Investment Decision Optimization for Natural Gas Exploration Projects: Literature Review and Frontier Analysis Based on the Geske Model

Yue Chen; Lupeng Li

doi:10.63313/EBM.2018

Authors

Yue Chen School of Economics and Management, Southwest Petroleum University, Chengdu 610500, China Author
Lupeng Li School of Economics and Management, Southwest Petroleum University, Chengdu 610500, China Author

DOI:

https://doi.org/10.63313/EBM.2018

Keywords:

Investment Decision-Making, Geske Model, Natural Gas Exploration, Option Pricing, Uncertainty

Abstract

The investment decision-making for natural gas exploration projects is faced with numerous uncertain factors, such as market price fluctuations, technologi-cal advancements, and policy changes. Traditional investment decision-making methods struggle to effectively address these volatile risks and uncertainties. In recent years, the Geske model, as a multi-stage investment decision-making tool based on option pricing theory, has gradually been applied to the field of natural gas exploration to help decision-makers make flexible and optimal investment choices in uncertain environments.Through a literature review, this paper ex-plores the current application status and optimization paths of the Geske model in natural gas exploration projects, and analyzes the advantages and limitations of its combination with option pricing theory. First, the application of the Geske model in multi-stage decision-making can effectively address the technological, market, and policy uncertainties in natural gas exploration projects, providing investors with flexible decision-making options. Second, this paper discusses issues such as practical application cases and computational complexity of the model, and proposes potential future research directions, including improving computational efficiency, accurately estimating parameters, and integrating big data and machine learning technologies. By sorting out existing research achievements, this paper provides a theoretical basis for the promotion of the Geske model in natural gas exploration and other high-risk industries, and offers new ideas for optimizing investment decision-making.

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