RESOURCE LIBRARY

White Papers, Published Articles, and Case Studies

White Papers

Everyday Decision Analysis

By Paul Wicker
For groups facing a large number of quick-turn decisions on a daily basis, applying a formal Decision Analysis (DA) process would seem impractical. This paper showcases how Decision Strategies has adapted a DA protocol for everyday decision making.

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The Materiality Question

By William Haskett
Successful companies have material interests in material opportunities, but how much interest or acreage is enough? When is it bad to have too much of a good thing? Understanding materiality and its linkage to competitive advantage.

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Uncertainty as a Source of Value

By Patrick Leach
If you invest only in risk-free assets, you will receive only the risk-free rate of return (usually assumed to be that of T-bills).  Value beyond that rate is created by investing in individual assets and projects with good potential returns – and significant risk and uncertainty – and then managing that portfolio of assets in such a way as to bring the overall portfolio risk into a range that is acceptable to your investors.  This essentially converts uncertainty into value.  This paper discusses why this is so, as well as the ramifications for businesses.

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Pain and Regret

By William Haskett
Not all decisions are made based on calculations of average value. In fact, very few decisions should be made that way. This discussion of decision making priorities involves the concepts of Regret (the probability of an undesirable outcome) and Pain (the injury that occurs when a regrettable event occurs). It is contended that this decision mechanism underlies most of our critical decisions. Recognizing that there is a viable way to approach Pain and Regret allows teams and companies to bake better, more well-informed decisions.

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Steam and Glean: Planning to Learn in a Potential World-Class Heavy Oil

By William Haskett
A case study of the application of uncertainty management methods to the evaluation, efficient learning, and the prioritization of investment in a world-class heavy oil project.

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Unconventional Type Curves - Useful or Sirenes of Disaster

By William Haskett
Advocating for the appropriate handling of uncertainties within a production profile, we examine the dangers of simple Type-Curves and describe how to create a better value-structured curve.

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Pitfalls in the Evaluation of Unconventional Resources

By William Haskett
Published several years after the original benchmark paper “Evaluation of Unconventional Resources”, it provides a run-down on the incorrect or implausible short-cuts some companies were taking with respect to valuing Unconventional opportunities, including failure to recognize multiple EUR families, failure to take a decision based approach, and the assumption that the average EUR creates the average value.

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Published Articles

The Myth of Sweet Spot Exploration

By William Haskett
Exploration in Unconventional Resource plays is different than that of Conventional Oil and Gas. It is important to understand the impact of bias in opportunity assessment when only sweet-spots are drilled. Ultimately, the opportunity value results from the drilling of all areas. Initial drilling of the sweet-spots as opposed to a representation of what the opportunity holds will result in the overestimation of potential and value. Additionally, it hinders the prioritized learning that needs to take place in order to achieve rapid, early efficiency.

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Reining In The Data Junkies - Having the Guts Not to Appraise

By William Haskett
A practical example of a sequence of value-of-information assessments is used to show that sometimes, information is neither useful or valuable, even when intuition may say otherwise. The quest for more information before making a decision can sometimes hand a company delays and decreased value. The sequence of investment decisions in this exploration appraisal situation draws out the importance of qualitative assessment before getting into the numbers.

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Seeing the Forest As Well As the Trees

By the Executives of Decision Strategies
It is often useful to see how companies deploy a broad based, decision-centric Portfolio Management process to develop insights and make decisions about resource allocation to long-term, high-stakes asset development projects. In this paper, we examine how a larger Oil and Gas company achieved just that.

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Simulation improves decisions: Integrated simulation programs enhance strategic decision-making

By the Executives of Decision Strategies
Integrated simulation modeling greatly enhances strategic decision-making by providing clarity and context, identification and mitigation of downside threats, and the allocation of resources to the right work at the right time.

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Exploitation and Management of Risk and Uncertainty

By William Haskett
Drilling professionals face uncertainty management issues. A variety of tools are applied to help them describe and manage uncertainties. This is the text of an article prepared for Drilling Magazine.

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Improving Upstream Forecasts

By the Executives of Decision Strategies
There are flaws that can occur in E&P asset planning, which can undermine the accuracy and credibility of forecasts. Financial managers and decision makers can avoid serious pitfalls if they ask the right questions at the right time. Asking key questions increases the magnitude and the chance of success as downside risk and unintended outcomes can be identified and mitigated. This significantly elevates the reliability of forecasts.

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Unconventional Resource Exploration - Understanding Value, Risk, and Decisions

By William Haskett and Patrick Leach
A decision- and value-oriented context for Unconventional Resource plays is a critical factor in the identification of risk, prioritized learning, and value accretion.

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Risk Analysis Approach: Helping Operators See the Light in Unconventional Plays

By William Haskett and Patrick Leach
This paper is a World Oil write-up that expands upon the innovations presented in the benchmark “Evaluation of Unconventional Resource Plays” paper.

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Late & Over Budget: Why Projects Always Seem to Take Longer and Cost More Than Planned

By Patrick Leach
This paper describes how project managers have to fight two phenomena that make most projects run late and cost more than planned.  One is near-critical-path parallel tasks, which reduce the probability of staying within the forecast. The other is the way right-skewed uncertainty distributions interact with the portfolio effect, such that even if we have a 50-50 probability of completing each task on time, the probability of completing the entire project on time is much lower.

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Evaluation of Unconventional Resource Play

By William Haskett
This is the benchmark paper that provided industry with a way to evaluate Unconventional Resource opportunities, optimize pilot programs, and establish a priority for investment. New in this paper was the concept of an EUR envelope, that explorationists are chasing a family of wells rather than a bulk resource, and that the rapid determination of the character of that family of wells was possible with a lower than expected (by most) number of results.

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Production Profile Evaluation as an Element of Economic Viability and Expected

By William Haskett
This is one of the first papers published on stochastic, or probabilistic production profiles. The difference between pathway and aggregate profiles is outlined, as well as their very important differences and uses.

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Managing Maintenance Expenditures with Integrated Decision Analysis

By the Executives of Decision Strategies
What are you going to Stop? What are you going to Start? What are you going to change? An integrated decision management and portfolio approach is discussed, which analyzes the risks of reducing or discontinuing a practice, or conversely, increasing maintenance spending where necessary.

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Practical Optimization: Working with the Realities of Decision Management

By William Haskett
This is a joint paper between Decision Strategies and Optek Systems that deals with the application of portfolio optimization principals to portfolios containing both exploration and development elements. A critical discussion pertains to the cross-period optimal allocation of both capital and human skill sets. This method is far more stable and informative than the standard allocation of capital in single budget period methods.

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Optimal Appraisal Well Location Through Efficient Uncertainty Reduction and Value of Information Techniques

By William Haskett
Development well placement is critical to the early understanding of the resource present. Well placement can assist in the rapid assessment of the go/no go decision as well as the use of efficient well placement to achieve a rapid understanding of facility sizing options.

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More Clarity, Less Bias - Better Mergers

By Patrick Leach

Despite good intentions and impressive pro forma cash flow forecasts, if history is any indication, most mergers will fail to deliver the promised value to shareholders. This articles explains what can be done to avoid joining the slag heap of failed mergers.

 

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Literature

Why Can't You Just Give Me A Number: An Executive's Guide to Using Probabilistic Thinking to Manage Risk and to Make Better Decisions

Patrick Leach (CEO of Decision Strategies, Incorporated) draws on his extensive consulting and teaching experience to present a compelling, insightful, and understandable case for using probabilistic analysis as part of everyday business decision-making. Practical examples and case studies are clearly presented.

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