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Frequently Asked Questions & Workflows

Frequently Asked Questions

1. What is the fundamental difference between DEET (Deterministic) and PEET (Probabilistic)? DEET uses single, fixed inputs for all economic variables (price, OPEX, CAPEX) to generate one specific outcome. PEET uses statistical distributions (e.g., P10/P50/P90) for inputs and runs Monte Carlo simulations to provide a range of probable economic outcomes.

2. How do I run a sensitivity analysis on oil and gas prices? Navigate to the Economics Sensitivity Module. You can define low, base, and high pricing decks. The module will automatically run the combinations and generate spider/tornado charts for NPV and IRR.

3. How are CAPEX and OPEX structured in DEET? CAPEX is typically modeled as point-in-time investments (e.g., Drilling, Completion, Facilities). OPEX can be structured as fixed monthly costs (/month),variablecostsperBOEproduced(/month), variable costs per BOE produced (/bbl), or water disposal costs ($/bbl of water).

4. Can I run Monte Carlo simulations in PEET? Yes, that is the primary function of PEET. You assign probability distributions to your input parameters, and PEET runs thousands of iterations to generate a probabilistic distribution of your NPV and IRR.

5. How do I compare multiple economic scenarios? Use the Cases Explorer. You can select multiple saved economic runs (e.g., “Base Case”, “High CAPEX Case”) and compare their cash flows, payout times, and present values side-by-side in a consolidated table.

6. Where do I define royalty rates and taxes? Fiscal terms, including royalties, severance taxes, and corporate income taxes, are configured in the fiscal regime settings within your DEET or PEET project setup.

7. What economic indicators are calculated? The engine calculates Net Present Value (NPV) at various discount rates, Internal Rate of Return (IRR), Return on Investment (ROI), Payout Time (in months), and maximum negative cash flow.

8. How do I export the cash flow table for a specific case? Inside the results pane of DEET, click the “Export” button above the cash flow table. This downloads a comprehensive Excel file detailing monthly and annual cash flows.

9. Can I import my own cost models? Yes. You can import cost models via .csv if you have complex, time-varying OPEX or CAPEX structures that are easier to build externally.

10. How do I use the Cases Explorer to manage my economic runs? The Cases Explorer acts as a central repository. You can duplicate existing runs, group them by project, delete obsolete runs, and set one run as the authoritative “Base Case” for variance reporting.

11. How does the Sensitivity Module handle variable combinations? By default, it runs one-at-a-time (OAT) sensitivity (changing one variable while holding others at base). You can also configure it to run a full factorial matrix, though this requires significantly more computation time.

12. Is it possible to define inflation or escalation rates? Yes. In DEET, you can apply an escalation factor (e.g., 2% annual inflation) to OPEX, CAPEX, and commodity prices individually.

13. Can I link an FDP schedule directly into DEET? Yes. The most powerful workflow is connecting your FDP schedule directly to DEET. This automatically imports the well timing, production streams, and rig schedules, allowing the economic model to dynamically respond to schedule changes.

14. How do I visualize the probabilistic distribution of my NPV in PEET? After running a PEET simulation, navigate to the Results tab. The module will display a Cumulative Distribution Function (S-curve) and a histogram showing the P10, P50, and P90 NPV values.

15. How do I handle abandonment costs? Abandonment costs (ABEX) can be scheduled as a fixed cost triggered at the end of the well’s economic life, or at a specific date. The engine automatically terminates production when the well reaches its economic limit (when OPEX exceeds revenue).

Main Workflows

Workflow 1: Performing a Deterministic Economic Evaluation

  1. Link Data: Open DEET and select your FDP Schedule to import the production profile and timing.
  2. Setup Prices: Input your commodity price deck (e.g., flat 70/bblOil,70/bbl Oil, 3/mcf Gas).
  3. Setup Costs: Enter your CAPEX (/ftfordrilling,/ft for drilling, /stage for completions) and OPEX parameters.
  4. Configure Fiscal Terms: Set a 12% royalty and apply standard severance taxes.
  5. Run & Review: Execute the evaluation and review the monthly cash flow table and the calculated NPV10 and IRR.

Workflow 2: Running a Probabilistic Sensitivity Analysis

  1. Base Case: Ensure you have a valid DEET Base Case saved.
  2. Open Sensitivity: Navigate to the Economics Sensitivity Module.
  3. Define Ranges: Select Oil Price and CAPEX as your sensitivity variables. Set Oil Price to vary between 50and50 and 90, and CAPEX to vary ±20%.
  4. Execute: Run the sensitivity analysis.
  5. Analyze Tornado Chart: Review the generated Tornado chart to determine whether Oil Price or CAPEX has the largest impact on your project’s NPV.