Lessons from Local Oil Industry in Cash Flow, Recoverable Volume, Production Curve, and more

Lessons from Local Oil Industry Most of Professor Luciano Arantes Rezende Costa’s students at the Brazilian Petroleum Institute work in the local oil industry.

So, when he teaches his 20-hour course on evaluation of petroleum exploration opportunities, he has to provide hands-on lessons his students can immediately apply in their own careers.

That’s where Palisade’s @RISK software comes into play.

"To illustrate the classes, I've created a very simple model in Excel for evaluating exploration opportunities and bidding on them," Prof. Costa says. "Using the flexibility of @RISK, I've included in this model uncertainty about how much petroleum could be found (recoverable volume); how much could be produced by year (production curve); and how much cash flow could be expected from the estimated production."

Prof. Costa speaks from experience. In addition to teaching at the Institute, he works full time for Petrobras, one of the world’s largest integrated energy companies. The Rio de Janeiro-based company currently produces about 2.6 million barrels of oil and natural-gas equivalent a day.

Prof. Costa first encountered @RISK while earning his master’s degree at Colorado School of Mines in 1997. He says @RISK continues to be one of the easiest ways to teach Monte Carlo Simulation, a computerized mathematical technique to account for risk in quantitative analysis and decision-making. "Students can visualize what is going on just by pressing a single button," he says.

"My classes are very practical because students can grasp the concepts easily and use @RISK to create new models for their own real-life problems," Prof. Costa says.

» Learn more about how Petrobras has integrated @RISK into their operations

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