Kausik Ash |
Javier Echave |
Trang Ho |
Sarah Nash |
Ayse Zeynep Saka |
Raj Sambasivan |
1a Financing of Orinoco Basin
The generally understood criterion for using project finance to fund a project and Petrozuata 's compliance comparison are as below;
Legally independent company = Once the project was completed, Petrozuata would become a stand-alone entity, with the sponsors warranty coming to an end
Non-recourse debt = at completion the project debt would also become non-recourse to the sponsors.
Sponsor holding most of the equity are also suppliers/customers = Conoco would purchase the first 104,000 BPCD from Petrozuata upon production,
Single purpose…show more content… Avg. annual change in oil price
The average Maya price was relative consistent for the 10 year period of 1986-1996 ($14.27) vs. the most recent 5 year period of 1991-1996 ($14.25). Both of these averages are lower than the average for 1982-1996 ($16.57), so the assumption of 2.5% annual growth seems aggressive.
VZ Govt. royalty rate
According to the case (p.3), the royalties paid by operating subsidiaries of PDVSA are 16.67%.
Same as given.
Market Risk Premium
Utilizing the market risk premium listed in Exhibit 11.
Country Risk Premium
Utilizing the country risk premium listed in Exhibit 11.
In addition, we noted that the asset beta, risk-free rate and tax rate were different from the values given in the case, so we altered these to be consistent with the case [asset beta: 0.6 0.38 (Exhibit 11 – p. 21), risk-free rate: 6.81% 5.60% (Exhibit 11 – p. 21) and tax rate: 34% 67.7% as an operating subsidiary of a state-owned enterprise).