Method helps operators determine best times to shut down projects

Ken Kasriel RPS Energy London David Wood DWA Energy Ltd. Lincoln, UK Click here for the complete Method A and Method B Excel files mentioned in this article. If the aim of investment activity is to maximize value to the investor, the time to end the activity is when the investor believes maximum possible value is achieved, before value is destroyed by continuing. To prevent such value destruction, upstream petroleum industry investments usually have some form of economic limit test (ELT) which determines that it is time to stop a project when forecast "value" (i.e., some definition of revenue minus some definition of costs) would otherwise turn irreversibly negative. Whil...

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