Guest Article


the production profiles. The expected value established on the basis of the three scenarios equals the value of the base case.


3. The cost requirements for the two additional scenarios are estimated by applying the “power rule” as defined in equation (1). This engineering rule-of-thumb describes the effect of changing production volume on the costs associated with a project.


⁄ ⁄ ( ) Where scenario y refers to the base-case scenario and scenario x refers the additional scenario that is developed.


4. A cumulative probability distribution of the portfolio value is developed on the basis of the probability weighted scenarios for the individual projects. Details on the algorithm applied are described by Willigers (2009).


(1)


Figure 1. Screenshot of PalantirPLAN® showing a listing of projects in the left panel, a project Gantt chart in the upper right


panel, a chart showing the cumulative production of the portfolio in the lower right panel and a summary of key value metrics in the inset-window in the lower right corner of the image.


Figure 2. A schematic representation on the workflow used in portfolio valuation using the PalantirSUITE.


Drillers and Dealers :::


::: December 2011 Edition


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