If the development well modeled in Table 1 in [[Building a cash flow model]] had been assigned an 80% chance of success by the geologist, the calculated ENPV (aftertax) at 4% would be [[cost::713,480 USD]] (0.80 × [[cost::1,015,600 USD]] – 0.20 × [[cost::495,000 USD]]). Since this is a linear function, a plot of ENPV versus the probability of success results in a straight line. Assume two points (''P''<sub>s</sub> = 1 and 0) to define the line. The intersection where the ENPV is zero will give the breakover point for the probability of success. [[:file:key-economic-parameters_fig3.png|Figure 3]] demonstrates this concept. The breakover probability of success for the development well is approximately 33%. | If the development well modeled in Table 1 in [[Building a cash flow model]] had been assigned an 80% chance of success by the geologist, the calculated ENPV (aftertax) at 4% would be [[cost::713,480 USD]] (0.80 × [[cost::1,015,600 USD]] – 0.20 × [[cost::495,000 USD]]). Since this is a linear function, a plot of ENPV versus the probability of success results in a straight line. Assume two points (''P''<sub>s</sub> = 1 and 0) to define the line. The intersection where the ENPV is zero will give the breakover point for the probability of success. [[:file:key-economic-parameters_fig3.png|Figure 3]] demonstrates this concept. The breakover probability of success for the development well is approximately 33%. |