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b. Under commodity price forecasting, the oil price is one of the single most powerful parameter in an oil field valuation model in terms of

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b. Under commodity price forecasting, the oil price is one of the single most powerful parameter in an oil field valuation model in terms of its effect on NPV, and yet notoriously hard to forecast. Explain the origin and factors for this behaviour. (10 marks) [Total: 15 marks

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