Crystal Ball: Tomorrow's Forecast If you cannot read this newsletter, you can view it online at http://www.crystalball.com/newsletters/newsletter214.html November 28, 2007 | Issue 214 | www.crystalball.com

Crystal Ball Update

The holiday season is here, and I'm sure many of you are very busy. There are many changes occuring at Crystal Ball this holiday season. This issue of Tomorrow's Forecast is being sent to you from the new Crystal Ball office location in the Denver Technology Center. Click here for our new contact information.

You will notice the newsletter has a new look. This is one of the many changes reflecting Crystal Ball being a global business unit of Oracle. This also coincides with the new design and features of the Crystal Ball Web site, www.crystalball.com.

And you'll see a new "Focus On" section each month on our homepage. Each month, Crystal Ball will feature a new industry and/or application. December 2007 is our first themed month. December's focus is on Oil & Gas. Learn more about how Crystal Ball relates to Oil & Gas in this issue of Tomorrow's Forecast.

Sincerely,

The Crystal Ball Global Business Unit

Houston Petroleum Club Lunch

Date: Tuesday, December 4, 2007
Time: 11:00 A.M. - 1:30 P.M.
Location: Houston Petroleum Club, 800 Bell Street, 43rd floor, Houston, TX 77024

Attend the free Oracle Business Intelligence (BI) Executive Lunch Briefing to learn how Oracle’s portfolio of BI technology and applications (including Crystal Ball) provides the most comprehensive petroleum business intelligence and analytic capabilities available today for the digital oilfield.

To reserve your place at this executive event, please call 800.820.5592 ext. 4867.

Crystal Ball Oil & Gas Forum

The Crystal Ball Oil & Gas Forum will be held December 13th in Houston, Texas at the Houston Marriott West Loop.  The event will feature a full day of case studies, best practices and workshops led by Crystal Ball and risk modeling experts in the Oil & Gas field. 

Attendees at this event will:

• Discover innovative applications for using Crystal Ball from the people who know it best--other users
• Learn the latest techniques for risk analysis, simulation and optimization
• Exchange solutions and network with professionals who have successfully used Crystal Ball
• Improve the communication of risk and how to get the most out of forecasting and analysis results.

> Speakers and Abstract
> Schedule
> Register Here

Upcoming Web Seminar

Capital Budgeting and Risk Analysis in Oil & Gas

Date: Wednesday, Dec. 19th, 2007
Time: 9:00 am MST (Denver)
Location: Your desk

Valuation of Oil & Gas assets is a critical and challenging process.  In this session, the following important topics will be addressed using Crystal Ball: analytical skills, techniques, and challenges in Oil & Gas capital budgeting; project valuation; distribution fitting; correlation assumptions; risk analysis of Oil & Gas projects; sensitivity analysis, sensitivity charts and tornado charts; scenario analysis; and Monte Carlo simulation analysis.

Presented by Betty Simkins, Williams Companies; and Professor of Business in the Department of Finance at Oklahoma State University.

> Register to attend this Web seminar

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RESOURCES

On Demand Oil & Gas Web Seminars

These Oil & Gas Web Seminars are available to view at your convenience. They cover a wide range of topics relating to the Oil & Gas industry. Topics include:

• Using Crystal Ball to Analyze Waterflood Projects:
  Demonstrates the effectiveness of using Crystal Ball with a simple “quick look” model to simulate hydrocarbon recoveries from a waterflood project.
  
  
• Portfolios Optimization in Oil & Gas:
  An analysis of risk and real options and their contribution to efficient capital allocation
  
  
• Forecasting Oil & Gas Production for Short-Term Planning:
  Learn why and how probabilistic analysis is used to forecast Oil & Gas production in Chevron's GOM Deepwater Producing Operations Group and the key benefits of the methodology.
  
  
• Efficient Capital Allocation in Oil & Gas:
  Learn when is a project an efficient use of corporate capital, what is the Efficient Frontier, what is an appropriate measure of risk in capital project evaluation, what is the role of strategic flexibility (real options) in project evaluation and the capital allocation decision, and what effect does this flexibility have on the Efficient Frontier.
  
  
• Could Probabilistic Reserve Estimates Handle Simulation Pessimism?:
  Accurately estimating recoverable reserves and then determining the best scenario to develop the reserves is a key function of reservoir engineering. Learn how to use Monte Carlo simulation techniques to calculate the volumetrics of the original hydrocarbon in place (OHIP) to yield a more realistic range of probable OHIP.

> View all Crystal Ball on demand web seminars.

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Success Story

Stochastic Drill Queue Scheduling

Oil & Gas exploration and production is very expensive and
time consuming. It deals with many unknowns, with high risk and uncertainty an inherent part of the industry. The more an Oil & Gas company can understand and plan for uncertainty, the better it will do at mitigating risks and achieving success.

“Using Crystal Ball Software helped increase the accuracy of our drill queue forecast.” David Meinert, Petroleum Engineer, Chevron

> View the entire case study.

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White Paper

A "Top Down" Approach For Applying Modern Portfolio Theory To Oil & Gas Property Investments
D.D. Faulder, P.E., SPE, Colorado School of Mines and F.L. Moseley, Ph.D., SPE, Minot State University
Agriculture and Agri-Food Canada
Source: 2004 Crystal Ball User Conference

Petroleum companies commonly use a “bottom up” approach for constructing and evaluating their petroleum portfolios, i.e. the “fill the data cube approach.” Extensive information for each well is coded into the economic software including but not limited to rock and fluid properties, production profiles, operating and capital costs and then aggregated to fields, business units and finally the total petroleum asset base. This approach requires a significant commitment in technical, managerial and computer resources “to fill the data cube;” seriously limiting portfolio analysis to companies willing to commit to those re-sources.

An alternative to the “bottom up” approach is the “top down” approach. Financial fund managers on Wall Street use this “top down” approach for the construction of financial portfolios. The financial analysts are first involved in making forecasts for the economy, then for industries and finally for companies. This same concept and process can be applied to the petro-leum industry, greatly reducing the effort to prepare for and conduct portfolio analysis.

> View the entire white paper

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Risk Tip

How to use the Custom Distribution in Crystal Ball– The Histogram Distribution (Tip #4 of 5)

Introduction

The Custom distribution in Crystal Ball is arguably the most versatile, but also one of the most difficult distributions to correctly use within Crystal Ball. In fact, using the Custom distribution, a Crystal Ball software user can construct five different kinds of distributions (see Table below).

Each of these five distributions has a different use and application. The way that the Custom distribution “knows” which of the above five to make for you totally depends on the format of your input data ("date entry rules").

> View the Full Risk Tip (#4 of 5)

Share a comment, risk analysis tip or a new CB Tip with your fellow Crystal Ball users! Send your contribution to newsletter@crystalball.com.

> Previously published tips and techniques

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MONTE CARLO IN THE NEWS

Application of the Dispersive Discovery Model
Source: The Oil Drum Newsletter, DrumBeat: November 27, 2007

Monte Carlo simulation is used in the application of the Dispersive Discovery Model in relation to the discovery of oil fields.

Using Monte Carlo Simulation to Derive More Accurate Project Duration Estimates
Source: Enterprise 2.0 Ireland, Friday, November 16, 2007

No project runs entirely uninterrupted from start to finish. Forecasting how long a project is going to take has been a near impossible task for companies for years. Few large infrastructure projects where there is a team and strict deadlines in place, are completed on time. Monte Carlo simulation is used to give more accurate project duration estimates.

Home Economics-The Property Market
Source: The Sunday Times, November 11, 2007

The housing market can be a confusing one. If you're buying, is it best to wait? If you're selling, when should you do so? Statistics are contradictory on the subject. In this article, Monte Carlo simulation is used by a home mortgage firm to come up with some interesting results.

Read about Monte Carlo simulation in a recent article or paper? Let us know! Send your citation to newsletter@crystalball.com.

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MICROSOFT EXCEL AND THE WEB

The Excel Nexus
Microsoft Excel connects the worlds of business, finance, marketing, engineering, math, statistics, and academics. If you use or create spreadsheets, odds are that you use Excel. Excel Nexus provides templates, tutorials, and articles to help increase your productivity while taking advantage of the power and popularity of spreadsheets.

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TRAINING SCHEDULE

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CRYSTAL BALL USER GROUP DISCUSSIONS

The Crystal Ball User Group (CBUG) is a Yahoo!® online forum where Crystal Ball users can discuss issues and methods related to Crystal Ball software.

Latest topics:

• Correlation coefficients inconsistent
• How to show forecast cell as new input for another forecast in sensitivity chart.
• Bootstrap Method to calculate safety stock

> Click here to visit CBUG and register to become a member

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