Monte Carlo Simulator

Monte Carlo Simulator

Now, it is possible to simulate and visualize cash flows, PV’s, IRR’s, production volumes and other key metrics across multi-well drilling programs in Spotfire!

Everyone in industry understands that key economic assumptions, like IP’s, decline rates, capital costs, timing of drilling, completion to initial production, and commercial terms, are all uncertain to some degree. To address these sources of economic risk, Blue River has implemented economic calculation data function with a Monte Carlo simulation engine, which repeatedly simulates the cash flows that result from different assumption outcomes, giving operators and investors a full spectrum of possible economic results, from the worst possible losses, to what is most likely to occur, and to the largest upside possibilities too!

Choose ranges of possibilities for over 40 different assumptions (e.g. IP, initial decline rate, Drilling / Completion Costs, Price). Appropriate distributions are used to model uncertainty in these assumptions. These parameter sets can be tweaked in Spotfire, as well as saved and read from parameter files for sharing and transfer of key assumptions across people and groups. Includes a flexible and sophisticated pricing model for oil and gas.

Ability to simulate up to 3 different drilling programs together. Each drilling program has entirely independent assumptions, allowing analysis of programs for different possible completion zones, inclusion of existing production and decline in the economics, or bundled deals with entirely different production and economic parameters. Results are available for each drilling program as well as rolled up across all drilling programs.

Drilling and economic outcomes can be simulated and visualized for hundreds or thousands of scenarios with the push of a button.

Up to 50 years of production and cash flows are modeled for each well across all programs. Economic risk charts include an analysis of the sensitivity of the economics to the various assumptions, showing a chart which identifies the most important economic assumptions and their relative contribution to economic risk.

  • A large collection of output data tables are available, allowing customers to create a virtually limitless set of interactive visualizations, in addition to the rich preset visualizations which come bundled with the template.
  • Quickly visualize likely financial outcomes, as well as upside and value-at-risk likelihoods and dollar magnitudes. Project cash flows, expenses, capital outflows, and production volumes over time across multi-well programs.
  • Easy to tweak assumptions and rerun analysis as more information about drilling programs is acquired and risk is reduced.
  • Ability to expand the economics dashboards from tables, to histograms, cross plots, line plots, heatmaps, and all the other rich visualization tools that allow analysts and decision makers to quickly identify interesting scenarios and add confidence to forecasts and operating plans.