Modified Methodology for Assessing the Economic Efficiency of Geological and Technical Measures in the Oil and Gas Industry, Taking into Account Risks

Development and testing of a modified methodology for assessing the economic efficiency of geological and technical measures in the oil and gas industry, taking into account risks affecting the financial result of activities.
The paper uses discounted cash flow methods, variance analysis based on the weighted moving average and moving variance, the real options method based on the PERT distribution, as well as the expected cash value method (EMV analysis). The calculations were based on data from the Srednebotuobinskoye oil and gas condensate field for a portfolio of 31 geological and technical measures planned for the period 2026-2029.
A modified NPV formula differentiating risk adjustment factors for positive and negative cash flows is proposed. The developed classification of risks of geological and technical measures was taken into account in the context of cause classes with calculated correction factors. Based on PERT modeling of stochastic deviations in oil and gas condensate production, probabilistic outcome scenarios were generated; a portfolio of activities is ranked through EMV analysis. It was shown that excluding risks, the total net present value of the portfolio is overestimated by 1,018 million rubles. (39%), and 11 out of 31 measures that looked effective in the standard DCF assessment, with comprehensive risk accounting, demonstrate a negative value of the expected cash value.
This determines the purpose of this study - to develop and test a modified methodology for investment assessment of geological and technical measures that correctly reflects risks. The proposed methodology makes it possible to eliminate the systematic overestimation of efficiency estimates characteristic of traditional DCF models, as well as reduce the risks of making incorrect management decisions and incurring waste costs. As a result, the financial result is maximized in conditions of limited resources. The methodology is universal and applicable to any oil and gas company that uses key investment performance indicators to make strategic decisions.

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