You are thinking of investing in a field that may have

Assignment Help Accounting Basics

Reference no: EM13596884

You are thinking of investing in a field that may have commercial amounts of oil. Based on the existing data of the field you believe there is a 15% chance that if you drilled immediately you would find a commercial discovery. You also have the option of investing in more information, which would include more sample wells and data acquisition. You believe that there is an equally likely chance that this information will either double expected chances of finding a well, or inform you for certain that the area is not commercial. The additional information would cost $60MM. Drilling for production would cost $100MM. A normal commercial discovery would result in an NPV of $750MM after the original drilling and seismic costs. However, you know that a third of all commercial discoveries are major discoveries resulting in an NPV of $1,000MM after the original drilling and seismic costs.

Do you decide to invest in the project?
If you decide to invest, would you invest in more data acquisition?

Reference no: EM13596884

Questions Cloud

You are about to issue a report on the compiled financial : you are about to issue a report on the compiled financial statements of abc company. however you feel you lack

A ray of light moving along the vector -i-2j undergoes : a ray of light moving along the vector -i-2j undergoes refraction at an interface of two media which is the x-z

Primary and secondary amines form hydrogen bonds among : primary and secondary amines form hydrogen bonds among themselves. assume you have a solution of ethanamine ethylamine.

A suppose that a channel has a slope of m 001 or 1 and a : design of open channels - to protect cities from flooding during heavy rains open channels are sometimes constructed to

You are thinking of investing in a field that may have : you are thinking of investing in a field that may have commercial amounts of oil. based on the existing data of the

A moderate wind accelerates a pebble over a horizontal xy : a moderate wind accelerates a pebble over a horizontal xy plane with a constant acceleration a 5.00 ms2i 7.00ms2j. at

An oil and gas investor is considering the acquisition of : an oil and gas investor is considering the acquisition of two fields. both fields have the same production profiles

The company uses the weighted-average cost method in its : miller company manufacturers a product for which materials are added at the beginning of the manufacturing process. a

Using all four demographic reports overview trend : using all four demographic reports overview trend employment and population detail for zip code 60614 choose four

User Account

All Pages