This paper defines a methods to evaluate economically projects that have value mid-to-long term. Traditional evaluation methods such as Net Present Value NPV is not enough to make decisions.
The classical models based on evaluating investment projects such as NPV and IRR, do not incorporate into the assessment the project's ability to change, increase, expand or grow. The failure to consider these options may lead to underestimate the investment projects by not considering aspects that may be strategic for the company.
For example, such projects contribute to increase the recovery factor using exploitation methods (water injection, nitrogen injection, gas injection, extraction of water) or projects as EOR Enhanced Oil Recovery (EOR) Improved Oil Recovery (IOR) and Secondary Recovery projects where its nature is invest now in the development for long-term profit.
This paper will explain how we can use the methods of Real Options with Binomial, Black-Scholes and Monte Carlo Simulation applied in EOR Offshore project, Real Options have the potential to foresee for some projects, changes in the future productive investment and hence increasing their value.