Small oil and gas operator must decide whether to drill in a certain place for oil. After considerable geological studies, the operator has narrowed the possible results of four possible scenarios, one of which was a dry hole (without oil), and provided its best estimate of the associated probabilities. Assessing the prospects for long-term needs assessments and the rate of decline in oil production from the perspective of formation and probable crude oil prices in the next two to three decades. The second one was necessary because drilling costs occur in the first year or two, but the income from the well was created as oil was produced for decades. To help students frame the issue of future oil prices, the cases discussed issues related to the future of the global supply and demand for oil. "Hide
by Gary Clendenen, John O'Neill, Jason Clendenen Source: North American Case Research Association (NACRA) 15 pages. Publication Date: December 1, 2011. Prod. #: NA0154-PDF-ENG
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