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Uncertainties impacting reserves, revenue, and costs (view source)
Revision as of 17:01, 10 January 2014
, 17:01, 10 January 2014→Lognormality and log probability paper
# Remember that the absolute maximum and minimum values are not ''P''<sub>90%</sub> and ''P''<sub>10%</sub>!
# Remember that the absolute maximum and minimum values are not ''P''<sub>90%</sub> and ''P''<sub>10%</sub>!
# Although the values associated with any conventional probabilities (P<sub>90%</sub>, ''P''<sub>50%</sub>, and ''P''<sub>10%</sub>) can be read directly from the log probability paper, neither the mode nor the mean is so apparent. These parameters must be calculated.
# Although the values associated with any conventional probabilities (P<sub>90%</sub>, ''P''<sub>50%</sub>, and ''P''<sub>10%</sub>) can be read directly from the log probability paper, neither the mode nor the mean is so apparent. These parameters must be calculated.
# The mean (or average) is the single best numerical representation of the distribution and is determined approximately by ''Swanson's Rule of approximation''<ref name=Megill_1988>Megill, R. E., 1988, An introduction to exploration economics, 3rd ed.: Tulsa, OK, PennWell Books, 238 p.</ref> as follows:
# The mean (or average) is the single best numerical representation of the distribution and is determined approximately by ''Swanson's Rule of approximation''<ref name=Megill_1988>Megill, R. E., 1988, An introduction to exploration economics, 3rd ed.: Tulsa, OK, PennWell Books, 238 p.</ref> as follows: <math>\text{Mean} = 0.3(P_{90%}\text{ value}) + 0.4(P_{50%}\text{ value}) + 0.3(P_{10%}\text{ value})</math>
:<math>\mathbf{Equation}</math>
# Must ''all'' distributions be lognormal? A good working rule here is to ''assume'' lognormality, but be willing to modify or adjust the distribution if there is ''legitimate'' evidence (not just wishes or guesses) supporting it.
# Must ''all'' distributions be lognormal? A good working rule here is to ''assume'' lognormality, but be willing to modify or adjust the distribution if there is ''legitimate'' evidence (not just wishes or guesses) supporting it.