Risk Analysis and Decision Making

Day 1- Monte Carlo simulation vs. decision trees; How Monte Carlo simulation works; Language of
statistics and probability; Data analysis; @RISK (or Crystal Ball): fitting data, menus, distributions,
settings, assumptions, forecasts; Latin Hypercube sampling

Day 2 - Building simple models; Volumetric products; Central Limit Theorem; Drilling AFE; Aggregation
models; Working with experts; Recognizing & incorporating dependency, cross plots, correlation;
Effects of correlation

Day 3 – Changing distribution type; Production forecasts and cashflows; Imposing uncertainty on
prices and costs; Modeling unscheduled events; Meaning of P10 forecasts, Layered prospects

Day 4 – Decision tree fundamentals and applications using Palisades Precision Tree; Scheduling and
timing; Linking between model components; Presentation essentials

Day 5 -Experimental design; Models and data from the class; Converting from Deterministic to
Stochastic; Review of report presentations; Comprehensive class problem and presentation

Jim Murtha, a registered petroleum engineer, presents seminars and training courses and advises clients
in building probabilistic models in risk analysis and decision making. Jim is an industry-recognized expert
on risk and decision analysis; he was elected to Distinguished Membership in SPE in 1999, the recipient
of the 1998 SPE Award in Economics and Evaluation, and was 1996-7 SPE Distinguished Lecturer in Risk
and Decision Analysis. Since 1992, over 5000 professionals have taken his classes. SPE has further
honored Jim by choosing him as the principal author of the Chapter on Risk and Decision Analysis in the
new edition of the SPE Petroleum Engineering Handbook. He has published Decisions Involving
Uncertainty - An @RISK Tutorial for the Petroleum Industry. In 25 years of academic experience, he
chaired a math department, taught petroleum engineering, served as academic dean of a college, and
co-authored two texts in mathematics and statistics. Jim has a Ph.D. in mathematics from the U of
Wisconsin, a MS in petroleum & natural gas engineering from Penn State, and a BS in mathematics from
Marietta College.