Geology, geography and global energy

Scientific and Technical Journal

Natural rent in geological survey. Creating portfolio with desired probability ensuring the profitability

2013. №3, pp. 124-145

Brazhnikov Artem O.  - Applicant of Gubkin Russian State University of Oil and Gas, VolgogradNefteotdacha ltd., Geophysicists passage, Russian Federation, Volgograd City 3400075,,

The article highlights the aspects of creating corporate geological exploration project portfolio with desired probability ensuring the profitability. The methodology of analytical determination of minimum required economic efficiency indicators of a separate geological exploration project on the geological conditions and scrutiny of geological exploration object, is presented. This methodology allows assessing as the insufficiency of natural rent withdrawal by the state in certain economic conditions of granting rights to the mineral resources exploration, as its redundancy for the sustainability of the exploration companies. The comparative analysis of the proposed methodology for creating of project portfolios with the widespread in practice modern methodology by Peter R. Rose, is provided. The algorithm of the computer program for creating and balancing the portfolio of the oil and gas exploration projects with the desired probability ensuring the profitability, is presented. The dependence of the minimum value of the discounted profitability index of exploration projects on probability characteristics of separate projects and the whole portfolio is shown in the analytical and graphical form. A brief analysis of the results obtained in relation to the objects and subjects of the geological survey is given.

Key words: geological exploration,exploration business,natural resource rent,subsoil,geological survey,exploration projects portfolio,predictive success,the risks,the required probability,the required rate of return,success,risk management,project portfolio manageme