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Oil & Gas — Volumes & Economics

From a prospect to a P90 reserve estimate, EUR, expected value and an AFE cost range — all as distributions, not point estimates

Overview

Five models for the subsurface and the money that follows it. Unlike the rest of Flexa Analytics these are parameter-driven: you do not drop a table into the visual. You describe each input as a distribution in the form and the simulation does the rest, which is what you want when the well has not been drilled yet and there is no history to sample.

Answer the question: "Every number in this AFE is an estimate with a range behind it. What does the range of outcomes actually look like, and which input is driving it?"

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No table required. Nothing needs to be dragged into Rows, Columns or Values. Pick the problem type, open Edit Parameters, and every field arrives with a working default — Run produces a result on the first click. Add data later if you want the defaults replaced by your own numbers.

The five models on this page

Model What it computes Key inputs
Reserves (P10/P50/P90)Volumetric oil-in-place and recoverable reserves from rock and fluid uncertaintyArea · Thickness · Porosity · Sw · NTG · Bo · RF
Project Economics (NPV/IRR)Cash-flow model over a production profile — NPV, IRR, payback, breakeven pricePrice · Capex · Opex · Production profile · Discount
Decline Curve (EUR)Arps decline to estimated ultimate recoveryInitial rate qi · Decline Di · Arps b · Horizon
Exploration EMVExpected monetary value of a prospect — chance of success against dry-hole costNPV if success · Dry-hole cost · Probability of success
Drilling AFEWell cost from planned days, day rate and non-productive timePlanned days · Day rate · NPT days · Flat cost

Reserves (P10/P50/P90)

The classic volumetric calculation, run ten thousand times. Each of the seven rock and fluid properties is a distribution rather than a single number, so the output is a reserves range instead of a figure that pretends the subsurface is known.

Default parameters:

  • ▸Area:PERT(400, 500, 650)
  • ▸Thickness (gross pay):PERT(20, 30, 45)
  • ▸Porosity:Triangular(0.15, 0.20, 0.28)
  • ▸Water saturation:Uniform(0.20, 0.40)
  • ▸Net-to-Gross:Uniform(0.70, 1.0)
  • ▸FVF (Bo):Uniform(1.1, 1.3)
  • ▸Recovery factor:PERT(0.20, 0.35, 0.50)
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Try this: Widen porosity and watch the tornado — on most prospects it overtakes area as the dominant driver, which is an argument for spending the next dollar on petrophysics rather than seismic.
Reserves simulation showing P10, P50 and P90 volumes with a tornado chart

Project Economics (NPV/IRR)

Takes a production profile and prices it. Reports the probability the project makes money at all, the breakeven price that puts NPV at zero, and the NPV range — the three numbers an investment committee actually asks for.

Default parameters:

  • ▸Price:Triangular(6, 10, 16)
  • ▸Capex:PERT(800, 1000, 1300)
  • ▸Opex fixed:Triangular(60, 100, 140)
  • ▸Opex variable (per unit):Uniform(0.5, 1.5)
  • ▸Production multiplier:PERT(0.7, 1.0, 1.2)
  • ▸Production profile:120, 100, 80, 60
  • ▸Discount / Escalation / Royalty / Tax:0.10 / 0 / 0 / 0
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Try this: Compare the breakeven price against your planning price rather than reading NPV alone. A project with a healthy expected NPV and a breakeven above your price deck is a bet on prices, not on the reservoir.
Project Economics simulation showing expected NPV, IRR, breakeven price and the NPV distribution

Decline Curve (EUR)

Projects a well forward from its initial rate using Arps decline, with the b exponent as a distribution. That last part matters: b decides whether the tail is exponential or hyperbolic, and it is where most of the disagreement about EUR lives.

Default parameters:

  • ▸Initial rate (qi):PERT(800, 1000, 1400)
  • ▸Decline (Di):Triangular(0.08, 0.12, 0.20)
  • ▸Arps b:Triangular(0, 0.5, 1) — hyperbolic: (1.0, 1.5, 2.0)
  • ▸Horizon:15 periods
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Try this: Run it once with b in (0, 0.5, 1) and again with (1.0, 1.5, 2.0). The EUR range moves further than most people expect from one exponent — which is the point.
Decline Curve simulation showing the EUR distribution from Arps decline parameters

Exploration EMV

The drill-or-drop calculation. Weighs the value if the well works against the cost if it does not, and reports both the expected value and the probability the outcome is positive at all.

Default parameters:

  • ▸NPV if success:PERT(50, 200, 600)
  • ▸Dry-hole cost:PERT(20, 40, 80)
  • ▸Probability of success:0.30
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Try this: Drop the probability of success to 0.15 and EMV turns negative. Finding the probability at which it crosses zero tells you how much geological confidence the prospect actually requires.
Exploration EMV simulation showing expected monetary value and probability of a positive outcome

Drilling AFE

An AFE that admits trouble happens. Non-productive time is its own distribution rather than a flat contingency percentage, so the cost range reflects how bad a stuck pipe or a weather window actually gets.

Default parameters:

  • ▸Planned days:PERT(25, 30, 45)
  • ▸Day rate:Triangular(40000, 50000, 70000)
  • ▸NPT days:PERT(0, 4, 15)
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Try this: Compare the P90 cost against the flat contingency in your current AFE. A 10% line item rarely covers the NPT tail on a well with this much spread.
Drilling AFE simulation showing the well cost distribution including non-productive time
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Reading P10 / P50 / P90: Industry convention here is the reserves one, not the statistics one. P90 is the low case — the volume you have a 90% chance of exceeding, the number a bank will lend against. P10 is the high case, exceeded only 10% of the time. P50 sits between them. Every model on this page reports all three, plus a tornado showing which input moves the answer most.