Title: Impact of offshore drilling rigs availability in the optimal investment timing on high-deep water projects in the Santos Basin
Authors: Marcio Augusto SampaioPinto; Saul Barisnik Suslick
Departamento de Engenharia de Minas e de Petróleo, Escola Politécnica, Universidade de São Paulo, Praça Narciso de Andrade, S/N, Vila Mathias, CEP 11013560 – Santos, SP – Brazil
Deceased; formerly of: Universidade Estadual de Campinas, Brazil
Abstract: One of the greatest challenges in the oil industry is the availability of drilling rigs for operations in high-deep waters environments. This delay affects the decision of the optimal time to invest when examined by traditional valuation methods or for real options theory. This paper proposes an option model based on stochastic behaviour of oil prices and its relationship with optimal rules of investments. This model was applied for valuation and decision-making of oil projects simulating the new discoveries in the pre-salt areas in the Santos Basin. The results showed that with the traditional framework of the investment decision, the delay tolerated in production is much lower than the delay tolerated by the real options theory. Consequently, this paper estimates how much can be tolerated for delay in delivering an offshore drilling rig without affecting the optimal time to invest in an irreversible project. [Received: January 31, 2015; Accepted: December 24, 2015]
Keywords: real options; investment under uncertainty; impact of infrastructure in oil projects; economic evaluation.
Int. J. of Oil, Gas and Coal Technology, 2017 Vol.15, No.3, pp.217 - 234
Available online: 07 Jun 2017