A study on the postponement investment decision-making of coal bed methane project based on the real options

A large number of random factors in the process of the coal bed methane (CBM) development project can lead to a high degree of risk and uncertainties, and the traditional investment decision-making methods (for example DCF method) ignored the value of investment opportunities which were brought by the project environment´s uncertainties and management flexibilities. Introducing real options method, we analyzes options´ characteristics of CBM project in this paper, and constructed the investment decision-making model based on the postponement strategy, and illustrates the application of the model through case studies. So this paper provides new ideas and methods for investment decision-making of coal-bed methane project development.