Risked Volume & EMV Calculator

Calculate risked reserves and Expected Monetary Value (EMV) using probabilistic volumes (P10/P50/P90), geological risk factors, and economic parameters. Includes decision tree analysis, Monte Carlo simulation, and sensitivity tornado charts for prospect evaluation and portfolio optimization.

EMV Risked Reserves Probabilistic Monte Carlo Decision Tree

Input Parameters

Probabilistic Volumes (STOIIP/GIIP)

MMbbl
90% chance volumes exceed this (optimistic)
MMbbl
50% chance volumes exceed this (most likely)
MMbbl
10% chance volumes are below this (conservative)

Geological Risk Factors

prob
Source, migration, timing (0.0-1.0)
prob
Top and lateral seal integrity (0.0-1.0)
prob
Presence, quality, deliverability (0.0-1.0)
- PoS = Pg × Ps × Pr

Economic Parameters

fraction
Recoverable reserves / STOIIP (typical: 0.2-0.5)
$/bbl
Expected oil price at production
$/bbl
Production & operating cost per barrel
$MM
Total drilling & facilities investment
$MM
Cost if prospect fails (exploration well)
%
NPV discount rate (typical: 8-15%)

Monte Carlo Simulation

More iterations = more accurate distribution

Quick Presets

Results

Theory & References

Probabilistic Volume Estimation

PERT Distribution:

Mean = (P10 + 4×P50 + P90) / 6

This assumes a lognormal-like distribution where P50 is the median and P10/P90 represent the 10th and 90th percentiles.

Risked Volumes:

Risked Mean = Mean × PoS

Where PoS = Pg × Ps × Pr

  • Pg: Geology/Play risk (source, migration, timing)
  • Ps: Seal risk (top & lateral seal)
  • Pr: Reservoir risk (presence, quality, deliverability)

Expected Monetary Value (EMV)

Decision Tree Formula:

EMV = (NPV_success × PoS) - (Cost_failure × (1-PoS))

Success Branch:

  • Revenue = Recoverable Volume × Oil Price
  • Operating Cost = Recoverable Volume × OPEX
  • Net Cash Flow = Revenue - Operating Cost - CAPEX
  • NPV = NCF / (1 + discount_rate)

Failure Branch:

  • Cost = Dry Hole Cost (exploration well)

Decision Rule:

If EMV > 0, the prospect has positive expected value and should be considered for drilling.

Monte Carlo Simulation

Randomly samples from the P10-P90 volume distribution using lognormal assumptions to generate thousands of realizations. This produces:

  • Full probability distribution of outcomes
  • Mean and standard deviation
  • Confidence intervals
  • Risk of under-performance

Applications:

  • Prospect ranking and portfolio optimization
  • Capital allocation decisions
  • Risk vs. reward trade-offs
  • Minimum economic field size analysis
  • Value of information studies