Royal Dutch Shell, BP, and Exxon Mobile are considering establishing a consortium to extract oil in Libya, a country with considerable riskiness (see the attached pdf of World Bank country backgrounder for details). The following information is pertinent to your analysis:
- The reference rate for the type of oil is the Brent Crude (https://oilprice.com/oil-price- charts/block/1#) rate.
- Information on Brent Crude oil futures and options can be found here (https://www.cmegroup.com/trading/energy/crude-oil/brent-crude-oil.html) and are traded on the CME. (Open this website and click Contract Specs to find the information)
- All current corporate information on BP, Shell, and Exxon is valid and should be considered in this analysis. For example, use their respective WACCs, annual reports (visions/goals/challenges), bond ratings, etc… when answering the below questions.
- Project specific details are:
o 20-year operational life of this oil facility.
o 2-years’ time-to-build component (facilities and related infrastructure), during which time no barrels of oil can be produced.
o 50% chance for the oil wells (on which the facility is built) to produce 30 million barrels of oil per year; 25% chance of 60 million barrels per year and 25% chance of wells being dry, i.e., 0 barrels of oil will be produced in that case.
o The fixed cost to establish the facility in Libya is $8.5 Billion USD.
o The variable cost is 24 LYD (Libyan Dinars) per barrel of oil extracted.
o Assume the Libyan government charges royalties of 15% on profits of any oil activities in occurring in their territories.
o Furthermore, assume, that the Libyan government has a 10% withholding tax on any monies paid to foreign corporate owners, regardless as to the form of the monies, i.e., dividends, interest on inter-company loans, management fees, ect…
Given the above, answer the following questions:
Note: There are acceptable “degrees of freedom” for these answers, i.e., multiple correct answers are quite possible. I am most interested in the quality of your explanations and thought process here. Feel free to state any reasonable (evidence-based) assumptions you may make while answering these questions.
- What could be the optimal WACC for the consortium be? Explain your methodology. Hint: Think about our discussion of International CAPM. Is this project within the normal operational scope of the consortium’s companies? A good reference on country risk premia is: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html
- Do you think the consortium will be a stable coalition? What assumptions and/or conditions might you want to add for stability of the consortium?
- After year 10, the consortium decides to sell their Libyan oil operations. How would you value this project? Assume US Chevron is the potential buyer. Clearly explain your methodology and any assumptions you make. Intuitively, would the facility’s valuation be different if the buyer was Saudi Aramco? Why or why not?
- Now assume in year 5 there is 70% chance of increased conflict in Libya. Furthermore, assume that if increased conflict happens the facility will be inoperable that year (i.e., no oil produced). How would this affect your time zero’s NPV? In year 8, would this scenario affect the project’s NPV?
- Intuitively, could the consortium take steps to minimize political risk to their operations in Libya? If so, what could they be.
theomnipotent god is an omnipotent lawgiver. or, it could also be arguedthat for schmitt, theology itself is political: that theology is thebasis for politics and the 2 meet on the factor of sovereignty. thisessay will leave aside for the instant the secondary aspect of thisquote, which is that there may be also a historical development that makesmodern theories of the state theological ideas: it's miles sufficient to notethat in both principle, the democratic notion of the human beings at thecentre of sovereignty misunderstand the character of the sovereign. for schmitt, the sovereign is he who creates law. however, in thiscreation, the sovereign has an exciting ontological characteristic.for (schmitt: 1963:36) “even though he stands outside the normally validlegal device, he though belongs to it, for it's miles he who mustdecide whether the charter wishes to be suspended in its entirety.”accordingly, for schmitt the sovereign is covered within the felony order handiest atthe point of its own suspension. this may be understood as theexception. for example, in a kingdom of exception, the regulation is suspendedby an act of law itself: in that act, the exceptional nature of thedecision of sovereignty becomes clear, and you possibly can see that regulation iscreated by using an superb choice that can be recalled at any time inthe country of exception. this factor is the authentic factor that lies atthe basis of regulation, and thus, is the foundation for schmitt conceptof the political. for schmitt, the political is preceded in a certainsense with the aid of the kingdom. as agamben (1995:26) explains: the exception does now not subtract itself from the guideline; alternatively, therule, suspending itself, offers upward push to the exception and, maintainingitself in terms of the exception, first constitutes itself ordinarily. . . the sovereign selection of the exception is the originaryjuridico-political shape (struttura) on the basis of which what isincluded in the juridical order and what is excluded from it acquiretheir meaning is that this anarchy? for if it become, then schmitt would be arguing forreplacing the weimar republic with a kingdom no better than the nation ofnature. this isn't the case. for schmitt (1963:12): what characterizes an exception is principally limitless authority,this means that the suspension of the entire current order… because theexception isn't like anarchy and chaos, order in the juristicsense still prevails, even supposing it isn't of the regular kind. schmitt is keen to maintain a regular relation between the nation ofexception and the state of law. it is nonetheless the law that suspendsitself via the determine of the sovereign. for schmitt, it's miles thisdecision that is on the coronary heart of sovereignty. in preference to sovereigntybeing a rely for famous will, schmitt is familiar with that underlyingthe founding of any regulation is a moment where regulation must be suspended. thismoment returns in the nation of exception. this country of exceptionguarantees the electricity of the sovereign. it also well-knownshows that sovereigntyis pure immediacy, instead of illustration (that's the makingpresent of something that is absent). as schmitt notes of thesovereign choice (1985b: 31): “the selection becomes instantlyindependent of argumentative substantiation and received autonomousvalue.” this argument, schmitt claims, is aware the true strength oflaw in a manner rationalist jurisprudence fails to do. we see that schmitt argument approximately the choice versus the rule of thumb is nota new concept in his concept in the 1920’s. the similarity betweenthese statements and those in regulation and judgement suggest this projecthad been there from the very start. inside the political theology he givesa properly definition of his venture: (ibid: 22): “exactly a philosophyof concrete life should not withdraw from the exception and the extremecase, however should be inquisitive about it to the very best degree.” thru thisproject schmitt tries to break out of the choice among nihilisticindividualism (the bureaucratic nation) and network based politics(communism, as well as regimes based totally on way of life) by means of emphasising thesingularity of sovereignty. v solutions: sovereign violence schmitt now has a critique of the cutting-edge global, and a desiredworld he would like to visit. he unearths his means in violence. throughviolence schmitt argues it's miles feasible to interrupt with rule primarily based systemsof sovereignty. as he notes (1985b: 12): “the norm is destroyed by theexceptio>GET ANSWER