SPE Economics & Management
Volume 5, Number 1, January 2013, pp. 28-32

Summary

Upstream companies face a series of three discrete, serial probabilities in capturing and commercializing hydrocarbon resource: capture (probability of securing the right to financially participate), exploration (Rose 1992) (probability of discovery), and commerciality (probability of economic viability). This paper focuses on probability of capture (PoC).

Organizations such as defense contractors have used the concept of "probability of win" to help estimate their chances of capturing large government project contracts and to guide their capture planning efforts. The authors have created a four-factor framework specific to the upstream sector of the oil industry. The four factors are probability that the owner will SELL, probability that our company (the buyer) is willing to BUY or make an offer, probability that the buyer's offer will WIN or be chosen as the winner, and probability of reaching final agreement or ALIGNment, including completing final documents. The four factors are multiplied to reach a final probability of capture. This framework takes into account both probabilistic (external) and decision (internal) factors, and can be used at any point during the project assessment. Chevron uses the probabilities of capture and discussion of the components to help understand the adequacy of its business-development efforts and to provide insights to capture teams to help guide them. The authors believe that capture assessment is important, and that this framework is robust and general enough for use in the capture assessment of any upstream opportunity.

© 2013. Society of Petroleum Engineers

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History

• Original manuscript received: 10 July 2012
• Revised manuscript received: 28 November 2012
• Manuscript approved: 10 December 2012
• Published online: 22 January 2013
• Version of record: 1 February 2013