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Bayes Theorem 2005-04-03
From wei:

In the January 11,1988,issue of the Oil&Gas Journal, R.A.Baker describes how the Bayesian approach can be used to revise probabilities that a prospect field will produce oil. In one case he describes, geological assessment indicates a 25% chance the field will produce oil. Further,there is an 80% chance that a particular well will strike oil given that oil is present on the prospect field.

  1. Suppose that one well is drilled on the field and it comes up dry. What is the probability the prospect field will produce oil?
  2. If two wells come up dry, what is the probability the field will produce oil?
  3. The oil company would like to keep looking as long as the chances of finding oil are greater than 1%. How many dry wells must be drilled before the field will be abandoned
  4. If the first well produces oil,what is the chance the field will produce oil?

Answered by Andrei Volodin and Penny Nom.



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