This paper documents the development of a model to support strategic planning in companies that provide equipment and services for oil and gas exploration in the lower 48 states of the US. The model is in the form of a supply curve that relates the price required to produce a barrel of oil and gas with expected volume of drilling activity for a defined timehorizon. The model can be used to address future uncertainties with regard to location, type and volume of drilling activity that can be expected with a certain market price of oil and gas.
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The research was sponsored by Operations ManagementC enter through a grant from Lone Star Technologies Inc. The authors are grateful to Phillipe B. Gassin for his contributions to this study.