3. Case Study
The model was applied for estimating a cost for drilling a well in Oman. The historical data for years 2008-2012 were tested. The data provided contain the actual cost and duration, various rigs operating in the well. The model should predict the future cost and duration for the subsequent year. To help decision maker (i.e. the budget estimator) a well card that summarizes the sources of variation in both cost and duration was provided (Table1). For each well analyzed, the decision maker was given the optimal forecast using historical data for years 2008- 2012.For instance, for any particular well the variation is within the year itself which means that it is internal within the well not due to factors that may change on yearly bases like inflation, rigs, drilling technique. The drilling team is has a learning effect when learning exponent is negative which may reduce the total cost. The well card mentioned in table 1 has the variations details and details are fed to the expert so that s/he can update her/his belief about the actual cost.