Portfolio Optimisation

Client Information

Over the past five years Palantir has developed a solid long term working relationship with our client, a FTSE 250 British independent oil and gas company with assets in Europe and North Africa.

Objective

The client faced a classical portfolio optimisation dilemma: a strong pipeline of development projects but insufficient capital resources to fund the complete portfolio. Palantir assistance was requested to develop several competing corporate portfolio strategies and to quantify the trade-offs between them.

Palantir’s Role

In collaboration with the client, Palantir consultants developed a detailed work plan with specific tasks, timelines and deliverables. At the heart of the success of the project was the application of PalantirSUITE, Spotfire® and state-of-the-art portfolio optimisation and risking methods, as well as the expert Decision Analysis knowledge of our consultants. PalantirPLAN was used to model necessary portfolio adjustments to reflect the capital constraints faced by the company. PalantirPLAN provided a visualisation of the impact of asset divestment and/or postponement of project investments on the corporate portfolio performance. The shortfall between the portfolio performance and company targets were quantified for several development scenarios. The development of the client’s exploration portfolio is instrumental to the long-term company performance hence some specific exploration deliverables had been defined.

A portfolio algorithm coupled with Spotfire® was employed to initially generated a large number of possible portfolios and subsequently identify those exploration portfolios that are doable and meet the corporate objectives. Given that all portfolios’ economics were fully risked, a judgement could be made on the likelihood that a specific exploration portfolio would meet a set target. Also, the relationship between budget allocation and the likelihood of success, i.e. the chance of meeting corporate targets, was assessed.

Benefit to the Client

The portfolio assessment developed in PalantirPLAN and Spotfire® by Palantir was instrumental to corporate management in the development of a corporate investment strategy and provided critical insight into the trade-offs between different corporate portfolio development opportunities.