Changes

Arps and Arps<ref name=pt02r1>Arps, J. J., J. L., Arps,, 1974, Prudent risk-taking: Journal of Petroleum Technology, v. 26, p. 711–715., 10., 2118/4565-PA</ref> provided a graphical method for determining whether the risk of a given exploration venture is acceptable, if the cost, reward, and chance of success are known and if the firm has chosen a probabilistic safety factor (that is, 95%) for its overall program. The Arps and Arps method is not applicable to most development projects, except for very small firms.

Arps and Arps<ref name=pt02r1>Arps, J. J., J. L., Arps,, 1974, Prudent risk-taking: Journal of Petroleum Technology, v. 26, p. 711–715., 10., 2118/4565-PA</ref> provided a graphical method for determining whether the risk of a given exploration venture is acceptable, if the cost, reward, and chance of success are known and if the firm has chosen a probabilistic safety factor (that is, 95%) for its overall program. The Arps and Arps method is not applicable to most development projects, except for very small firms.

However, the petroleum industry has traditionally dealt with risk aversion through more pragmatic business methods, including the following:

However, the [[petroleum]] industry has traditionally dealt with risk aversion through more pragmatic business methods, including the following:

* Farming-out leased acreage in exchange for a drilling commitment

* Farming-out leased acreage in exchange for a drilling commitment