Volatility and an underlying deterioration in commodity prices, including oil and gas prices, have severely undermined confidence and the viability of Exploration and Production projects. In turn, this has amplified the need to undertake a thorough investigation into risks and uncertainties as part of the financial modeling and decision-making in oil Exploration and Production projects. To address this requirement– for increased rigor of decision-making and beyond the current practice of the mere deployment of a Discounted Cash Flow model, a new model integrating Real Options and Monte Carlo simulation of a project’s valuation is presented. The new model is mainly to be applied to explain the risks and uncertainty of the projects. More specifically, a case study of an oil Exploration and Production project is used to illustrate the effectiveness and validity of the proposed new model.