Petrozuata – Oil Project Finance

Awards.jpgPetrozuata is a wonderful case because it was touted as such a successful case study in use of project finance to gain a low cost of capital and was supposedly structured so well to manage risk. But five years after commercial operation the project was nationalized. This is after taxes were dramatically increased on the project. The write-up below and the associated videos provide a different perspective on the case than the typical lauding of Conoco management and financial institutions that structured the transaction.

Discussion of the case studies below takes a very different philosophy. The cases concentrate on analysis of mistakes that were made and what are some of the common themes of mistakes made in the financial analysis of the various investments. Cases are often relatively old so that you can see what went wrong and hopefully why things fell apart.

Here is my write-up of the case.

Subject Excel File Video Link Chapter Reference Page Reference
Creating Graph of Cash Flow and Debt Service Petrozuata Cash Flow and Debt Service https://www.youtube.com/watch?v=idU6FQ8syFQ
Graphing Oil Prices in Time Line Petrozuata Time Line https://www.youtube.com/watch?v=gFLN8D_G0h0 2 40
Computing Production Cost to Gauge Political Risk Petrozuata Production Cost https://www.youtube.com/watch?v=fJVKMmYmFpU
Equity IRR and Different Exit Points with High IRR Petrozuata IRR https://www.youtube.com/watch?v=BDi0tJotSpk
Equity IRR with Sale of Project and Changing Risk Petrozuata Changing Risk https://www.youtube.com/watch?v=uk_W4cGwrh8
Computing Risk Premium Earned Petrozuata Risk Premium Method https://www.youtube.com/watch?v=T_SxwJJYPBM
Short-cut keys and Goal Seek Macro Political Risk.xlsm https://www.youtube.com/watch?v=DG9n_t2YNUk Chapter 4 40
Implied Probability on Nationalization with Different Risk Premia Political Risk.xlsm https://www.youtube.com/watch?v=KFzceICWujI
Simle Time Series Analysis of Oil Petrozuata Monte Carlo.xls https://www.youtube.com/watch?v=WliOwYepmHo
Monte Carlo Set-up Petrozuata with Monte Carlo 1.xls https://www.youtube.com/watch?v=x4bLsnmRjBM
Monte Carlo Simulation with Mean Reversion Petrozuata with Monte Carlo 2.xls https://www.youtube.com/watch?v=2mLJEo2ubsw
Graphing Distributions with Monte Carlo Simulation Petrozuata with Monte Carlo 3.xls https://www.youtube.com/watch?v=_oVz9TT6a5g
Project Finance Analysis in Petrozuata Case Petrozuata Analysis.xls https://www.youtube.com/watch?v=idU6FQ8syFQ
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Petrozuata Articles and Resources Other than HBS Case