Research On Economic Evaluation Method Of Oil And Gas Exploration And Development Project Based On Real Options

The economic evaluation of investment projects is an important part of the project development process,It determine the feasibility of the implementation of the project,And has a significant impact on the final profit and loss of the project,The traditional economic evaluation method of discounted cash flow method,usually underestimate the value of the project because of the value of the uncertainty of the value of the neglect.Real options approach considers the uncertainty as a positive factor,and thinks the high volatility is likely to bring about a significant increase in project value.Due to low production,the development of difficult and long development cycle in oil and gas exploration projects,so that large fluctuations in output and oil price fluctuations have an impact on the value of the project,As a result,the value of the risk is greater,the real options method has a stronger applicability.The application of real option method in the investment decision of oil and gas exploration and development project is explored in this paper.The basic meaning of real options,pricing and the and the operational characteristics of the oil and gas exploration and development projects in three stages of exploration,development and production of applicability is presented in this paper,and the comprehensive review of real option theory evolution and development and its application is made.Based on the main contents of the three stages(exploration,development and production)in the oil and gas exploration and development project,in-depth analysis the characteristics of the investment decision making of oil and gas exploration and development projects,to illustrate the application of real option method in oil and gas exploration and development project economic evaluation,Next points out insufficient in the existing research on application of real option in the oil and gas exploration and development projects from the types of real options identification and project evaluation of the specific application,and puts forward the choice is equivalent to option.As long as there is no investment for the Limited third party similar to option in the investment project development process,there is no option.And,based on the deep analysis of the theory of financial option and its pricing model,a real option model is constructed based on B-S model for oil and gas exploration and development projects,Through an example to calculatethe value of projects under the two methods.The results show that the net present value method seriously underestimated the value of the project due to the unreasonable estimation on oil prices,and the real option method can be very good to make up for the shortage on predicting oil prices.