About Rose & Associates – E & P Risk Assessment Software & Training

History of Rose & Associates LLP

Rose & Associates LLP was established in 2000 as a consulting firm specializing in E&P Risk Analysis, with a focus on teaching and helping client companies to implement consistent evaluation procedures. We carry on the tradition of systematic objective evaluation of prospects and plays, and the calibration of estimates against actual results.

Our business practice is recognized for having the highest technical and professional standards, its responsive service, and identifying and meeting the needs of our clients. You may find our history interesting, as it intertwines the careers of several people instrumental for making systematic risk analysis the elegant, yet understandable pathway to greater E&P profits.

The Dilemma

Today, most explorers acknowledge three professional responsibilities: (1) find prospects, (2) measure them objectively, and (3) communicate your findings in a clear consistent fashion for more improved decision-making. But before about 1965, the assignment of risked economic value to drilling ventures mostly used “rules of thumb,” based on individual experience. Expectably, such pragmatic measures varied widely among provinces and companies (and even between offices in the same company). Salesmanship thrived — but the stakeholder often suffered.

The subjective nature of geology, together with intuitive judgments involved in prospect ranking encouraged a prevailing attitude that, somehow, geoscientists just weren’t supposed to know much about prospect economics. Geoscientists were expected to be optimistic, whereas engineers became economic “gate-keepers” — both self-fulfilling prophecies that have had negative consequences.

The Pioneers

Two pioneering geoscientists — Bob Megill and Ed Capen — were instrumental in changing all that. They disseminated and developed concepts and tools that laid the foundation by which geoscientists could finally begin to take professional responsibility for objective representation of the value of their prospects as business ventures.

Bob Megill worked for Carter, Humble, and Exxon from 1941 to 1984. Early in his career, he showed great talent for understanding petroleum economics and statistics and using them perceptively. During the 1960’s, Megill began teaching Exxon geotechnical staff about prospect economics and later about risk analysis of exploration ventures. In 1973, Exxon gave Megill permission to publish “An Introduction to Exploration Economics” (Pennwell 1973, 1978, 1988). Subsequently, Megill published a companion volume, “An Introduction to Exploration Risk Analysis (1979, 1984). Both books became industry best sellers. He was a much sought-after consultant from 1984 until his second retirement in 1990.

Ed Capen worked for ARCO from 1957 to 1992. He started as a research geophysicist, where he soon sensed that the repeated trials and high uncertainty so characteristic of petroleum exploration made statistics an under-appreciated, but very powerful tool when applied to E&P activities. At ARCO, he took part in a series of highly original and insightful, applied research projects, which shed light on competitive bonus bidding, economic yardsticks, dealing with uncertainty, capital budgeting, and probabilistic reserves estimating. Many of these found their way into SPE publications. AAPG published one of Capen’s very best articles in “The Business of Petroleum Exploration” (1992), where he presented all the statistical formulae involved with correctly estimating prospect reserves.

The Bridge

After 14 years with Shell, three years as USGS Chief of the Oil and Gas Branch, and four years as Chief Geologist of Energy Reserves Group, Inc. (now BHP Americas, Inc.), Pete Rose went on his own in 1980 as an independent prospector and consultant. In 1984, he started collaborating with Megill and Capen, jointly designing and team-teaching a well-received AAPG school on prospect risk analysis. For 14 years, that school continued to evolve, being presented about 50 times around the world under AAPG’s banner. In working with an economist and a mathematical geophysicist, Rose frequently served as a bridge, providing geologic explanations and boundary conditions to problems often defined in complex math and statistics associated with uncertainty.

PetroRisk Partners

In 1990, Rose began specializing in Exploration Risk Analysis in his professional practice (Telegraph Exploration, Inc.), working with major companies such as Texaco and Unocal. After Megill retired again in 1990, Rose formed PetroRisk Partners with Capen and Bob Clapp, both of whom retired from ARCO in 1992. They continued to develop and team-teach their very popular AAPG 5-day course, “Evaluating and Managing Petroleum Risk,” for major companies such as ARCO, Conoco, Marathon, and Mobil, until 1998 when both Capen and Clapp retired again.

Sole Proprietor

From 1992, Rose also continued to consult and teach as a sole proprietor for an expanding list of corporate clients. He published widely, contributing to influential volumes such as AAPG’s “The Business of Petroleum Exploration” (1992). Rose’s professional accomplishments include serving as President of AAPG’s Division of Professional Affairs (1996/97), receiving the coveted Parker Memorial Medal in 1998 from the American Institute of Professional Geologists, and being granted AAPG Honorary Membership in 2002. From 2001 to 2003, Rose contributed a regular column, “The Business Side of Geology,” for AAPG’s monthly “Explorer” news magazine. In 2001 AAPG published his book, “Risk Analysis and Management of Petroleum Exploration Ventures,” widely considered as the “Bible” on E&P Risk Analysis, It has been translated into Japanese, Chinese, and Russian, and now, after seven printings, the book is only available on CD.

From Sole Proprietor to Partnership

​Rose began to expand his practice in 1998, partly in response to industry interest in Risk Analysis software he licensed from Marathon, which was developed utilizing his concepts and procedures. In early 1999, he brought in Gary Citron, a geophysicist with 20 years of experience with Amoco, for his broad international background in prospect assessment and performance tracking. Early in 2000, Rose recruited drilling and reservoir engineer Mark McLane, a 20-year veteran with Exxon and Pioneer, to develop training courses addressing risk analysis for exploitation and development projects.

In 2003, Rose stepped down as Managing Partner of Rose & Associates, LLP, first serving as Senior Partner and as of January 2005, Senior Associate. He was President of AAPG 2005-2006. In 2007 Rose was prominent among other professionals in successfully encouraging the SEC to modernize its rules defining oil and gas reserves categories. In 2013 the Geological Society of London presented him with its Petroleum Group Medal for lifetime achievements (the first American recipient), and AAPG honored him with the Halbouty Outstanding Leadership Award in 2014.