Optimizing Oil and Gas Acquisitions Using Recommender Systems
This work addresses a domain-specific problem for oil and gas companies by providing incremental improvements to recommender systems for well acquisitions.
The paper tackled the problem of suboptimal well acquisitions in the oil and gas industry by applying a Factorization Machine-based recommender system, achieving metrics like a hit rate of 0.680 and precision of 0.229, but noted limitations in exact relevance matching.
Well acquisition in the oil and gas industry can often be a hit or miss process, with a poor purchase resulting in substantial loss. Recommender systems suggest items (wells) that users (companies) are likely to buy based on past activity, and applying this system to well acquisition can increase company profits. While traditional recommender systems are impactful enough on their own, they are not optimized. This is because they ignore many of the complexities involved in human decision-making, and frequently make subpar recommendations. Using a preexisting Python implementation of a Factorization Machine results in more accurate recommendations based on a user-level ranking system. We train a Factorization Machine model on oil and gas well data that includes features such as elevation, total depth, and location. The model produces recommendations by using similarities between companies and wells, as well as their interactions. Our model has a hit rate of 0.680, reciprocal rank of 0.469, precision of 0.229, and recall of 0.463. These metrics imply that while our model is able to recommend the correct wells in a general sense, it does not match exact wells to companies via relevance. To improve the model's accuracy, future models should incorporate additional features such as the well's production data and ownership duration as these features will produce more accurate recommendations.