MW Petroleum: Company Overview

The passage I will analyze in this close reading is from the works of Theodore

Valuation is the estimation of an asset’s value, whether real or financial, based on variables perceived to be related to future investment returns, on comparison with similar assets, or, when relevant, on estimates of immediate liquidation proceeds (Pinto, Henry, Robinson, Stowe; 2010). Correct valuation of real assets can present challenges to financial analysts. Different models can be used to arrive at the closest estimate of value and yet certain issues will always arise. This case attempts to tackle two approaches in real asset valuation: Discounted Cash Flow (DCF) analysis and the issues surrounding such, as well as the Black-Scholes Model for Real Options. Questions to be addressed in the study are:

For problems requiring computations, please ensure that your Excel file includes the associated cell computations and/or statistics output; this information is needed in order to receive full credit on these

Valuation is the estimation of an asset’s value, whether real or financial, based on variables perceived to be related to future investment returns, on comparison with similar assets, or, when relevant, on estimates of immediate liquidation proceeds (Pinto, Henry, Robinson, Stowe; 2010).

The future cash flows of MW’s reserves contain a great amount of risk and have many possible future outcomes. The real option valuation method takes into account the flexibility rising from this uncertainty. Real options often are valued using financial-option pricing techniques. However, there are several things to be considered when treating reserves as options by using more specific Black & Scholes model.

Compute the NPV in €s by translating future peso cash flows into €s at expected future spot rates. Note Ariel’s € hurdle rate for this asset class was 8%. Annual inflation rates are expected to be 7% in Mexico and 3% in France.

417). In other words, these are the cash flows that will only occur if we do accept the project.

2.68 0.75 69.69 4.83 105.26 50.56 94.69 135.65 6.58 1.24 0.71 0.64 4.84 1.30 41.97% 16.13% 8.32% 12.99% 35.22%

In late 1990, the group of Amoco Corporation and Apache Corporation had begun talking regarding the possible acquisition of MW Petroleum from Amoco to Apache. MW Petroleum Corporation is a wholly owned subsidiary of Amoco Corporation which has its own reserves, management team and with full ownership in geologic and engineering data. MW Petroleum, a free-standing exploration company that was even as large as some of independent oil companies. It operated exploration and development for well, approximately working interests in 9,500 wells in 300 production areas. The growth of MW was very attractive to the other investors, which company grows 30%

Pacific Oil Company is a Sweetwater Oil company of Oklahoma City, Oklahoma. It was founded in 1902. One of the major chemical lines of Pacific's is the production of vinyl chloride monomer (VCM).

From the data obtained from the survey, we have identified 50 non users and 39 users. Thus substituting n1= 52 and n2=39, Y1= - 1.029 and Y2= 1.373, we get C to be 0.34357.

= NPV (normal) * 0.7 + NPV (best) * 0.2 + NPV (worst) * 0.1

V (SF1 ≥ SF2, SF3) = 1; V (SF2 ≥ SF1, SF3) = 0.654643557; V (SF3 ≥ SF1, SF2) = 0.089175

demand of oil and gas, lower oil and gas price and lower prospectivity and commerciality of

UNIVERSITI PUTRA MALAYSIA A CASE STUDY ON PETRONAS GLOBALIZATION A STRATEGIC MANAGEMENT DECISION AHMAD HUSSAIN GSM 1999 6 [ 1 i§l <: AL - FATHIHAH IN THE NAME OF ALLAH, THE COMPASSIONATE, THE MERCIFUL. PRAISE IS ONLY FOR ALLAH, THE LORD OF THE UNIVERSE.