The upstream E&P industry is one of the riskiest businesses in which to invest and is dominated by different types of uncertainties: political, economic, social, and technical. Many factors can lead to optimistic or pessimistic risk assessment. Overestimation, underestimation, misidentifying critical risks, overselling projects, and underselling projects are some of the problems. For consistent risk analysis of exploration projects, a systematic approach is used that includes geologic risk, minimum economic field size (MEFS), resource-size distribution, development cost, rate streams, commodity price, and discount rate. This approach requires highly skilled geoscientists and reservoir, facility, and drilling engineers to estimate field-development costs, generate the economic indicator, rank the exploratory prospects' potential success, and support the business decisions. The definition of “exploration success” contains two main variables: (1) probability of geologic success (Pg) and (2) probability of economic success (Pe). To remove the risk of subeconomic volumes from the volumetric distribution, the industry uses the estimation of minimum required resources for the full project life cycle, considering the most likely development scenario. An effort is made to describe the appropriate MEFS estimation methodology, which is an essential component for consistent exploratory-project risk analysis. The influence of key parameters on MEFS estimation, including some illustrative examples, also are analyzed to demonstrate the criticality of MEFS estimation and its impact on exploratory-prospect risk assessment and to achieve an overall economic success.

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