ProdEng: Services for Oil & Gas Extraction

Frank V. Cespedes; Maria Fernanda  Miguel; Mariana  Cal

Case | HBS Case Collection | September 2018

ProdEng: Services for Oil & Gas Extraction

by Frank V. Cespedes, Maria Fernanda Miguel and Mariana Cal

Abstract

ProdEng is a venture created as part of a PE fund and provides oil field services in Argentina. In 2016, an industry-wide unforeseen oil and gas demand slump drove ProdEng’s average service rates down by more than 37%, with EBITDA margins falling from 50% to 24% in the second half of 2016. Although the partners remained optimistic about ProdEng’s long-term fundamentals and management team, the short-term challenges required that they act rapidly. However, they had divergent views on the path forward. Should they stay the course and focus on their core competencies, or should they rethink their approach to sales and drive profitability via spot contracts in a highly uncertain time? The key issues in this case are pricing, customer selection, and management of prices and accounts in an inherently uncertain, volatile demand environment.

Keywords: pricing; Entrepreneurship; Sales; Marketing; Price; Strategy; Latin America; Argentina;

Language: English

Format: Print

28 pages

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Citation:

Cespedes, Frank V., Maria Fernanda Miguel, and Mariana Cal. "ProdEng: Services for Oil & Gas Extraction." Harvard Business School Case 819-003, September 2018.

Fred Shilmover and Sam Clemens prepared for their fourth quarter board meeting. They were excited to have scaled their software startup, InsightSquared, to $2 million in revenue and secured an $8 million round of venture capital. However, they disagreed on the path ahead, specifically on the sales and marketing plan. Shilmover preferred a sales-centric approach to growth while Clemens preferred a marketing-centric one. Which strategy was optimal for their venture’s next phase of growth?

Case | HBS Case Collection | February 2019 (Revised March 2019)

Banorte and the Capital Call Facility: Infrastructure Finance in Mexico

John D. Macomber, Carla Larangeira and Fernanda Miguel

As a result of Mexico´s pension industry deregulation, pension funds were able to invest in energy and infrastructure projects through a variety of financial instruments, particularly through Capital Development Certificates (CKDs), an asset class that served as a vehicle for investing in unlisted companies. By the end of 2017, pension funds had invested more than $16 billion in infrastructure, with CKDs as the primary investment vehicle for this sector. Motivated by increased domestic liquidity and opportunities for investment, Rodrigo Jair launched Jair Infrastructure Investments, a specialized fund with the majority of its capital raised from pension funds. Jair was approached by Felipe Duarte, head of Banorte´s Infrastructure and Energy Group, who offered him a short-term credit line to increase the fund´s liquidity during its investment phase. Jair had to decide whether he should deploy this line or rely exclusively on capital calls from his investors to fund his pipeline. Was it worth paying the commitment fees to achieve increased liquidity? What risks should he consider when making this decision? What are the upsides and downsides of relying on equity or debt for a fund like Jair Infrastructure Investments? Will techniques like this bring significantly more capital into infrastructure investing?

Keywords: financial products; fund management; capital call facility; pension funds; Infrastructure; Energy; Finance; Decision Making; Investment Funds; Financial Instruments; North America; Mexico;

Citation:

Macomber, John D., Carla Larangeira, and Fernanda Miguel. "Banorte and the Capital Call Facility: Infrastructure Finance in Mexico." Harvard Business School Case 219-049, February 2019. (Revised March 2019.) View Details

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