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An oil wildcatter is who holds an option somewhere in Palawan An oil wildcatter who holds an option somewhere in Palawan is considering whether to

An oil wildcatter is who holds an option somewhere in Palawan

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An oil wildcatter who holds an option somewhere in Palawan is considering whether to conduct a seismic survey or not before drilling. A seismic survey can determine the types of subsurface structures which can indicate the probability of finding gas or oil, since certain formations are more favorable to the existence of gas or oil than others. However, a seismic survey is expensive -in this case it is assumed to be P1,000,000. The other pertinent data are: The cost of drilling is P20,000,000 If oil is found, the wildcatter woud sell to a major producer for P50,000,000 If gas is found, he would sell to a major producer for P35,000,000 If the seismic survey is performed, it would reveal with certainty whether the structure is of Type A (very favorable to the existence of gas or oil) or Type B (less favorable) or Type C (very unfavorable) The manager equated Type A to only 65% and Type C to zero percent. This means that B type has a probability of _%

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