You're thinking of investing in field which mihgt have commercial amounts of oil. Based upon the existing data of field you think there is a 15% chance that if you drilled immediately you would find out commercial discovery. You also have option of investing in more information, which would comprise more sample wells and data acquisition. You think that there is equally likely chance that this information will either double expected chances of finding well, or inform you for certain that area isn't commercial. The additional information would cost $60MM. Drilling for the production would cost $100MM. A normal commercial discovery would result in NPV of $750MM after original drilling as well as seismic costs. But, you know that the third of all commercial discoveries are major discoveries resulting in NPV of $1,000MM after original drilling as well as seismic costs.
Do you decide to invest in project?
If you decide to invest, would you invest in more data acquisition?