Exploration is not just a science – it’s a business! You can only work in areas where you can acquire “mineral rights,” you have to limit yourself to opportunities where you have a reasonable chance of generating a profit, and you have to do it in a volatile environment with price fluctuations and other risks and opportunities. In this module, we explain how oil and gas companies evaluate projects by projecting all cash inflows and outflows over the life of a project, including: all costs, the quantity and timing of production, product prices, mineral rights contract terms, and other factors. We explain why cash flows received or paid in the future are not as valuable as cash received or paid today, and we painlessly explain how future cash flows are therefore “discounted” to estimate the “net present value” of a project. Everyone should know these important business factors that drive the industry!

Duration: Approximately 25 minutes, depending on user pace.

Learning Objectives: Upon successful completion of this module, you will be able to:

• Recognize that business objectives make exploration much more challenging than just finding oil and gas
• List common costs incurred in oil and gas exploration and development
• Describe why the timing of revenues received and costs paid is important for estimating the value of a project
• Explain why mineral rights are required and how they are obtained through leasing and other forms of contract
• Summarize common mineral rights terms and how they impact project economic results
• Summarize common mineral rights terms and how they impact project economic results

Prerequisites: Module 1-8

Advance Preparation: None

Program Level: Non-technical

Format: Prerecorded narrator with supporting visuals. User controls course pace.