245
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
The Higher up in the list,
the better the project helps meat your goals….
Portfolios (by Trace Number and Capex)
Different Capex Levels.
Expl. Capex where Opportunity was funded
By Portfolio Trace
635
547
501
465
423
C.NPV.Mean
1745
1624
1610
1514
1435
Capex:
Order Desc
Oport
Clave
Oportunidad
578 Jackson
561 Williams
498 Gehrig
422 Rickey
564 Chance
541 Appling
440 Johnson
446 Yount
590 Clemens
556 Aaron
512 Clemente
429 Hornsby
490 Palmer
436 Marichal
557 Griffey, Jr.
563 Bench
546 Smith
Slide:59
Count
4
4
4
4
3
3
3
3
3
3
3
3
3
2
2
2
2
709
8
47
269
293
9
27
145
292
331
283
394
486
623
54
58
595
5
65
129
200
6
173
198
614
5
65
174
298
614
5
65
174
298
45
111
220
212
287
45
111
220
212
287
97
245
97
245
360
349
454
77
555
8
67
153
156
9
74
224
199
286
302
576
98
88
215
Spotfire Energy Forum, Feb. 10, 2004
A Grey number means
that the project was
funded in a Trace
higher than the Capex
for that selected
portfolo
It is useful when
comparing portfolios
of different capex
levels.
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Spotfire Sheds Light on a Complicated Problem
• Woolsey’s 1st Law
– “A Manager would rather live with a problem he
cannot solve than accept a solution he does not
understand.”
• Woolsey’s 2nd Law
– “A Manager does not want, and will not pay for, an
OPTIMUM solution. He wants to be better off now,
as quickly and as cheaply as possible.
*Dr. R. E. D. Woolsey, Professor of OR/MS, Colorado School of Mines
Woolsey & Swanson, Operations Research for Immediate Applications, Harper & Row, 1974.
Slide:60
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Spotfire Communicates Portfolio Decisions.
How and where the Portfolios are built matters not.
BlitzPort MultiField
Confidence of At Least X Reserves
Confidence of > X Reserves
100%
80%
60%
40%
20%
0%
0
200
400
600
800
MMBOE Reserves
1000
1200
1400
373
371
370
369
368
366
365
364
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Expected
Management
Created Portfolios
Integer/Linear
Programing Portfolio
Optimizer
Slide:61
Spotfire Energy Forum, Feb. 10, 2004
Prospect and Portfolio
Database
NPV vs Capex - CumCapex
vs. C.NPV.Mean
- CumCapex
1800
614
1600
1400
1200
1000
800
600
400
200
0
671
CumCapex
Once the Portfolios are stored in the
database, Spotfire can compare them all
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
WiserWays-Spotfire Portfolio Analysis Process
• Define the population of potential Projects to fund
• Define a set of Strategies for funding candidate portfolios.
• Use an automated process to generate thousands of
candidate portfolios according to the different strategies.
• Load the candidate Portfolios into Spotfire
• Apply/change constraints by sliding Spotfire query devices.
• Select many good portfolios that are close to the Efficient
Frontiers of many different measures.
• Find the projects most often funded in these good portfolios.
If happy with plan, Fund these projects, Execute Plan
• Change and Negotiate Goals.
• Refine Strategies.
Slide:62
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Goals for Improving the Portfolio Management process
To “trade-off”
one goal with
another
ROCE vs NPV - C.NPV.Mean vs. ROCE-2006w
0.2
0.15
Better
• To know
which
portfolios are
superior to
other in the
Performance
measures that
matter.
0.1
0.05
0
Better
0
500
1000
C.NPV.Mean
Slide:63
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
1500
2000
2500
Goals for Improving the Portfolio Management process
• To Understand,
Predict, and
communicate the
range of possible
outcomes of any
funded Portfolio
This Portfolio has a
5% Probability for > 2000 MMBOE
65% Probability for > 1000 MMBOE
90% Probability for > 750 MMBOE
A different Portfolio has a
10% Probability for > 2000 MMBOE
45% Probability for > 1000 MMBOE
65% Probability for > 750 MMBOE
Slide:64
Spotfire Energy Forum, Feb. 10, 2004
MMBOE Conf
3000
2500
2000
1500
1000
500
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
How the proposed project meets these goals
• The MultiField Portfolio Confidence Curve Calculator
can quickly generate the range of results for candidate
portfolios quickly.
Confidence of At Least X Reserves
Confidence of > X Reserves
100%
80%
60%
40%
20%
0%
0
500
1000
1500
2000
2500
3000
3500
MMBOE Reserves
Slide:65
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
4000
4500
Carpa-101
Kanche-1
Jacaranda-1
Sihil-8
Chaca-1
Tecolli-1
Sihil DL-7
Ayaknak-1
Xihuitl-1
Abolengo-1
Oxtitan-1
Hisopo-1
Saramako-1
Xaxamani-1
Tlahuan-1
Lankahuasa-DL1
Chumate-1
Chichini-1
Ayoc-1
Pet-1
Niquita-1
Ribereño-101
Kaanakil-1
Yah-1
Jachim-1
Hux-1
Chechem-1
Recchia-1
Yuca-1
Pokoch-1
Baay-1
Yuksan-1
Yaxkin-1
Yuk-1
Salmonete-1
Chulux-1
Maximino-1
Tema-1
Matzat-1
Ficus-1
Mecatl-1
Coztic-1
Ixpiyut-1
Iski-1
Tiki-1
Saurio-1
Chizam-1
Sekna-1
Ciguis-1
Bolontiku Dl-1
Expected
Series52
• To Reduce the time
to assemble,
calculate and
analyze the
candidate portfolios
Reward
Goals for Improving the Portfolio Management process
• To increase the
number of candidate
portfolios that can be
considered within a
given amount of time,
thereby exploring
more options.
Risk
Slide:66
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
BlitzPort and Spotfire
• By making VISIBLE
the potential funding
opportunities,
DECISION MAKERS
can see available
alternatives and the
degree of difference
(or equivalence)
between them.
• You can change your constraints in the conference room
for real-time turnaround.
• Understandable. Quick. Easy. Inexpensive.
Slide:67
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
Thanks to
• Spotfire
– For the opportunity to speak here and for the
work we have done together since 2001.
• Adán Oviedo Pérez, Subdirector,
Exploración Vicepresident, Pemex
• Brett Edwards, President, Custer
Resources
Slide:68
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)
And Thank You for your attention.
• This presentation will be available for download at
http://wiserways.com
You can do the job many ways….
Do it better with
Dr. Stephen M. Rasey
WiserWays, LLC
Associate of Custer Resources
Houston, TX
http://wiserways.com
[email protected]
713-353-0139
Slide:69
Spotfire Energy Forum, Feb. 10, 2004
© 2004, Stephen M. Rasey, WiserWays, LLC
Some Rights Reserved (Creative Commons At, NC, SA)