Investment optimization in oil and gas plays

Abstract

Abstract A model was established to illustrate the relation between cumulative exploration investment and growth of total proved reserves on the basis of growth model of total proved reserves. The Data Envelopment Analysis (DEA) theory was used to give an optimal solution of the function of constructed productivity and development investment, and, together with an exponential oil & gas operational cost function, a model of the relation between development investment and oil & gas output was deduced. Based on the models of investment-exploration-development relations, and considering maximum profit, yield component, reserves-to-output ratio and production rate, an optimal function of multi-stage investment was established, which can result in multi-stage investment structure under given conditions with genetic algorithms. The method can provide scientific basis for oil companies to make a long-term strategic program and investment plan in oil and gas exploration and development, decrease the subjective blindness in the investment and bring about a reasonable and orderly exploration and development of oil and gas resources