Case | HBS Case Collection | 2010 (Revised from original 2010 version)
by Benjamin C. Esty and Albert W. Sheen
Tom Roberts, a founding partner of Compass Maritime Services, a New Jersey-based shipping research and consulting firm, has been asked by a new potential customer in May 2008 for advice on purchasing a capesize bulk carrier. After identifying a suitable ship with his colleague Basil Karatzas, they must determine an appropriate offer price for the ship and justify their recommendations.
Keywords: Decision Choices and Conditions; Judgments; Price; Management Analysis, Tools, and Techniques; Negotiation Offer; Mathematical Methods; Ship Transportation; Valuation; Consulting Industry; Shipping Industry;
Citation:
Esty, Benjamin C., and Albert W. Sheen. "Compass Maritime Services, LLC: Valuing Ships." Harvard Business School Case 211-014, December 2010. (Revised from original September 2010 version.)
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Supplement | HBS Case Collection | 2013
The Kashagan Production Sharing Agreement (PSA), Spreadsheet Supplement
Benjamin C. Esty
Case | HBS Case Collection | 2013
The Kashagan Production Sharing Agreement (PSA)
Benjamin C. Esty and Florian Bitsch
When discovered in the 1990s, the Kashagan oil field was the second largest oil field in the world. The project sponsors (equity investors) signed a 40-year production sharing agreement (PSA) with the Kazakh government in 1997, with the expectation the field would be developed at a total cost of $57 billion and would be pumping oil by 2005. Unlike most contracts in the energy industry, the Kashagan agreement was a "flexible PSA" meaning the contractual terms—the allocation of risks and returns—depended on ex post realizations of such things as capital costs and profitability. The parties incorporated contingencies into the contract to make it fairer and more flexible, and to ensure it remain viable over the project's 40-year life.
Due to a combination of problems and challenges, the project was still not done in mid-2007. At that time, the sponsors, led by the Italian energy company ENI, announced the project would not be completed until 2010 and the total cost was likely to be $136 billion. Although oil prices had risen dramatically between 1997 and 2007, thereby making the project worth considerably more, the Kazakh government indicated its desire to renegotiate key provisions of the contract. The sponsors had to decide whether to renegotiate the contract and, if so, which parts.
Keywords: negotiation; contracts; oil ＆ gas; project finance; Kazakhstan; Asia; ENI; risk management; economic development; capital budgeting; international finance; valuation; project management; expropriation; product sharing agreement; Negotiation; Agreements and Arrangements; Development Economics; Energy Sources; Capital Budgeting; International Finance; Valuation; Joint Ventures; Energy Industry; Asia; Kazakhstan; Italy;
Teaching Note | HBS Case Collection | 2013 (Revised from original 2013 version)
Creating the First Public Law Firm: The IPO of Slater & Gordon Limited (TN)
Benjamin C. Esty and E. Scott Mayfield