A methodology for assessing the oil and gas potential and forecasting the associated exploration activity in a frontier or partially explored petroleum basin is presented here. The models discussed are an integral part of a microeconomic simulation of petroleum endowment, exploration, development, production, transportation, and distribution. The first two components of this simulation, the geology (endowment) model and the exploration model, are the main topics of this paper. The geology model simulates an inventory of prospects and generates an associated resource assessment. The exploration model simulates the economic evaluation of these prospects and the drilling decisions for each, generating a sequence of discoveries (and dry wells) over time that form an inventory of deposits to be evaluated for development. The learning process in exploration is explicitly incorporated in the simulation through Bayesian revision of the simulated explorationist’s perception of the geology. The approach has proved useful in the evaluation of alternative land use policies and should also be useful in exploration planning at the play and basin levels.