Case Assignment 1.1: BE Oil Case Analysis

Case Assignment 1.1: BE Oil Case Analysis

This is a graded assignment and counts towards programme completion.

Time: The suggested time for this assignment would be 120 minutes.

Grade Weightage: The total marks for this assignment are 25. This is part of the assignment component of the course evaluation. In total, there are 2 evaluation items in this component. This assignment/case study component of the course is worth 30% of the final grade.

Instructions:

This graded case-based assignment is mapped to the key concepts covered during the first three weeks (Weeks 13) of the course. Please apply the learnings from these weeks while solving this assignment.

Participants would need to submit the structured assignment response to this assignment at the end of the fourth week.

The solutions to the assignment need to be submitted in the allowed template formats. (Please refer to the submission instruction at the end to know the accepted file formats.)

If you face any difficulty in submitting your response, kindly contact support.

Evaluation Details:

Your answers to the numerical problems will be graded both on the final answers and the calculation steps enumerated in your submission.

Academic Integrity Instructions for Learners

To maintain academic integrity and ensure the originality of your work, please adhere to the following guidelines:

Original Work: All submitted work must be your own. This means that you have personally researched, analysed, and synthesised the information presented in your assignment.

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Assessment Cover Sheet: Complete, sign, and attach the Assessment Cover Sheet provided here Download hereto your assignment. By doing so, you declare that your work is original and that you understand the consequences of violating academic integrity standards.

Resources:

APA Citation Guidelines: Refer to the link Introduction - Referencing style - APA 7th - Library Guides at University of Western Australia (uwa.edu.au) Links to an external site. for detailed instructions on how to cite different types of sources correctly.

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Remember: Academic integrity is essential for maintaining the credibility of your work and contributing to the academic community. By following these guidelines, you demonstrate your commitment to ethical scholarship and intellectual honesty.

Task:

Based on the provided case study on BE Oil, analyse the potential drilling decisions facing Quentin Bell, the owner of BE Oil. Your analysis should consider the economic landscape, oil prices, production costs, and anticipated revenues. Assess each of the six wells' economic viability based on different anticipated oil prices and provide recommendations for which wells, if any, Bell should consider drilling.

Link to the case study: https://hbsp.harvard.edu/tu/05553e77Links to an external site.

Instructions:

1. Analysis:

Analyse the economic viability of each well (A to F) based on the anticipated revenue projections at different oil prices ($50, $60,, and $70 per barrel).

Consider the drilling and fracking costs, anticipated barrels of oil and the revenue projections provided in Exhibit 1.

Assess the potential profitability of each well, given the expected changes in oil prices.

2. Recommendations:

Provide clear recommendations on which wells, if any, Bell should consider drilling. Support your recommendations with evidence from your analysis.

Justify your recommendations based on a comprehensive assessment of the economic factors involved.

3. Oil Price Considerations:

Discuss the impact of oil price fluctuations on the company's decision-making process.

Evaluate the uncertainties and risks associated with the future trajectory of oil prices.

Submission:

Write a structured analysis report outlining your findings and recommendations.

Use clear headings, bullet points, and data analysis to present your arguments effectively.

Aim for a concise and comprehensive analysis (approximately 10001200 words).

Assignment Solution Guidelines: BE Oil Case Study

Understanding the Task:

The core objective of this assignment is to analyse the decision of which oil wells Quentin Bell should drill, given the uncertain future oil prices. Your analysis should be rooted in the financial data provided (Exhibit 1), with a focus on the interplay between drilling costs, potential oil production, and revenue at different price points.

Analysis Steps:

Data Familiarisation:

Thoroughly review Exhibit 1 in the case study. Understand the structure:

Wells A-F

Drilling costs

Fracking costs (where applicable)

Operational fracking cost include

Drilling and completion: This includes the cost of drilling the well, well casing, cementing, and perforating.

Hydraulic fracturing: The fracturing process itself involves injecting water, sand, and chemicals into the well, which all contribute to the cost.

Proppant: Sand or ceramic proppants are used to hold open fractures, and their type and amount affect the cost.

Water and chemicals: Water acquisition, treatment, and disposal, as well as the chemicals used, are significant expenses.

Anticipated barrels of oil per well

Revenue projections at $50, $60 and $70 per barrel

Spreadsheet Setup (if using):

Create a well-organized spreadsheet. Columns might include:

Well Name

Drilling Cost

Fracking Cost

Total Cost (Drilling + Fracking)

Anticipated Barrels of Oil

Revenue at $50/barrel

Revenue at $60/barrel

Revenue at $70/barrel

Profit at $50/barrel (Revenue - Total Cost)

Profit at $60/barrel

Profit at $70/barrel

Calculate Profitability:

For each well and each price scenario, calculate the profit:

Profit = (Revenue per barrel * Anticipated Barrels) - Total Cost

Analyse Economic Viability:

Individual Well Analysis: Examine each well's profitability across the three oil price scenarios. Which wells are profitable at all price points? Which are only profitable at higher prices?

Comparative Analysis: Compare the wells to each other. Which wells offer the highest potential profit, and under what conditions?

Sensitivity Analysis: Consider how small changes in oil prices might impact the profitability of borderline wells.

Consider Non-Financial Factors:

Briefly acknowledge that while the financial analysis is crucial, other factors might influence Bell's decision:

Environmental impact

Regulatory considerations

Company's risk tolerance

Long-term strategic goals

Recommendations:

Clearly State Your Recommendations:

Specify which wells Bell should prioritise for drilling.

Be explicit about the oil price conditions under which each recommendation is valid.

Provide strong justification.

Support your recommendations with specific data from your analysis.

Explain your reasoning. Why is one well a better choice than another in a given scenario?

Address Oil Price Fluctuations:

Acknowledge the uncertainty of oil prices.

Explain how your recommendations might change if oil prices deviate significantly from the projections.

If possible, suggest a range of oil prices where your recommendations hold true.

Writing the Report:

Structure: Use clear headings (Analysis, Recommendations, Oil Price Considerations).

Conciseness: Aim for 1000-1200 words. Be direct and avoid unnecessary filler.

Data Presentation: Use tables or graphs within the text to present your key findings clearly.

Professional Tone: Maintain a formal, objective tone throughout your report.

Additional Tips:

Review the Case Study Thoroughly: Make sure you fully understand the context and information provided.

Show Your Work: If you use a spreadsheet, consider including it as an appendix so your calculations are transparent.

Proofread carefully. Errors can detract from the professionalism of your work.

Submission Instructions:

Go through the evaluation criteria to understand what is expected from this assignment.

Please read the Instructions for Submitting Assignments for Similarity Checks through Turnitin here: Instructions for Submitting Assignments for Similarity Checks through Turnitin: Master-UWA-Global MBA (emeritus.org)

Rename the document as UWA_MBA_ME_Case_Assignment_1.1_<Your_Name>.doc

After you complete your assignment, select the Start Assignment button at the top of this page.

Upload the file containing your responses.

Select the Submit Assignment button to submit your responses.

Note: This is a required assignment and counts towards programme completion.