School Work

REAL OPTIONS AS VALUATION AND DECISION MAKING TOOL IN UPSTREAM PROJECTS

Description
This thesis consists of 10 chapters. Chapter 1 covers the purpose, background information, methodology, and structure of the thesis. The value chain will be discussed in Chapter 2. Chapter 3 to Chapter 7 introduced the tools needed to solve the case study. Case study and proposed solution presented in Chapter 8 and 9. Finally, Chapter 10 is concluded the study. To understand investment decisions, one need to understand the industry’s value chain. Chapter 2 analyzed value chain in upstream petroleum industry, they are: (1) prospect, (2) exploration and appraisal, (3) development, (4) production, and (5) abandonment. Chapter 3 starts by explaining how the stochastic process can be used to forecast the oil price. Simply put, a stochastic process is a mathematically defined equation that can create a series of outcomes overtime, outcomes that are not deterministic in nature. Two stochastic process approaches: (1) brownian motion and (2) mean-reverting will be discussed. Chapter 4 revisited classical valuation approach of oil and gas properties. In an oil and gas environment, the assumption of perpetuity is not realistic, thus a cash flow forecast should run for the entire life of the asset being valued. To accurately forecast the ‘free-cash-flow-to-the-firm’, a proper financial model is needed. The financial models consist of (1) profit loss, (2) balance sheet, (3) cash flow, and (4) valuation. Since the financial model produced only a single-point estimate result, Chapter 5 presented Monte Carlo simulation as a tool to get a set of probable outcome. Monte Carlo simulation is undertaken by modelling a project and its key factors affecting the profitability of the project. Using @RISK software, a simulation can be done as many times as possible to plot a frequency distribution of the outcomes. Chapter 6 talked about decision tree analysis. In contrast to Monte Carlo simulation which evaluate pre-determined project scenarios, decision tree focus on managerial decisions. Decision tree also take account of uncertainty, but they do so in a more rudimentary way, typically, by specifying the probabilities of limited classes such as “large”, “small” or “zero”. Still, either simulation or decision analysis could not capture value of flexibility like real options. However, the models described in the real options literature often greatly oversimplify the problems. The integrated approach presented in Chapter 7 tried to bridge this gap by noting that there are two types of risk associated with most corporate investments: public (non-diversifiable) and private (diversifiable). It presented an approach that covered traditional decision analysis at one extreme to option pricing at the other. To illustrate where real options analysis can be used to add value in valuation and decision making process, a case study will be introduced in Chapter 8. This case is based on generalized experience, with a fictional story and characters, but the salient features resemble the development of Ivar Aasen field in the North Sea. Chapter 9 offered practical solution that demonstrates the possibility of actually implementing real options valuations in a meaningful way by an analyst. Chapter 10 presented an important conclusion: the integrated approach resulted with a probability distribution that combines real options, diversifiable risk, and non-diversifiable risk effects: The right-hand side of the distribution has fatter tails (upward potential), while losses on the downside are clearly cut off.
Categories
Published
of 77
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Share
Transcript
    XGOA JSVEJLR OR ^OAWOVEJL OLF FGBEREJL KODELM VJJA EL WSRVXGOK SXJIGBVR Olfedo Xevoe el Sorteoa Nuaneaakglt jn t`g Xgquergkglts njr t`g Fuoa Fgmrgg jn KHO / KRb el Nelolbeoa Kolomgkglt V@GRER    pm. 8 Gxgbutevg Rukkory V`es t`gses bjlsests jn ?3 b`optgrs. B`optgr ?  bjvgrs t`g purpjsg, hobdmrjulf elnjrkotejl, kgt`jfjajmy, olf strubturg jn t`g t`gses. V`g voaug b`oel weaa hg fesbussgf el B`optgr 8.   B`optgr 2  tj B`optgr =   eltrjfubgf t`g tjjas lggfgf tj sjavg t`g bosg stufy. Bosg stufy olf prjpjsgf sjautejl prgsgltgf el B`optgr 0    olf 5.  Neloaay, B`optgr ?3   es bjlbaufgf t`g stufy. Vj ulfgrstolf elvgstkglt fgbesejls, jlg lggf tj ulfgrstolf t`g elfustry―s voaug b`oel . B`optgr 8 oloayzgf voaug b`oel el upstrgok pgtrjaguk elfustry, t`gy org9 (?) prjspgbt, (8) gxpajrotejl olf opproesoa, (2) fgvgajpkglt, (6) prjfubtejl, olf (7) oholfjlkglt. B`optgr 2  storts hy gxpaoelelm `jw t`g stjb`osteb prjbgss  bol hg usgf tj njrgbost t`g jea prebg. Rekpay put, o stjb`osteb prjbgss es o kot`gkoteboaay fgnelgf gquotejl t`ot bol brgotg o sgregs jn jutbjkgs jvgrtekg, jutbjkgs t`ot org ljt fgtgrkelesteb el loturg. Vwj stjb`osteb prjbgss opprjob`gs9 (?) hrjwleol kjtejl olf (8) kgol-rgvgrtelm weaa hg fesbussgf. B`optgr 6  rgvesetgf baosseboa voauotejl opprjob` jn jea olf mos prjpgrtegs. El ol jea olf mos glverjlkglt, t`g ossukptejl jn pgrpgtuety es ljt rgoaesteb, t`us o bos` najw njrgbost s`juaf rul njr t`g glterg aeng jn t`g ossgt hgelm voaugf. Vj obburotgay njrgbost t`g ‐nrgg -bos`-najw-tj-t`g- nerk―, o prjpgr nelolbeoa kjfga  es lggfgf. V`g nelolbeoa kjfgas bjlsest jn (?) prjnet ajss, (8) hoaolbg s`ggt, (2) bos` najw, olf (6) voauotejl. Relbg t`g nelolbeoa kjfga prjfubgf jlay o selmag-pjelt gstekotg rgsuat, B`optgr 7   prgsgltgf Kjltg Boraj sekuaotejl  os o tjja tj mgt o sgt jn prjhohag jutbjkg. Kjltg Boraj sekuaotejl es ulfgrtodgl hy kjfgaaelm o prjigbt olf ets dgy nobtjrs onngbtelm t`g prjnetoheaety jn t`g prjigbt. Wselm CXERD sjntworg, o sekuaotejl bol hg fjlg os koly tekgs os pjssehag tj pajt o nrgquglby festrehutejl jn t`g jutbjkgs. B`optgr >   toadgf ohjut fgbesejl trgg  oloayses. El bjltrost tj Kjltg Boraj sekuaotejl w`eb` gvoauotg prg-fgtgrkelgf prjigbt sbglorejs, fgbesejl trgg njbus jl kolomgreoa fgbesejls. Fgbesejl trgg oasj todg obbjult jn ulbgrtoelty, hut t`gy fj sj el o kjrg rufekgltory woy, typeboaay, hy spgbenyelm t`g prjhoheaetegs jn aeketgf baossgs sub` os ‑aormg‛, ‑skoaa‛ jr ‑zgrj‛ . Rteaa, get`gr sekuaotejl jr fgbesejl oloayses bjuaf ljt bopturg voaug jn nagxeheaety aedg rgoa jptejls.  @jwgvgr, t`g kjfgas fgsbrehgf el t`g rgoa jptejls aetgroturg jntgl mrgotay jvgrsekpaeny t`g prjhagks. V`g eltgmrotgf opprjob`  prgsgltgf el B`optgr =   tregf tj hrefmg t`es mop hy ljtelm t`ot t`grg org twj typgs jn resd ossjbeotgf wet` kjst bjrpjrotg elvgstkglts9 puhaeb (ljl-fevgrseneohag) olf prevotg (fevgrseneohag). Et prgsgltgf ol opprjob` t`ot bjvgrgf trofetejloa fgbesejl oloayses ot jlg gxtrgkg tj jptejl prebelm ot t`g jt`gr. Vj eaaustrotg w`grg rgoa jptejls oloayses bol hg usgf tj off voaug el voauotejl olf fgbesejl kodelm prjbgss, o bosg stufy  weaa hg eltrjfubgf el B`optgr 0  . V`es bosg es hosgf jl mglgroaezgf gxpgreglbg, wet` o nebtejloa stjry olf b`orobtgrs, hut t`g soaeglt ngoturgs rgsgkhag t`g fgvgajpkglt jn Evor Oosgl negaf el t`g Ljrt` Rgo. B`optgr 5  jnngrgf probteboa sjautejl  t`ot fgkjlstrotgs t`g pjsseheaety jn obtuoaay ekpagkgltelm rgoa jptejls voauotejls el o kgolelmnua woy hy ol oloayst. B`optgr ?3   prgsgltgf ol ekpjrtolt bjlbausejl 9 t`g eltgmrotgf opprjob` rgsuatgf wet` o prjhoheaety festrehutejl t`ot bjkhelgs rgoa jptejls, fevgrseneohag resd, olf ljl-fevgrseneohag resd gnngbts9 V`g rem`t-`olf sefg jn t`g festrehutejl `os nottgr toeas (upworf pjtglteoa), w`eag ajssgs jl t`g fjwlsefg org bagoray but jnn.    pm. 2 Bjltglts Gxgbutevg Rukkory  ........................................................................................................................................ 8 B`optgr ? Eltrjfubtejl  .................................................................................................................................... 7 Kgt`jfjajmy  ................................................................................................................................................. > Vormgt Mrjup  ................................................................................................................................................ = Fgaeketotejl  ................................................................................................................................................... = Rtrubturg  ....................................................................................................................................................... 0 B`optgr 8 Wpstrgok Sgtrjaguk Elfustry  ..................................................................................................... 5 Srjspgbt  ........................................................................................................................................................ 5 Gxpajrotejl olf Opproesoa  .......................................................................................................................... 5 Fgvgajpkglt  .............................................................................................................................................. ?3 Srjfubtejl  .................................................................................................................................................. ?3  Oholfjlkglt  ............................................................................................................................................. ?3 Sgtrjaguk Gbjljkebs  ............................................................................................................................... ?? B`optgr 2 Rtjb`osteb Njrgbostelm  ............................................................................................................... ?8 Jea Srebg  ...................................................................................................................................................... ?8 Rtjb`osteb Srjbgss  .................................................................................................................................... ?2 Hrjwleol-Kjtejl  ........................................................................................................................................ ?2 Kgol-Xgvgrtelm Srebg Kjfga  ................................................................................................................... ?6 B`optgr 6 ^oauotejl jn Jea olf Mos Srjpgrtegs  ........................................................................................ ?7 Elbjkg (FBN) Opprjob`  .......................................................................................................................... ?7 Srobteboa Essugs  .......................................................................................................................................... ?> Nelolbeoa Kjfgaaelm  ................................................................................................................................... ?= B`optgr 7 Kjltg Boraj Rekuaotejl  ............................................................................................................. ?0 Rglsetevety Oloayses  .................................................................................................................................... ?5 B`optgr > Fgbesejl Vrgg  .............................................................................................................................. 83 Jptejls  ........................................................................................................................................................ 8? B`optgr = ^oauelm Nagxeheaety, Xgoa-Jptejls  ............................................................................................... 82 Xgoa-Jptejls  .............................................................................................................................................. 86    pm. 6 Kgt`jfs njr ^oauelm Nagxeheaety ................................................................................................................. 87 Xgoa-Jptejl ^oauotejl (XJ^)  .............................................................................................................. 87 Fgbesejl Vrgg Oloayses (FVO)  ............................................................................................................. 87 Wlfgrayelm resd9 Fevgrseneohag vgrsus Ljl-Fevgrseneohag  ................................................................... 87 V`g Eltgmrotgf Opprjob`  ......................................................................................................................... 8> B`optgr 0 Bosg Rtufy Duduzo Jnns`jrg Jeanegaf  ...................................................................................... 8= Eltrjfubtejl  ................................................................................................................................................. 8= Srjspgbt  ...................................................................................................................................................... 80 Gxpajrotejl olf Opproesoa  ........................................................................................................................ 85 Fgvgajpkglt  .............................................................................................................................................. 23 Srjfubtejl  .................................................................................................................................................. 22  Oholfjlkglt  ............................................................................................................................................. 26 Gbjljkebs  .................................................................................................................................................. 27 Bosg _ugstejls  ......................................................................................................................................... 2= B`optgr 5 Srjpjsgf Rjautejls  .................................................................................................................... 20 Fesbjult Xotg  ............................................................................................................................................ 20 Njrgbostelm Jea Srebg  ................................................................................................................................ 25 Vrofetejloa ^oauotejl Kjfga  ..................................................................................................................... 68 Kjltg Boraj Rekuaotejl  ............................................................................................................................ 67 Fgbesejl Vrgg  ............................................................................................................................................. 60 Rbglorejs  .................................................................................................................................................... 73 ^oauelm Nagxeheaety  ....................................................................................................................................... 7? B`optgr ?3 Bjlbausejl  ................................................................................................................................. 76 ]jrds Betgf  .................................................................................................................................................... >3 Aest jn Nemurgs olf Vohags  ............................................................................................................................ >8  Oppglfex  ......................................................................................................................................................... >6  Ohjut t`g out`jr   ............................................................................................................................................ ==

Bio Ethanol

Aug 28, 2017

vida sana

Aug 28, 2017
Search
Tags
Related Search
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks
SAVE OUR EARTH

We need your sign to support Project to invent "SMART AND CONTROLLABLE REFLECTIVE BALLOONS" to cover the Sun and Save Our Earth.

More details...

Sign Now!

We are very appreciated for your Prompt Action!

x