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Oil & Gas Industry

In: Business and Management

Submitted By chenay
Words 328
Pages 2
OIL AND GAS INDUSTRY
3 SECTORS: 1. Upstream: Exploration and production (E&P) 2. Midstream: Transportation 3. Downstream: Distribution and retail * Most int’l oil & gas co. = INTEGRATED
ID potential O&G field - prdcn = 1 – 3 years
Total CAPEX up to $100MM+ (depends on circumstances of each drilling project ie. Under water, earctic, etc.)
Constraints:
* LICENSE to operate each oil and gas field (drill vs prdcn)
(*licensing can be sold*) country owns right to resources issues license share in profits
* Country can enter into JV with company (BUT gvt ONLY shares in profit)
Criteria: proof of credentials 1. Tech ability 2. Environ. Awareness 3. Financial capacity
PSA license: profit sharing w/gvt (% of profits ie. Rev. – amort cost of drilling- royalties – prdcn c.)
Royalty tax also imposed by gvts (% mkt value of o&g prdcn)

Independent E&P companies:
EU & UK : range of diff. size listed companies ( on AIM’s or full staock Markets)
Investors: large institutional investors TRGT. : LONG TERM GROWTH IN SH. PX

YJ (E&P of O&G fields) * Listed on AIM * IPO: US $60MM * S/H: 12 large institutional s/h own 96% sh. * Purpose: ID potential O&G fields to be brought into prdcn * Strategy: explore, appraise, develop into prdcn its licensed fields SAFELY + RESPONSIBLY
Financing:
Note: very high CAPEX before ability to earn revenues equity not enough, rqr debt financing * Bank loan: US $140MM maturity 2018, 11% pa * Overdraft facility (to meet peak WC demands) : US $50MM @ 12% pa * Condition to debt: successful test drilling, licenses, independent report proving reserves

TRGT: New field s to ops FASTER
WEAKNESSES/CONSTRAINTS:
* CFLOW: tied up in current fields and expl. * Rqr funding for new sites * Measure: prdcn risk: write-offs (fields not

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