Abstract A regional network of five interlocking stratigraphic cross-sections compiling the published work of many geologists throughout central and southwest Texas demonstrates the true stratigraphic relationships among formations of the Lower Cretaceous Fredericksburg and lower Washita subcycles. Strongly supported by a long-established ammonite zonation, these detailed stratigraphic cross-sections show lateral relations between Edwards Group formations (Kainer, Person, Fort Terrett, Segovia, Fort Lancaster, and Devils River) of the Central Texas Platform with equivalent formations of the East Texas Basin (Walnut, Comanche Peak, Goodland, Georgetown) and the Maverick Basin of South Texas (West Nueces, McKnight, Salmon Peak). These cross-sections document the following regional stratigraphic relationships: The Burt Ranch Member (basal Segovia Formation), the Regional Dense Member (basal Person Formation), and the Kiamichi Member (basal Georgetown Formation) are stratigraphic equivalents, all three being in the Adkinsites bravoensis Ammonite Zone (lowermost Washita) The peritidal Person Formation is the shelf-interior equivalent of the pelagic-shelf Georgetown Formation, except for its uppermost member, the Main Street, which forms the thin remnant Georgetown Formation on the distal Central Texas Platform. Thus the Person Formation is properly assigned to the lower Washita subcycle, not the Fredericksburg.

Abstract During the 1990s, many international petroleum companies improved their exploration performance significantly by using principles of risk analysis and portfolio management, in combination with new geotechnologies. While exploration risk cannot be eliminated, it can certainly be reduced substantially, on a portfolio scale. And the widespread adoption of standardized risk analysis methods during the 1990s brought badly needed discipline to petroleum exploration. By the mid-1980s, most well-informed major international petroleum firms that were engaged in exploration recognized that, globally, the average size of new discoveries was diminishing. Not coincidentally, the class of exploratory prospects categorized as “high risk/high-potential” was showing marked signs of underperformance. For major companies, when all such ventures, which averaged around a 10% perceived probability of success, were considered, less than 1% actually discovered profitable oil and gas reserves, and the sizes of these discoveries were generally far smaller than predicted. All in all, such exploration for new giant fields destroyed value, rather than creating it, in the 1980s and early 1990s. Consequently, exploration, as a corporate function, lost credibility. It badly needed to begin delivering on its corporate promises. It needed to become more efficient, and thereby more profitable. To optimize the allocation of exploration capital, concepts of portfolio management began to be considered.

Abstract During the 1990s, many international petroleum companies improved their exploration performance significantly by using principles of risk analysis and portfolio management, in combination with new geotechnolo-gies. While exploration risk cannot be eliminated, it can certainly be reduced substantially, on a portfolio scale. And the widespread adoption of standardized risk analysis methods during the 1990s brought badly needed discipline to petroleum exploration. By the mid-1980s, most well-informed major international petroleum firms that were engaged in exploration recognized that, globally, the average size of new discoveries was diminishing (Figure 1 ). Not coin-cidentally, the class of exploratory prospects categorized as “high-risk/high-potential” was showing marked signs of underperformance. For major companies such as Shell, Mobil, and Amoco, when all such ventures—which averaged around a 10% perceived probability of success—were considered, less than 1% actually discovered profitable oil and gas reserves, and the sizes of these discoveries were generally far smaller than predicted. All in all, such exploration for new giant fields destroyed value, rather than creating it, in the 1980s and early 1990s. Consequently, exploration, as a corporate function, lost credibility. It badly needed to begin delivering on its corporate promises. It needed to become more efficient, and thereby more profitable. At the same time, as superior new technologies were introduced, and exploration came to be a global effort under more centralized coordination, corporations realized that they needed to adopt systematic procedures to better manage the exploration function. To optimize the allocation of exploration capital, concepts of portfolio management began to be considered.

Abstract Risk and uncertainty are not synonymous (Megill, 1984 ; Rose, 1987). Risk connotes the threat of loss. Risk decisions weigh the level of investment against four considerations: net financial assets, chance of success/failure, potential gain, and potential loss. The last three considerations must rely on estimates, made under uncertainty, of the range of probabilities that some condition may exist or occur. Every exploration decision involves considerations of both risk and uncertainty. Risk comes into play in deciding how much we are willing to pay for additional data or mineral interests, considering the high impact of front-end costs on project profitability. Uncertainty is intrinsically involved in all geotechnical predictions about the range of magnitude of the inferred mineral deposit, the chance of discovery, and the cost of finding and developing it. Therefore, once prospects have been identified, the problem in serial exploration decision making is twofold: to be consistent in the way we deal with risk and uncertainty, and to perceive uncertainty accurately and reduce it where possible. Although extensive scientific and geotechnical work is indeed essential to successful modern petroleum exploration, we must also recognize that nearly all of the parameters required to assign expected monetary value to the exploratory prospect can only be estimates made under substantial uncertainty. Table 1 lists the most significant ones. Given the importance of responsible estimating, it is quite remarkable that until recently so little effort has been made by most modern oil companies to monitor and improve their geotechnical staff's estimating performance.

Abstract The prospect reserves distribution is really an estimate of the range of ultimate volumes of oil and nat-ural gas that may be recovered if the prospect discovers a producible hydrocarbon accumulation, which may become an oil or gas field. As discussed earlier, this value does not equate to “proved,” “probable,” or “possible” reserves, as formally defined engineering parameters (Capen, 1996 ; Cronquist, 1997). Those engineering definitions arose out of fiduciary needs and are subject to continual revision throughout the life of the field. They involve considerations of reservoir volume as well as detailed reservoir parameters, flow rates and decline curves, and multiple economic assumptions. Obviously, such details are usually not available for exploration ventures. Accordingly, many companies employ a simpler set of parameters (Figure 6) that are more consistent with the high degree of uncertainty that attends exploratory prospects: Prospect Reserves = Productive Area (in acres, hectares, or kilometers 2) χ Average Net Pay Thickness (in feet or meters) χ Hydrocarbon-Recovery Factor (in bbl or mcf [thousand cubic feet] per net acre-foot, bbl per net m 3 /hectare-meter, or m 3 per net km 2 -m). The parameters shown in Figure 6 are deterministic; that is, single-value estimates for each parameter, all of which, because of substantial geotechnical uncertainty, are much better forecast as a probabilistic range of possible outcomes. Deterministic predictions are generally unreliable; fortunately, their use in the modern exploration industry is diminishing.

Abstract It is essential for geoscientists to understand how the results of their technical work are used in estimating the economic value of the ventures in which they have been involved. Otherwise, they may invite incorrect use or manipulation of their professional geotech-nical product. This understanding requires that they have a good working knowledge of economics and finance integrated into their geotechnical expertise.

Abstract No rational investor wants to make a large payment for a purchase whose quantity, quality, and longevity are largely unknown. However, that is essentially what is required of most modern petroleum firms that seek to explore and develop new prospective areas. To obtain contractual rights to explore for and develop petroleum resources in most countries, a cor-poration usually must commit to spending millions of dollars, either through work commitments (line-miles of seismic surveys, number of drilled wells, and the like) or front-end payments (bonus bids, fees, and the like), or both. Frequently, such financial commitments are undertaken with only minimal knowledge about the prospectivity of the contract area—how many new fields may be discovered; how much oil and/or gas they may contain; how much it may cost to find, develop, and produce them; how profitable they may be; how long it may take to establish production; and how long the productive life of the fields may be. Ideally, such exploration would be staged: progressive investments would be closely related to the ongoing acquisition of geotechnical, economic, and political information bearing on evolving perceptions of risk versus reward, thus minimizing unnecessary expenditures. However, the form of most existing international contracts prevents such prudent investing. Thus the most critical decision in modern petroleum exploration is not which prospect to drill. Rather, it is which new trend or area to go into, because that decision commits the organization to millions of invested dollars, years of involvement, and hundreds of man-years of professional and technical effort.

Abstract We have now reviewed all the necessary considerations by which exploration prospects and plays may be objectively measured with respect to potential reserves, chance of commercial or economic success, and range of profitability given success. The remaining tasks concern how the inventories and portfolios of such opportunities may be managed as business ventures, taking into account the financial and human resources of the firm.

Abstract The Prospector Myth is the petroleum explorationist's version of the Hero Journey. We are informed and inspired by the image of the courageous lone prospector who struggles against Mother Nature, financial hardships, skeptical associates, and repeated rejection by investors, before finally succeeding through persistence, faith, and luck, to achieve vindication, wealth, and fame. Most of us know personally—or know of— one or more such individuals. We call them “wildcatters,” “oil finders,” “visionaries,” and other dramatic names reflecting the respect they are accorded in our industry.