Investing companies may have many choices as to where to invest their money and capital. Financial analysis and evaluation will help companies decide whether the expected return at the end of exploration is worth the costs and risks involved in entering into play.

Once the company decides to explore the prospect, it can acquire the mineral rights and drill wells on land, or buy existing production and land from current operator. Company can use different type of legal entity to pursue different percentage interest on a project, such as corporation, joint venture, and partnership.

Common type of investment models to help make investment decisions:

1. Payback model
   It looks at how long it takes for the investment to pay back in full. It is simple to understand and calculate, yet it fails to take into account of time value of money.
2. Return on investment model
   It looks at the annual profit divided by value of investment. It is familiar to accountants but does not take into the time value of money.
3. Cost benefit ratio model
   It takes into account the costs of the project and its benefits in monetary term. It is also familiar to accountants but does not take into the time value of money.
4. Discount cash flow and Net present value model
   It looks at the cash inflow and outflow over the life of a project at a discounted rate, thereby, calculating the net present value. Different and competing projects can be rated by the net present value. Project with the higher net present value is better than a lower one.

Investing company can use a combination of the above models to evaluate a project. The most valuable models usually take into account the time value of money.