The extraction of natural resources from the earth, such oil, natural gas, coal, diamonds, and minerals, brings into the foray several probabilistic modelling and statistical inferential issues. Such issues have attracted the attention of notables like Kolmogorov, Halmos, and Barndorff-Nielson. Kolmogorov and Halmos leaned on limit theorems to propose the lognormal distribution, whereas Barndorff-Nielson advocated the log hypergeometric distribution purely based on empirical data. The log hypergeometric distribution has fat tails and could be a suitable model for modeling financial data as well. None of these authors brought into the picture Bayesian ideas which I think have a key role to play here, especially, because prospecting for oil and gas entails the judgements of wildcatters.

In this talk I will give a broad brushed overview of the topic and inject some Bayesian thoughts into the arena of exploration risk.