CASE ANALYSIS PETROLERA ZUATA‚ PETROZUATA C.A PETROLERA ZUATA (PETROZUATA) CASE ANALYSIS: Q1. HOW SHOULD PDVSA FINANCE THE DEVELOPMENT OF THE ORINOCO BASIN? WHAT ARE THE COSTS AND BENEFITS OF USING PROJECT FINANCE INSTEAD OF TRADITIONAL DEBT FINANCE? Soln. PDVSA should go for project financing for the development of the Orinoco basin. PDVSA is not looking for financing of one deal‚ but at a chain of many deals which would be a public- private partnership between PDVSA and a foreign organization
Premium Debt Interest Finance
Petrolera Zuata‚ Petrozuata C.A. Students: 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
Premium Finance Debt
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) ...............
Premium Risk Finance Debt
PROJECT FINANCE: PETROLERA ZUATA‚ PETROZUATA C.A. To convince the rating agencies of Petrozuata as an excellent opportunity for the sponsors and potential lenders‚ the deal structure must effectively mitigate risks associated to whether the project is financed through Project Financing or Debt Financing. Project Financing Benefits - PDVSA can get into a joint venture with a private firm Higher flexibility from preserved debt capacity More foreign investments from
Premium Finance Risk Investment
factors make project finance a lower-cost alternative to conventional corporate finance. Costs and benefits of using project finance‚ major risks and mitigation of these risks as well as evaluation of debt alternatives are all explored below using the Petrozuata deal as an example. PDVSA should ultimately finance the development of the Orinoco Basin using project finance and a detailed explanation can be found below. PROJECT FINANCE – COSTS AND BENEFITS OF USING PROJECT FINANCE Project Finance involves
Premium Corporate finance Finance Risk
Q3. AS CURRENTLY ENVISIONED‚ DEBT WILL COMPROMISE OF 60% OF THE FUNDS NEEDED FORTHE PROJECT. WOULD YOU RECOMMEND A HIGHER OR A LOWER LEVERAGE RATIO? WHATHAPPENS TO THE MINIMUM DSCR AND IRR ON EQUITY AS THE PROJECT LEVERAGE INCREASESTO 70% OF THE PROJECT FUNDS? DECREASES BY 50%?Soln. We would recommend that the debt should compromise of the already decided 60% level of thetotal funds. This recommendation I based on the following findings and reasons: 1. At 60% leverage the firm earns an IRR of
Premium Finance Debt Leverage
Petrolera Zuata‚ Petrozuata C.A. case study “La Apertura” (The Opening) • Target: Orinoco Belt heavy/extra heavy oil accumulation (biggest known in the world) • Key Strategy: Opening Venezuelan oil sector to foreign oil companies • How: Profit sharing agreements‚ operating service agreements‚ strategic joint-venture associations • Ownership: PDVSA or subsidiaries contribute10 years)‚ fixed interest rates‚ fewer more flexible covenants‚ larger amounts. – Cons: fund must be raised in a lump sum
Premium Petroleum Investment Venezuela
This is a preliminary syllabus and is subject to change Syllabus BUFN 771: International Corporate and Project Finance R.H. Smith School of Business University of Maryland‚ College Park Professor Stephen Wallenstein 4458 Van Munching Hall Office hours widely available (call for appointment) 301-405-7177 (office) 919-452-2112 (cell) swallens@rhsmith.umd.edu International Corporate and Project Finance will meet Thursdays from January 26 – March 8‚ 2012 from 6:25-10:00 pm at the
Premium Finance Investment Corporate finance
Session 4 CASE Questions Innocents Abroad: Currencies and International Stock Returns The goal of this case is to help Sandra Meyer develop a presentation to address Henry Bosse’s concerns about international investments. The general idea is to demonstrate to Henry the benefits of international diversification‚ if any. To achieve this goal‚ you need to have a view on 1) the impact of foreign exchange (FX) rates on the return and risk of international investments‚ and 2) the impact of having
Premium Investment
Project finance Aditya Agarwal Sandeep Kaul Fuqua School of Business Contents The MM Proposition What is a Project? What is Project Finance? Project Structure Financing choices Real World Cases Project Finance: Valuation Issues The MM Proposition The MM Proposition “The Capital Structure is irrelevant as long as the firm’s investment decisions are taken as given” Then why do corporations: Set up independent companies to undertake mega projects and
Premium Finance Risk Debt