Upstream sector gets flexible

Oil

The traditionally conservative oil exploration and production sector seemsto be living a little more dangerously. Companies are looking to take a moreflexible approach, involving the use of portfolio management models, which notso long ago they would have left well alone (see box).

The upstream oil industry traditionally used standard discounted cashflow techniquesto evaluate investments. These would determine the net present value of a singleasset and the rate of return of the investment, un