When oil prices were low, management energy focused on cutting costs and improving return on capital employed (ROCE). Because the ROCE was poor, the major fiscal problem was that the energy business is not competitive as an investment vehicle compared with other growth industries (such as computing, the Internet, and biomedicine). When the economics of time-lapse (4D) reservoir management are considered in a stochastic portfolio model of future cash now, various price scenarios can be considered quantitatively in terms of the relative contributions of each large field to the company's overall success. High recovery rates are required to balance risk and reward sufficiently. However, if cost-cutting models are used that exclude 4D reservoir management from future development scenarios for these fields, cash-now shortfalls result in all but the most optimistic future-price scenarios.
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