Managers in the petroleum industry often encounter adverse economic and operational issues associated with their assets and businesses, that on the surface, seem to be due to unfortunate choices made long ago regarding the structure of an investment, project, or commercial agrement. While the benefit of hindsight allows us to easily critique some pat decisions, a more in-depth analysis of decision making tools and processes reveals that there are some systemic, fundmental problems with out economic analysis that in many cases lead the best of managers to make these choices. One of the key issues for a capital-intensive commodity business such as petroleum development is the use of discounted cash flow for evaluation of investments. The underlying issue is that traditional present value or discounted cash flow (DCF) analysis methods used in petroleum economics often represent an arbitrary or inappropriate treatment of the risk in individual project cash flows. For example, commodity price sensitivity can differ widely from project to project, due to the inherent cost structure, extent of product price hedging, tax and royalty structures, etc. This paper will outline an methodology based on techniques which are used in securities markets to evaluate some simple natural gas field development example projects. The results will show some of the reason that a constant discount rate analysis can potentially provide a misleading bias on project selection. In these examples, where costs (capital and operating) are more certain than revenue, we show that discounted cash-flow (DCF) methods that use the same discount rate in the valuation of all projects may undervalue low cost natural gas relative to high cost natural gas,and lon life natural gas relative to short life natural gas. We also show that DCF methods tend to undervalue (or not value) the advantages of risk absorbing activities such as price risk management or hedging.