Hobbs, G. Warfield¹ 
(1) Ammonite Resources, New Canaan, CT

ABSTRACT: Preparing a Business Plan for a Petroleum Exploration and Production Venture: A Critical Step in Launching a Successful Enterprise

A business plan is a concise statement about a new enterprise, which serves as a blueprint for principals and potential investors. Important facts about the venture concerning what, who, why, where, how and when, and the estimated costs and projected financial returns are included in the plan. The document should be well thought out, properly ordered, and thorough, but not too long. It must be written in a manner that captures the reader’s attention in the first few paragraphs, and maintains that interest until the end. 
Business plans have a relatively standardized format. They typically begin with an executive summary which encapsulates the elements of the new business venture in one to two pages. A table of contents and list of exhibits follows. Principal sections in the business plan should include detailed descriptions of: a) the company and its management team – in particular the prior track record of the principals as oil and gas finders and managers; b) the proposed operations; c) use of funds; d) local market analysis; d) transaction structure; e) economic projections with appropriate sensitivities; and, f) risk factors, including environmental and regulatory concerns. Supporting maps, well logs, reserve reports, and other technical documentation are included as appendices. 
Energy capital providers are bombarded daily with new proposals. The business plan should clearly explain the competitive advantages of the proposal, and why investors will make money if they participate. A well-written plan will get the attention of serious financiers, and is a critical step to success.

AAPG Search and Discovery Article #90026©2004 AAPG Annual Meeting, Dallas, Texas, April 18-21, 2004.