--> ABSTRACT: The Impact of Strategic Risk on Petroleum Ventures: Examples from West Africa, by Laura Kay Ethetton, WM. D. Brumbaugh; #91020 (1995).
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The Impact of Strategic Risk on Petroleum Ventures: Examples from West Africa

Laura Previous HitKayTop Ethetton, WM. D. Brumbaugh

Strategic risk analysis is critical to realistically evaluating and developing oil and gas properties in today's turbulent environment. Economic viability and company performance are affected by strategic risks that are difficult to assess and quantify but must be considered in any petroleum venture. Risks such as competitive, political, environmental, and contract terms must be examined, particularly in the international arena where companies make large investments in time and resources. Strategic risk assessment and planning are needed to set and maintain company direction, improve profitability, and concentrate resources where they will add the most value. A strategic risk system will be presented which weighs the quality of an opportunity in light of a company's abili y to pursue it, creating a ranking of projects using multiple risk criteria.

The West Africa Aptian Salt Basins play contains examples of "Gambler's Ruin", where lack of coherent strategies and risk assessment led to economic failure. The examples illustrate how failure to consider strategic risk factors and lack of strategic planning contributed to unprofitable ventures. It will be shown how the use of strategic risk analysis would have led companies to look at all areas of risk, recognize threats and weaknesses and alter strategies accordingly. A timely initiation of strategic risk analysis could have been used to determine whether to strengthen position, dilute interest, or avoid the situation altogether, aiding selection of the most value-adding action, optimizing company value and avoiding economic detriment.

AAPG Search and Discovery Article #91020©1995 AAPG Annual Convention, Houston, Texas, May 5-8, 1995