A method of interpreting petrophysical measurement data include arranging measurements of at least one physical property of formations into a matrix representing the measurements and selecting a range of number of unobserved factors or latent variables for factor analysis. Factor analysis is performed on the measurement matrix and comprises performing factorization of measurements matrix into a number of factorsand performing rotation of the factorization results. Whether the factor loadings for each factor have achieved a “simple structure” is determined and either each of the selected number of factors is associated with a physical parameter of the formations, or one is added to the number of factors and factor analysis and rotation are repeated until factor loadings of all factors have achieved “simple structure” such that the each of the number of factors is associated with a physical property of the formations.