A – Wrong
Drilling a medium strike will also make profit.
B – Wrong
A medium strike would result in $400,000 profit. If a sale was made, the minimum profit would be $500,000 which is more than a medium strike profit.
C – Wrong
Probability of making a loss (10% = 0.1) is less than the probability of making a profit (90% = 0.9)
D – Correct
Probability of making a medium strike = 80% (0.8).
Probability of selling the right = 60% + 20% = 80% (0.8)
Hence D is correct.