Valuable Geology
is the first company ever to make oil & gas prospecting
work practically free from financial risk
it provides tools to form E&A Programs (portfolios of O&G prospecting
projects), the financial failure of which is practically impossible
it unveils a new era of colossal business opportunities and
new rates of subsoil survey, research and development
With Valuable Geology's products you will be able to:
conduct a geological exploration without financial risks
(the probabilities of making a profit are 99.000 – 99.999% and above)
win auctions for the most attractive subsoil blocks
implement the most challenging and ambitious E&A and technological ideas without the threat of financial losses
Key points
A revolutionary breakthrough has taken place in E&A risk management practice
The impression of extremely high risks related to E&A works, which is created by present-day probabilistic E&A risk management methods, is, in many cases, erroneous. Actual financial risks of scheduled E&A operations, which are assessed, not as individual project risks, but as risks of a developed E&A Program (oil and gas prospecting projects portfolio), are radically lower and can practically tend towards zero. In reality, major and medium companies would currently be able to elaborate E&A Programs with probabilities of a complete return on investments and profit-making at 99.000–99.999% and above, while expected profitability can amount to hundreds and even thousands of percent. But companies may not even be aware of the high financial reliability and the high expected profitability of elaborated E&A Programs that they feasibly achieve, since, due to the hypothetical nature of modern risk management, they are forced to assess the financial risks of planned E&A works as financial risks of each individual project.
It is the first time in the oil and gas industry that we have managed to solve the problem of the hypothetical (assumptive, unsubstantiated) nature of E&A risk management practices – the uncertainty of specific management results those, due to the imperfections of the applied management algorithm, can eventually turn out to be unacceptable.
The solution of the problem related to the hypothetical nature of present-day probabilistic E&A risk management makes it possible for real work practices to bring down the overall financial failure probability of a developed E&A Program so close to zero that occurrence of a financial failure event can be deemed to be practically impossible (1.000–0.001% or lower), while specific numerically quantified evidence of such a probability decreases.
The scale of new opportunities gained by the business and industry as a result of solving the issue of the hypothetical nature of present-day probabilistic E&A risk management is so huge than it is hard to capture at first glance. Possession of Valuable Geology products grants business opportunities which are as huge as those provided by a perfect E&A team (i.e. an exploration team with oil and gas prospecting projects being always a success). The only difference lies in the fact that in the case of a perfect exploration team, as an investment unit shall be deemed an individual oil and gas prospecting project, while in the case of Valuable Geology products, as an investment unit shall be regarded a single financially Risk-Free E&A Program which can now be formed thanks to our software products.
The possibility of confirmed achieving a financially, practically risk-free status of E&A operations, provided by Valuable Geology, makes a revolution in the oil and gas industry, unveils a new era of the industry development where pre-revolutionary oil and gas business tools and practices are no longer capable of providing companies with competitive power sufficient for stable existence and sustainable development. Making the E&A segment free from the threat of huge financial losses fundamentally changes the principles of competition and business in the oil and gas industry, introduces new tools and practices of competition and profit-making with their efficiency being so high that pre-revolutionary companies could never compete against them. The first companies to switch to real, non-hypothetical E&A risk management will have unprecedented opportunities to gain regional or global leadership and create a quantum leap in the efficiency of all business segments of the oil and gas industry, which is going to be insuperable for competitors.
The task of probabilistic E&A risk management is to bring the probability of financial failure of scheduled E&A works down to zero
The history of the oil-and-gas industry flourishing development for a century and a half demonstrates that, on a large number of projects, oil and gas field prospecting works are not only free from financial risks but also deliver extremely high profits – when implementing large numbers of oil and gas prospecting projects, successful projects pay back all costs, including costs related to implementation of projects that turn out a failure, and ultimately deliver a huge profit. We can witness this, not only across the industry in general, or a specific country, but also across individual major – and even medium companies – on the scale of several or even one ten delivered oil and gas prospecting projects.
The task of probabilistic E&A risk management is the determination of the quantity and the relevant economic and probabilistic characteristics of oil and gas prospecting projects planned for implementation, which would bring the probability of overall financial failure of the scheduled E&A works (E&A Program) so close to zero that occurrence of a financial failure event can be deemed to be practically impossible. In other words, probabilistic E&A risk management determines how many and what specific projects need to be implemented so that it is practically guaranteed (with a probability very close to 1) that successful projects will recoup absolutely all costs and deliver the minimum desired, or even greater, profit.
The task of probabilistic E&A risk management can be quite accurately described by the following metaphor.
Let's say we have the opportunity to choose any number of 30 different coins to toss. We must pay different amounts for the right to toss each coin. For example, to toss coin A we will have to pay $10, to toss coin B we will have to pay $5, to toss coin C we will have to pay $8, etc. For each “head”, we will receive some kind of winnings, different for each coin. For example, if coin A lands on heads, we will get $23, if coin B lands on heads, we will get $17, if coin C on lands heads, we will get $20, etc. If a coin lands on tails, we will not receive anything for it. Our task is to make such a choice of coins that the probability of total winnings from tossing the coins we have chosen is not lower than the level we set, for example, not lower than 99% or, which is the same, so that the probability of the total loss (probability of overall financial failure) from tossing the coins we have chosen is less than 1%.
A simple selection of the most profitable coins, without calculating the probabilities of the total win, does not guarantee a solution to the problem - it does not guarantee the achievement of a 99% probability of total winning - it leaves open questions about both the required quantity and the nomenclature of the selected coins. The real task of managing exploration risk is further complicated by the fact that, unlike coins, exploration projects typically have different values of success probabilities. In addition, in real practice, there are usually restrictions on the company’s budget, time, scientific and production capacity, etc.
All present-day probabilistic E&A risk management is hypothetical in its nature
A valid solution of the E&A risk management task has long been unachievable as it requires a large number of computations. Therefore, all present-day methods applied to E&A risk management use the Law of Large Numbers (LLN) algorithm, which does not require similar levels of computations but at the same time does not guarantee the above task delivery.
As a result of using the LLN algorithm, all present-day probabilistic E&A risk management practices are characterized by their hypothetical, assumptive, unsubstantiated nature. Due to a lack of relevant mathematical framework and computation capacity, LLN-based risk management results (specific value of probability of overall financial failure of the formed E&A Program) remain unknown. Due to the fundamental inconsistency of the LLN algorithm with the industry specifics (actually elaborated E&A Programs in real operational practice cannot consist of hundreds or thousands of projects), the LLN-based risk management results can be unacceptable – the probabilities of such large financial losses, which remain unknown, can be too high.
The non-competitive use of the LLN algorithm is the reason for the hypothetical nature of absolutely all methods of present-day probabilistic E&A risk management.
Due to this hypothetical nature, all present-day methods suggest only an abstract 'empowering teams and decision makers by risk assessment training and tools' or 'determination of the true value of opportunities' or “better decisions with the power of predictability” etc., instead of providing specific risk management results, i.e. specific values of achieved reduction of the overall financial failure probability of an elaborated E&A Program. Present-day probabilistic E&A risk management is so generalized, abstract and assumptive in its nature that most explorationists and even certain specialists who actually carry out risk management activities are not aware of the fact that all present-day probabilistic E&A risk management practices are not aimed at reducing E&A risks. Project E&A risks remain the same and are merely assessed while absolutely all present-day risk management methods try to mitigate the financial risks of scheduled E&A operations on the basis of such E&A risk assessments.
The hypothetical nature of present-day risk management creates an unreasonable impression of extremely high financial E&A risks, which does not correspond to reality
The probabilities of oil and gas prospecting projects exploration success normally vary in the range from 10 to 80 percent, while investments related to the acquisition of a subsoil block and E&A operations within one project may amount to tens, hundreds of millions and even a few billion USD.
The impossibility to know the specific results of all present-day probabilistic risk management practices (i.e. the impossibility to know the probability of the overall financial failure of an elaborated E&A Program) forces companies to assess the financial risks of planned E&A works, not as a risk of an E&A Program in general but as risks of individual projects. It means that companies arrive at extremely high estimates of planned E&A financial risks – risks of completely losing investments of dozens, hundreds of millions or billions of USD with a probability of 20–90%.
As we said earlier, the impression of extremely high risks related to E&A works, which is created by present-day methods, is erroneous. Actual financial risks of scheduled E&A operations, which are assessed not as individual project risks but as risks of a developed E&A Program, are radically lower and can practically tend towards zero. In reality, major and medium companies would be currently able to elaborate E&A Programs with probabilities of a complete return on investments and profit-making at 99.000–99.999% and above, while expected profitability can amount to hundreds and even thousands of percent. But companies may not even be aware of the high financial reliability and the high expected profitability of elaborated E&A Programs they feasibly achieve, since, due to the hypothetical nature of modern risk management, they are forced to assess the financial risks of planned E&A works as financial risks of each individual project.
The financially, practically risk-free nature of the oil and gas field prospecting works unveils a new era of the oil and gas industry
The advanced computation capacities and revolutionary computation methods created by Valuable Geology make it possible to actually bring down the overall financial failure probability of elaborated E&A Programs so close to zero that occurrence of a financial failure event can be deemed to be practically impossible (with the financial failure probability being 1.000–0.001% and below, while the complete return on all investments and profit-making probability being 99.000–99.999% and above). Thus, the solution suggested by Valuable Geology, with regard to the hypothetical risk management issue, is the first one in the industry to relieve the exploration segment from the financial loss hazard.
The DSS “ABVG” software developed by Valuable Geology provides all relevant quantified evidence of achieving a financially, practically risk-free status of planned E&A works – it makes it possible to determine the probabilities of getting any possible values of financial and non-financial indicators of E&A Programs, even those comprising a very large quantity of projects (dozens and hundreds of projects). The software does not only provide a company with confidence in achieving the target return on all investments in the E&A Program but also makes it sure it will discover specific hydrocarbons (HC) reserves volumes in the course of the E&A Program implementation – in other words, it makes it possible to form E&A Programs with practically certain delivery of reserves increment in volumes not lower than a certain pre-set level.
The opportunity to set the exploration segment free from financial losses, which is provided by Valuable Geology software products, and each time is supported by specific quantified evidence, opens a new era in the oil and gas industry, i.e. an era of formerly inaccessible colossal business opportunities, new rates of subsoil survey, research and development.
Possession of Valuable Geology products grants business opportunities which are as huge as those provided by a perfect E&A team (i.e. an exploration team with oil and gas prospecting projects being always a success). The only difference lies in the fact that in the case of a perfect exploration team, as an investment unit shall be deemed an individual oil and gas prospecting project, while in the case of Valuable Geology products, as an investment unit shall be regarded a single financially Risk-Free E&A Program which can now be formed thanks to our software products.
Valuable Geology products open up colossal business opportunities of the new era of the industry
Given the real, non-hypothetical E&A risk management practices provided by Valuable Geology, companies obtain colossal business opportunities which seemed unbelievable as recently as yesterday:
a financially, practically risk-free status of E&A operations – actual and evidenced bringing of the planned E&A financial failure probability down to zero given any possible demand in computations encountered in
ensuring ultra-high reliability and extremely high profitability of E&A investments at the same time (the probability of return on all investments and profit-making of 99.000–99.999% and above, actual profits of hundreds and even thousands of percent);
short timeframes of complete return on investments and E&A profit delivery within 1–3 years;
leadership and domination across all segments of the oil and gas industry, which results from the leading positions in the scope and unit costs of commissioned production reserves;
leadership in the scope and unit costs of commissioned production reserves as a result of leading positions in the scale and economic efficiency of E&A works;
leadership in the scale and economic efficiency of performed E&A works as a result of leading positions in terms of attractive project acquisition, development of E&A competencies, knowledge and technologies, as well as the scope, quality and relevancy of available E&A data, the ability to enhance the E&A operations scope without a threat of financial losses;
leadership in terms of attractive project acquisition as a result of using such powerful management tools as the Risk-Free Value of an E&A Program, Focused RMSEE Delivery and Focused GSEE Delivery, and leadership in development of exploration competencies, knowledge and technologies, as well as the volume, quality and relevancy of available E&A information;
leadership in development of E&A competencies, knowledge and technologies, as well as in the volume, quality and relevancy of available E&A information as a result of the ability to enhance the E&A operations scope without taking financial risks, and implement the most challenging and ambitious E&A ideas;
colossal E&A prospects beyond the reach of other companies, which are provided by the powerful management tools, i.e. the Risk-Free Value of an E&A Program, Focused RMSEE Delivery and Focused GSEE Delivery;
a powerful management tool known as the Risk-Free Value of an E&A Program;
a powerful management tool known as the Focused RMSEE Delivery;
a powerful management known as the Focused GSEE Delivery, etc.
Possession of Valuable Geology products will become a must to sustain the companies’ competitive positions
The possibility of achieving a financially, practically risk-free status of E&A operations makes a revolution in the oil and gas industry, unveils a new era of the industry development where pre-revolutionary oil and gas business tools and practices are no longer capable of providing companies with competitive power sufficient for stable existence and sustainable development. Making the E&A segment free from the threat of huge financial losses fundamentally changes the principles of competition and business in the oil and gas industry, introduces new tools and practices of competition and profit-making with their efficiency being so high that pre-revolutionary companies could never compete against them. The first companies to switch to real, non-hypothetical E&A risk management will have unprecedented opportunities to gain regional or global leadership and create a quantum leap in the efficiency of all business segments of the oil and gas industry, which is going to be insuperable for competitors. The companies staying behind, in terms of transition from hypothetical to real E&A risk management, will face a cascading loss of competitive positioning across all integration segments, posing a threat to their existence. Possession of the Valuable Geology tools unveiling a new era of development within the industry is currently a must for oil and gas companies in order to keep competitive, stable positions and ensure sustainable development.
The Valuable Geology products will provide your companies with all the colossal business opportunities of the new era, as well as business tools capable of ensuring the utmost competitive positioning and flourishing prospects for many decades ahead.
Learn more
Description of the key problem of present-day probabilistic E&A risk management, which required a solution
Colossal business opportunities unveiled by the Valuable Geology's solution of E&A risk management the key problem
Alternatives to our solution of present-day E&A risk management issues
The era of formerly inaccessible opportunities and new rates of subsoil survey, research and development
Practical acquisition of opportunities provided by the new era – Valuable Geology's revolutionary business models
Valuable Geology's Products
Ideal customer profile for the Valuable Geology's products
References
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