How is CoS calculated?, page-3

I don't work in the Oil industry, but the way they calculate the overall CoS is as follows:

Data is collected, reviewed, different hypothesises developed & tested, Joint venture partners then sit at the table and argue about the geological chance of success of the following components required to produce an economic accumulation of oil:

Source Rocks - % chance that the right rock types are present in the first place to generate hydrocarbons (HC), and if they have been buried deep enough to be within the oil/gas generating window.
Migration: if the HC are present are they able to migrate (move) to a position to where they ma be trapped
Trap: Eg stratigraphic trap, ie the HC migrate up a sandy lithology but as they move up dip, the facies (geological environment at the time the sands where deposited) changes potentially resulting in finer grained sediments, the hydrocarbons are then said to be trapped as they can no longer keep migrating. Or you could get a structure trap, where the HC can no longer migrate up the sandy unit any longer as the lithological unit is truncated by a fault
Seal: Is the fault that truncates the lithological unit sealed with gouge (material within the fault that precludes HC movement? Or is the overlying mudstone unit not breached, ie if it is faulted HC can escape, or if it has been eroded in places, HC could leak from here.
Preservation - well that's straight forward.

Anyway what they do is they ascribe a chance of success to all of the above variables and do the math

So say you had 4 variables and they chances of success for each one were
80%, 60%, 60% and 30%
(and you need them all the come in spinner)
the calculation would be 0.8*0.6*0.6*0.3 = 0.0864
Giving a CoS of 8.64%

Obviously frontier exploration in new basins, is higher risk as lower probabilities exist, and likewise exploration in mature basins are lower risk (however usually all the easiest/biggest stuff has been found by the time you get to this stage).

Hope that helps,
FB