Working paper
Optimal oil extraction as a multiple real option
- Abstract:
-
We study optimal oil extraction strategy and the value of an oil field using a multiple real option approach. Extracting a barrel of oil is similar to exercising a call option and optimal strategies lead to deferring production when oil prices are low and when volatility is high. We show that, in theory, the net present value of a country's oil reserves is increased significantly (by 100 percent, in the most extreme case) if production decisions are made conditional on oil prices. We also sh...
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- Publication status:
- Published
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Bibliographic Details
- Publisher:
- University of Oxford Publisher's website
- Series:
- OxCarre Papers
- Publication date:
- 2011-09-12
- Paper number:
- 64
Item Description
- Keywords:
- Pubs id:
-
1143870
- Local pid:
- pubs:1143870
- Deposit date:
- 2020-12-15
Terms of use
- Copyright date:
- 2011
- Rights statement:
- Copyright 2011 The Author(s)
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