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Download fileThe Cost of Drilling for Oil and Gas: An Application of Constrained Robust Regression
journal contribution
posted on 2006-01-01, 00:00 authored by William F. Eddy, Joseph B. KadaneThe robust regression method of Huber (1973) is used to
fit a model to the cost of drilling for petroleum. Because
the model includes a categorical variable (well type), a
linear constraint is imposed on the parameter estimates.
Because the model was fit to the logarithm of cost and
because it will be used to make repeated predictions of
cost, an adjustment that approximately unbiases the predictions
is imposed. The numerical values of the estimates
are discussed, and a comparison is made with ordinary
least squares.