The probability of successfully drilling exploration well


The probability of successfully drilling exploration well in a region is 40%, the cost of drilling and completing a well is $50 million and if the well is successful, the etimated size of the discovered reserves is 50 MM barrels. On the other hand, a dry hole cost about 80% of the cost of a successful completion. What is the expected investment per expected reserves?

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Business Economics: The probability of successfully drilling exploration well
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