Decision Economics · Module E1
Economic Framing for Subsurface Professionals
The economic vocabulary every subsurface professional needs: net present value, IRR and payback, discount rates and hurdle rates, the time value of money, expected monetary value, and how petrophysical outputs become economic inputs. It ends with the habit of stating the economic consequence of every technical result.
- Level
- Intermediate
- Position
- Module 1 of 8
- Video
- About 17 minutes, narrated
- Format
- Narrated video lesson and slide reading view; with the certified option, a quiz whose pass unlocks the next module.
What the module covers
- Net present value as the primary investment metric
- IRR, payback and capital exposure
- Discount rates and hurdle rates
- The time value of money, worked through
- Expected monetary value and exploration risk
- Turning petrophysical outputs into economic inputs
Learning outcomes
After the module you should be able to:
- Frame every petrophysical output with a stated economic consequence.
- Compute and interpret NPV, IRR and payback
- Explain how a change in a technical input changes value
- State the economic consequence of a technical result in one sentence
A short preview
Money received later is worth less than money received now, and discounting puts a number on how much less. At a 10 percent discount rate, $100 received in five years is worth 100 / 1.1⁵ = $62.09 today. Over a field life of twenty years or more that compounding dominates: at the same rate a barrel's revenue in year fifteen is worth about a quarter of the same revenue in year one. That is why production timing, not only volume, belongs in a subsurface professional's thinking.
Who it is for
Petrophysicists, geoscientists and reservoir engineers who need to connect technical work to investment decisions, and analysts new to upstream economics.
Prerequisites: None required; familiarity with volumetric estimates helps.
Take the module in the Learning Hub
Decision Economics: Eight economics modules from NPV framing through portfolio ranking and capstone. The lesson opens in the Learning Hub once the track is purchased; graded quizzes and the certificate come with the certified option.