1- Probability of striking oil: Assume that hitting oil at one drilling location

Question

1- Probability of striking oil: Assume that hitting oil at one drilling location is an individual location is 0.3. a) What is the probability that a driller will hit oil on or before the third drilling? b) If Y is the number of drillings until the first success occurs, find the mean and the standard deviation of Y. This venture will be profitable if the number of well drilled until the first success of getting oil occurs in less than or equal three. From your calculations, will the venture be successful? c)

Explanation / Answer

a) probability that driller will hit oil on or before third drilling =1-P( driller will not hit in 3 drilling) =1-(1-0.3)3 =0.657

b)from geometric distribution

mean of Y =1/p-1 =(1/0.3)-1 =2.3333

Variance of Y =Var(Y)=(1-p)/p2 =(1-0.3)/0.32 =0.7778

c)

we knowthat probability of getting successful mean hitting at 3 or less frill is 0.657 ; therefore there is higher probability of success but we can not say that for certainity as it is still a probability.

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