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The attractiveness of a petroleum exploration program depends on the expected return and the associated risk. Previous analyses of drilling programs have dealt with particular aspects of uncertainty. The variable which has received the most attention has been size of reservoirs. Various skewed probability density functions have proved consistent with empirical observation. Estimates of the expected value and variance of this variable have been casually interpreted as measures of the economic reward and the degree of risk, respectively, of specific exploration programs. The size of reservoir found, however, is only one aspect of the uncertainty in exploratory drilling. Among the other variables which have an important bearing on the economics of the program are the probability of making a discovery, the depth of the producing formation, and the productivity of the wells. The possible stochastic descriptions of the most significant variables have combined effects on the attractiveness of a venture.

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