Case | HBS Case Collection | July 1991

Pioneer Petroleum Corp.

by Richard S. Ruback

Abstract

Pioneer is an integrated oil company. Its operations include exploration and development, production, transportation, and marketing. The case focuses on Pioneer's cost of capital calculations and its choice between a single company-wide cost of capital or divisional costs of capital. Provides students the opportunity to learn how to calculate a company-wide weighted average cost of capital. An appropriate measure of the cost of equity capital is presented so that students are able to challenge their understanding of key concepts by critiquing the company's measure and suggesting their own.

Keywords: Cost of Capital; Energy Industry; Mining Industry;

Citation:

Ruback, Richard S. "Pioneer Petroleum Corp." Harvard Business School Case 292-011, July 1991.