Portfolio Optimisation and Screening in Low Funding Era

Abstract Portfolio optimisation is the process of choosing the proportions of various assets to be held in a portfolio, in such a way as to make the best use of the opportunities in that portfolio in any prevailing circumstance. This is a component of full-wide portfolio management which is an ill-defined and often over-used term. Whether or not a company's portfolio solution entails consolidating data into a spreadsheet or employing modern portfolio theory to develop an efficient frontier, the goal is to ensure long-term business success by optimising value returns at the minimum risk. Since June 2014, international oil and gas prices have been declining and currently (Dec 2015) below 40 USD per barrel and 2.5 USD per million Btu respectively (Fig 1). This has brought much pressure on funding availability both on the sides of national and international oil companies. To fully manage the SPDC's gas portfolio, innovative and sound processes were initiated to optimise and screen a very significant part of our portfolio to ensure that the company still meets and sustains her gas supply obligations with optimal value returns. Prioritisation and ranking of different projects using known parameters and also generating portfolio sensitives using PetroVR tool provided us the foundation for robust decisions on the way forward. Problem Statement: Evaluate different portfolio options to meet supply agreements and obligations.Prioritise all projects in the portfolio and rank them considering technical, commercial and other non-technical indicators. The methodologies applied in resolving the above problems were along two work streams namely: Build an integrated gas portfolio model using the PetroVR tool. This was built consistent with latestcompany's operating plan and creating multiple scenarios. The model has production forecasting and economics evaluation/screening capabilities. Therefore, it was possible to check each portfolio scenario in terms of ability to meet gas supply and their economics value.Project prioritisation tool. This is an in-house tool with analytical abilities. Key input data are ultimate recovery, gas Production rate, CAPEX, UDC, NPV, strategic considerations, etc. The results of these evaluations have helped the company make appropriate decisions on its gas supply strategy and ensuring projects with capacity to meet obligations are matured in priority order.