petrolook portfolio advisor
Power your decision making process through aclaro’s new Portfolio Advisor module; part of the innovative petroLook application suite. The Portfolio Advisor module is a full featured Portfolio Optimization solution. Powered by Charlotte Software Systems proprietary optimization engine - the Portfolio Advisor is the first and only software product for E&P offering true constrained multi-objective optimization..
Capital Planning poses many difficult questions:
Budget Allocation:
- What is the right capital budget for the business unit?
- How should limited capital be distributed between assets and opportunities?
- How many wells should be drilled? How many can be drilled?
- Project Selection:
- Which wells in inventory should make it into the plan?
- How can competing objectives (production, reserves, capital, etc) be satisfied? What are the tradeoffs?
- How do assumptions impact the plan?
- Mid Year Adjustments:
- What alternatives are available to get back on plan?
- Inventory Feedback:
- What types of opportunities should geology and engineering be focusing on?
Employing a portfolio approach makes capital planning quantitative and objective. But it’s important that the right tools and processes are leveraged, as they can influence the results of analysis and ultimately the financial performance of the organization.
Many organizations that understand the need for a portfolio approach are utilizing sub-optimal technologies and processes. Spreadsheet models, for instance, have all of limitations inherent with spreadsheets, including: complexity, different versions of ‘the answer’, fragility (easy to accidentally break a formula), long analysis turnaround times when introducing new opportunities or calculations, and the necessity to collapse multiple metrics into one or two summary metrics. Monte Carlo sampling coves only a small subset of alternatives, often providing misleading results. Solvers, like linear algorithms deliver a single ‘right’ answer, simplifying or passing off non-financial constraints (operational, regulatory, etc), and forcing qualitative, rather than quantitative judgments of fundamental tradeoffs.
Portfolio theory + optimization technology =
a rigorous, quantitative, and transparent solution for improved capital planning.
What is an Optimal Portfolio?
Portfolio theory highlights that many portfolios can be optimal when multiple objectives are in play. The Efficient Frontier (aka Pareto Optimal Frontier) reveals the fundamental tradeoffs between variables.
How does an Efficient Frontier relate to business decisions?
An efficient frontier is like the flight envelope for business decisions.
Flying outside the envelope isn’t possible (too high, too fast). Flying inside the envelope is conservative and likely represents missed opportunity (low and slow). Flying at the edge of the envelope means the best possible performance given the opportunities and constraints at hand (cruising altitude and max efficiency).
Human judgment should decide where to be on the envelope, not guess where the envelope is. Without data and rigorous analysis, human judgment provides directional guidance, but often misses the mark for understanding what the real business tradeoffs are. There are simply too many feasible solutions to evaluate exhaustively.
PetroLook Portfolio Advisor is the first and only software product for E&P offering true constrained multi-objective optimization. The key advantage of the system is a technical breakthrough that allows full constraint handling during optimization - no other product handles constraints as well. While other optimization engines exist on the market, the CSS Optimization Engine outperforms them on solution quality, computation speed, and constraint handling - providing a step change to current users of traditional portfolio analysis techniques and better results and more efficient workflows for users of more advanced optimization techniques.
