Petrozuata – Oil Project Finance

Petrozuata 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