Risk and uncertainty are inherent aspects of investing in petroleum exploration ventures. The tasks in serial exploration decision making are to be consistent in dealing with risk and uncertainty, and to perceive uncertainty realistically, reducing it where possible.

Many biases exist in the mental processes by which most people make risk decisions. These biases tend to produce significant inconsistencies. Consideration of such behavioral patterns, use of quantified risk-aversion methods, and periodic review of investment decisions all help to optimize risk decision making.

Judgments under uncertainty are also susceptible to biases, which commonly influence geologic estimates of (1) prospect target size, (2) discovery probability, and (3) cost of finding. Target-size estimates tend to range widely, and they seem to be accurate only within ± 1 order of magnitude of the actual size of discovered accumulations. Also, target-size forecasts tend to be significantly overoptimistic. Estimates of discovery probability also tend to be overoptimistic, because they commonly do not distinguish between noncommercial and commercial new-field wildcats. In addition, analysis of different geologic risk factors (structure, reservoir, trap, and hydrocarbon charge) may help improve perception of discovery probability, but explorationists commonly do not realize which g ologic factor actually constitutes the primary exploration hazard for a given prospect.

Cost-of-finding estimates seem to show the smallest variation in predictive accuracy.

Exploratory performance can be improved through constructive postmortem analysis of geotechnical predictions, review of exploration tactics versus declared strategy, and year-to-year comparison of exploration performance parameters. Performance trends can then be used to discount or enhance future prospects, modify corporate stances and procedures, and highlight functions that need improvement. Such analyses and improvements may best take the form of individual professional progress, rather than management-imposed inspection. They constitute a practical, constructive method for internal evaluation and systematic improvement of the exploration function.