Optimal exploration investments under price and geological-technical uncertainty: a real options model
link https://doi.org/10.1111/1467-9310.00208account_box Cortazar, Gaccount_box Schwartz, ESaccount_box Casassus, J
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This article develops a real options model for valuing natural resource exploration investments (e,g, oil or copper) when there is joint price and geological-technical uncertainty. After a successful several-stage exploration phase, there is a development investment and an extraction phase. All phases are optimized contingent on price and geological-technical uncertainty.
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| Autor | Cortazar, G Schwartz, ES Casassus, J |
| Título | Optimal exploration investments under price and geological-technical uncertainty: a real options model |
| Revista | R & D MANAGEMENT |
| ISSN | 0033-6807 |
| ISSN electrónico | 1467-9310 |
| Volumen | 31 |
| Número de publicación | 2 |
| Página inicio | 181 |
| Página final | 189 |
| Fecha de publicación | 2001 |
| Resumen | This article develops a real options model for valuing natural resource exploration investments (e,g, oil or copper) when there is joint price and geological-technical uncertainty. After a successful several-stage exploration phase, there is a development investment and an extraction phase. All phases are optimized contingent on price and geological-technical uncertainty. Several real options are considered. There are flexible investment schedules for all exploration stages and a timing option for the development investment. Once the mine is developed, there are closure, opening and abandonment options for the extraction phase. Our model maintains a relatively simple valuation structure by collapsing price and geological-technical uncertainty into a one-factor model. We apply the model to a copper exploration prospect and find that a significant fraction of total project value is due to the operational, development and exploration options available to project managers. |
| Derechos | acceso restringido |
| DOI | 10.1111/1467-9310.00208 |
| Editorial | WILEY |
| Enlace | |
| Id de publicación en WoS | WOS:000169146400008 |
| Paginación | 9 páginas |
| Palabra clave | VALUATION OIL |
| Tema ODS | 08 Decent Work and Economic Growth |
| Tema ODS español | 08 Trabajo decente y crecimiento económico |
| Tipo de documento | artículo |