INVESTMENT DECISION AND RISK ANALYSIS IN OIL EXPLORATION PROJECTS - A MQNTE CARLO VALUE-AT-RISK (VaR) APPROACH

This study examines the application of Monte Carlo simulation Value-at-Risk (VaR) technique or risk analysis and investment‘ decision in oil exploration project. The study uses the historical daily crude oil future pribe from Energy Information Administration and a hypothetical Okoro oilfield in Niger Delta - Nigeria. The analysis of the data was done using Value @ Risk Monte Carlo simulation and .the finding .shows that the project is profitable because it has a positive NPV It was recommended that the company should undertake the oil exploration as the chances of a positive return on investment are high.