Study on the Valuation Method for Overseas Oil and Gas Extraction Based on the Modified Trinomial Tree Option Pricing Model

Table 3

Distribution patterns of uncertainty factors for overseas oil and gas extraction.

Uncertainty factor	Distribution pattern	Source	Range	Additional remarks
Resource reserves	Logarithmic normal distribution	Reliable literature	>0	—
Sale price of oil	Mean-reversion with jumps	Available literature	>0	Mean value growing with time
Resource depth	Normal distribution	—	>0	The measurement error is normally distributed
Resource quality	Normal distribution	—	—
Utilization rate	Trapezoidal distribution	Assumed	[0, 1]	Consulting relevant experts& consider the reality
Rate of production	Triangular distribution	Assumed	(0, 1)
Decline rate	Triangular distribution	Assumed	(0, 1)
Discount rate	T-shaped or normal distribution	Assumed	—	Not in an agreement