Price Model Researching With The Real Option In Petroleum Exploration

Real options develop from the concept of financial options,it is the kind of expansion in area of inanical options.Its basic equity is generally the value of certain investment projeces. In this paper, the study of natural resources is the model of real options in petroleum exploration and development.Based on researching the real option model in petroleum exploration and development, and then its numerical method for the application of the trinomial tree.First using peartial differential equations derived the exploration, development, real option pricing model of production in the continuous phase; second using binomial model derived discrete option pricing model. This article includes: Chapter one:Introduction, in this chapter specified the background and significance of the research, and descript the literatures have been studied. Clarify the perspective of this paper, analysis methods, structural arrangements and the possible points of innovation.Chapter two:In this chapter, introduced the the real options theory. These include the concept of the real options,the basic types of the real options,the comparison between real option and traditional method,the basic methods of real option.Chapter three:This chapter is the one inportment chapter of this article, first of all some investment analysis on oil exploration and development projects that exist four kinds of real options, such as the delay in investment option, compound option, expansion option and contraction in investment option. First, the concepts of four options will be explained, and then given the basic assumptions that meet various options, using ITO theorem derives option pricing model,given the boundary conditions and the final value condition, finally I will write the continuous model with variational inequality equation, then continuous model with the explicit finite difference method for solving.The fourth chapter, this chapter is also the core of this article. The method is mainly used in numerical analysis method-trigeminal tree in the process of three phases:exploration, development and production stages of the pricing model.First use the trigeminal tree method to solve the project's investment value, and then make a comparison of the answer between using conventional analysis method to solve the value and the trigeminal tree method, and concludes that value of the project in the oil when you take into account the real options is higher than when they did not take into account them, thus real options in investment decision-making role are not ignored.Chapter five, sum up the full text of this article and point out the major shortcomings and future areas for improvement.Through this article researchs petroleum exploration and development projects to describe the characters of real options and the construction of the mathematical model, the result between using traditional method and real option is sharply contrary,which considering real option owns higher investment value, This has also demonstrated that the real option plays a important role in Projects.So investors can understand the real options more clearly, oil companies can be refer this model which is applied to the project to reduce the risk of erroneous investment and make the right investment programs.