Research in Oil Exploration Decision-Making: Estimation of Wildcat Well Outcome Probabilities

The goal of the study described here is to develop objective. quantitative methods for estimating the outcome probabilities of exploratory oil wells. The study employs the 're-experience' approach, in which historical data are used in a manner which attempts to recreate the past. Our past experience, of course, is the principal guide to the future. To appraise present-day oil prospects, however, we must analyze prospects that have been drilled in terms of how these former prospects were interpreted before they were drilled. An analysis of how they are interpreted after they were drilled is an inadequate guide to the future because our hindsight knowledge is superior to our foresight knowledge. Objective calculation of future outcome probabilities, then, requires that we attempt to treat past information in a manner analogous to that in which we must treat present information in forecasting future outcomes.