Application of real option method on economic evaluation of carbonate reservoirs on rolling development

Complicated geological origin and special triple medium of carbonate reservoirs result in hard evaluation of original oil in place, complex rules of multiphase flow, and low success rate of drilling.For the high uncertainty and investment risk, rolling development is often used on site.The traditional net present value method is widely used in economic evaluation, but it is big limitation, such as treating the uncertainty of investment environment negatively, and only evaluating the profit of the whole payback period.So real option method is first introduced in this paper to modify the deficiency of net present value.Combined with the features of rolling development of carbonate reservoirs, a new economic evaluation method based on real options is built.A calculation example is given, which shows that the new method based on real options is more precise than the net present value method on economic evaluation of carbonate reservoirs.The net present value method underestimates the true value of an exploration project, for not considering the option values resulted from uncertain invest environment.The new method based on real options makes up for this deficiency, evaluates the profit of each stage, and improves the flexibility of management decision.