A Brief DPL Tutorial

♦ The three uncertain outcomes (Low, Nominal, High) have the same original value
of $15. We will now change that to $10, $15 and $25
respectively, to cover the
range of possible oil prices for the problem, while maintaining the default
probabilities for now.
♦ Let’s assume that there is also uncertainty over the level of the reserves. Although
the reserves are estimated to be 90MM Bbl it could be as low as 50 or as high
as
200M.
♦ Right click on the Reserves node. Click on “Change Node Type” and choose
“Chance” to change this node into a Chance node.
♦ When the Node Definition window appears, click OK. You will see that the shape
of this node in the Influence Diagram pane has changed to a circle.
♦ Double click on the Reserves node again. The Data window will appear.
♦ The three uncertain outcomes (Low, Nominal, High) still have the same original
value of 90. We will now change that to 50, 90 and $200 respectively and click
OK.
The influence diagram for the model should look somewhat like Figure 17. Notice the
change in shape (and color) of the two nodes we modified from Value to Chance Nodes.
OperatingCost
FixedCost
DeclineRate
DevelCost
OilPrice
ProdRate
Figure 17
PSCShare
♦ We will now run our analysis again, by clicking on “Analysis/Decision Analysis”
on the pull down menu. We get the Policy Tree shown in Figure 18. We can also
see that the Expected NPV of the project has increased from 88 to 175.8 due to
range of possible values for the uncertain variables that we input.
19
Reserves
NPV