Linking Price Fluctuations to Investment Decisions to Create Flexible and Effective Plans A Thesis at UoB Develops a Model Improving Oil Companies’ Activities The Mathematical Model Increased the Company’s Investment Portfolio Profit By 10%.

Sakhir – University of Bahrain (Ali Al Sabbaq)

19 February 2023

A researcher at the University of Bahrain (UoB) has developed a mathematical model that helps decision makers in the oil sector make the right decisions by linking oil price fluctuations to the exploration, drilling and expansion of oil wells.

The student in the Engineering Management Master’s Program at UoB’s College of Engineering, Mohammed Mansoor Ahmed Hassan, presented the model as part of a scholarly thesis to complete his master’s degree in engineering management.

Researcher Hassan’s thesis was titled: “A Plan to Improve the Activities of Oil Exploration and Production Companies in An Environment of Changing Prices,” which aimed to develop a methodological framework to reduce potential technical, operational, commercial, and geopolitical uncertainties or fears associated with changes in global oil prices, and their impact on the business portfolio of oil exploration companies.

The researcher explained “The study found a gap between the decisions of oil companies and the market reality, as some companies take decisions without referring to the market data, for example, increasing the number of rigs when the price curve tends to decline.”.

Moreover, the researcher further stated: “The mathematical model that we developed improves investment decisions, by linking them to market developments, and this would maximize corporate profits and help modify investment plans in a flexible manner,” stressing that “Applying the model through simulation to a company’s plan helped increase the profits of the company’s portfolio by about 10%”.

The study relied on two-stage random programming, with correction as a framework for the proposed methodology for choosing the optimal business program, in order to help oil and gas companies make better investment decisions when uncertain.

An examination committee discussed the researcher Hassan’s thesis on January 19, 2023, consisting of: Associate Professor in the Department of Chemical Engineering at UoB, Dr. Mohammed Ali bin Shams as a supervisor, Professor of Business Administration and Research at the College of Business Administration at UoB (formerly), Prof.  Hatem bin Mahmood Al-Masri as an internal examiner, and Associate Professor of Chemical Engineering at the United Arab Emirates University, Dr. Munawar Sheikh, as an external examiner.

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