Page 153 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes Loss of oil
Probability of delay
Tie-ins and man-hours required for shutdown
Analysis flagged real cost differences between gas infrastructure options

COST DIFFERENCE BETWEEN GAS INFRASTRUCTURE OPTIONS
USD million OPTION A OPTION B

CAPEX

Risk & Contingency

Cost of Production

Total Cost

Progress to FEED
Based on our recommendations, the client swiftly chose an alternative capex option,
removing the impasse and enabling it to progress to the front end engineering design
(FEED) stage without further delays.
Question

Discuss the case in brief.
Source: http://www.sbc.slb.com/Our_Work/Energy_Expertise/Gas/Case_Study_Deciding_on_
Critical_Gas_Infrastructure_Investments.aspx
7.3 Summary

A commonly advocated procedure for fundamental analysis involves a 3-step analysis:
macro-economic analysis, industry analysis, and company analysis.

In a globalised business environment, the top-down analysis of the prospects of a firm
must begin with the global economy.

There are two broad classes of macroeconomic policies, viz. demand side policies and
supply side policies.
Fiscal and monetary policies are the two major tools of demand side economics.

Fiscal policy is concerned with the spending and tax initiatives of the government.
Monetary policy is concerned with money supply and interest rates.
The macro-economy is the overall economic environment in which all firms operate.
Changes in the management of any particular company or changes in government policy
at macro level can bring about changes in the attractiveness of certain securities.

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