While drilling a wildcat well, a tool is stuck. The engineers have two options: (1) to fish for the tool or • (2) sidetrack the well above the stuck position. The cost for each option and the associated probabilities are given in the table that follows. Based on expected value analysis, select the most economically viable option. Outcome Probability Cost, M$ Fishing Routine 35% 126 Troublesome 65% 380 Sidetrack Immediately Routine 85% 245 Troublesome 15% 436

While drilling a wildcat well, a tool is stuck. The engineers have two options: (1) to fish for the tool or • (2) sidetrack the well above the stuck position. The cost for each option and the associated probabilities are given in the table that follows. Based on expected value analysis, select the most economically viable option. Outcome Probability Cost, M$ Fishing Routine 35% 126 Troublesome 65% 380 Sidetrack Immediately Routine 85% 245 Troublesome 15% 436

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

While drilling a wildcat well, a tool is stuck. The engineers have two
options: (1) to fish for the tool or
• (2) sidetrack the well above the stuck position.
The cost for each option and the associated probabilities are given in
the table that follows. Based on expected value analysis, select the
most economically viable option.
Outcome
Probability
Cost, MS
Fishing
Routine
35%
126
Troublesome
65%
380
Sidetrack Immediately
Routine
85%
245
Troublesome
15%
436

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