Project Finance Petrozuata

Topics: Risk, Finance, Debt Pages: 18 (4739 words) Published: November 13, 2014
Evaluation of

Petrolera Zuata, Petrozuata C.A.

Project Finance Case Study

 

1
 

Table of Content

Petrozuata introduction ....................................................................................................................... 4 1. How should PDVSA finance the development of the Orinoco Basin? What are the costs and benefits of using project finance instead of traditional internal debt finance? ...................... 4 1.1. Project finance scenario (BBB) ................................................................................................. 6 1.2. Corporate finance scenario (BB) ............................................................................................... 6 2. What are Petrozuata’s three or four most important operating risks? How does the deal structure address these risks? Who would bear these risks if the project were financed internally by PDVSA instead? ............................................................................................................. 6 2.2 Pre-completion risks ................................................................................................................. 7 2.3 Post completion risk .................................................................................................................. 7 2.4 Sovereign risk ........................................................................................................................... 8 2.5 Financial risk ............................................................................................................................. 8 3. As one of the sponsors, what are your expected returns? Please assume the asset beta for an integrated drilling, pipeline, and refining firm is 0.60. ................................................................. 9 3.1 The ECF Method ..................................................................................................................... 10 3.1.1

  Scenario 1: Debt/Equity Ratio varies from year to year
 ..........................................................  10
 
3.1.2
  Scenario 2: Debt/Equity ratio is fixed until 2021 and is 0 from 2022  .....................................
 11
 
3.1.3
  Scenario 3: Debt/Equity Ratio is fixed at target D/E of 60:40 or 1.5  ......................................
 11
 
3.2 The CCF Method .................................................................................................................... 12 3.2.1
  CCF based on given CADS
 .........................................................................................................  13
 
3.2.2
  CCF based on our income statement forecast
 .........................................................................  13
 
4.

What kind of sensitivity analysis would you do to verify the project’s economics? ........... 14

5.

Would you invest in project bonds? Would you invest equity capital as Conoco? ............. 17

 

2
 

List of Tables and Charts
Table 1 - Advantages & Disadvantages Project Finance
 ...............................................................................  4
 
Table 2 - Advantages & Disadvantages Corporate Finance
 .........................................................................  5
 

 

3
 

Petrozuata introduction

Petrolera Zuata, Petrozuata C.A., is a $2.45bn proposed crude oil development project located in Venezuela. Conoco and Maraven, the two potential main sponsors, together with rating agencies and development agencies. The Petrozuata project is part of “La Apertura”, the strategic expansion of the Venezuelan oil sector to foreign investments. PDVSA, the Venezuelan Oil Company, aims at doubling its domestic oil and gas production through this $65 billion long-term initiative. With its three subsidiaries, Maraven, Lagoven and Corpoven, PDVSA manages the...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Project Finance Essay
  • Finance Course Project Essay
  • Essay on Finance 605 mini projects
  • Project Finance Essay
  • Project Finance Part Credit Memo Essay
  • finance Essay
  • Essay about finance
  • Finance Project Essay

Become a StudyMode Member

Sign Up - It's Free