Evercore Investment Banking Pitch Book
Preliminary Financial Analysis
Ultra Deep Risking Methodology
■ Industry standard expected value analysis
relies on risk weighting outcomes by their
probabilities
■ Cash flows from this analysis represent
aggregate expected values for a full program
inclusive of risk
■ Present Value of Development Well
Risk-weighted sum of the Present
Values of the Success and Mechanical
Failure cases
■ Present Value of Full Development
Sum of all development wells as
calculated above
Exploration Well
Legend
Expected Value for an Ultra Deep Prospect
Full Development
GCOS
Success
(1-GCOS)
Failure
= Exploration Well
= Development Well
25
Present Value Σ
of Full
Development
Present Value
of Exploratory
Dry Hole
GCOS Probability of Geologic Success (%)
MCOS = Probability of Mechanical Success (%)
#1
#20
MCOS
Success
(1-MCOS)
#30
Failure
MCOS
Success
Failure
(1-MCOS)
MCOS
Confidential
Success
Failure
Expected Value of Ultra Deep Prospect
Risk-weighted sum of the Present
Value of Full Development and the
Present Value of an Exploratory Dry
Hole
Risk Weighting
Expected Value = COS x (Present Value of Full Development) + (1-COS) x (Present Value of Exploratory Dry Hole)
EVERCORE PARTNERS
(1-MCOS)
Present
Value of
Well
Present
Value of
Mech. Failure
Present
Value of
Well
Present
Value of
Mech. Failure
Present
Value of
Well
Present
Value of
Mech. Failure
MOMORANView entire presentation