Decision Economics · Module E6
Project Ranking and Value of Information
Ranking projects under capital constraints: risked NPV and chance of success, the profitability index, expected-value ranking, value of information in a portfolio, ranking stability under price stress, and the biases that distort portfolios.
- Level
- Intermediate
- Position
- Module 6 of 8
- Video
- About 18 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
- Capital scarcity and opportunity cost
- Risked NPV and the chance of geological success
- Profitability index: value per capital dollar
- Value of information in a portfolio
- Ranking stability under price stress
- Portfolio biases and how to avoid them
Learning outcomes
After the module you should be able to:
- Rank projects and articulate value-of-information trade-offs.
- Rank projects by risked value and capital efficiency
- Decide which data acquisition is worth funding
- Present a ranking that survives challenge
A short preview
When capital is the constraint, ranking by NPV alone favours large projects. The profitability index, NPV divided by the capital it needs, ranks by value per dollar instead. A project needing $200M of capital with an NPV of $60M has a PI of 0.3; one needing $40M with an NPV of $20M has a PI of 0.5. With $200M to spend, five projects like the second create $100M of value against $60M for one like the first.
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.