--> ABSTRACT: Risk Analysis in International Exploration: A Qualitative Approach, by N. G. De'Ath; #91021 (2010)

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Risk Analysis in International Exploration: A Qualitative Approach

DE'ATH, NICK G.

These are exciting times for international exploration companies. But implementation of exploration strategies will depend on a company's ability to properly assess, analyze and effectively deal with the various categories of risk. Over the past two decades the industry has been driven by complex, quantitative methods of exploration risk analysis and the bottom line single number result used primarily to compare and rank exploration projects. The shortcomings of this approach are simply that lower risk, lower reserve opportunities survive the analysis better and are therefore the primary type of projects currently being drilled. Projects with significant upside reserve potential (which may or may not be fully understood and therefore perceived higher risk) tend not to survive the process and are ultimately not being drilled.

A qualitative method of risk perception, represented by a circular diagram named the "Opportunity Signature", is presented as an alternative to the quantitative approach. with this method, each significant technical, economic industry and country risk consideration is addressed in an overall project context and displayed visually as spokes on the wheel, colored to represent the degree of negative versus positive impact. This method is user friendly and highlights critical issues so that explorers can concentrate their efforts on mitigating the critical risks. The process allows decision makers to view the overall project signature and focus quickly on the positive or negative impact of specific parameters. This results in better informed decisions not driven solely by risk weighted economics.

AAPG Search and Discovery Article #91021©1997 AAPG Annual Convention, Dallas, Texas.