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Complete Case details are given below :
Case Name : BP Amoco (B): Financing Development of the Caspian Oil Fields
Authors : Benjamin C. Esty, Michael Kane
Discipline : Finance
Case Length : 15 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
British Petroleum and Amoco were the two largest members of the Azerbaijan International Oil Consortium (AIOC), an 11-firm consortium that was spending $10 billion to develop oil fields in the Caspian Sea. As of March 1999, AIOC had completed a $1.9 billion development project known as Early Oil. The two companies, however, had financed their shares of this project in different ways: BP used internal funds (traditional, on-balance sheet corporate finance), whereas Amoco was one of five AIOC partners that raised $400 million of project finance. Following the BP/Amoco merger in December 1998, managers in the combined firm's finance group had to reassess the Early Oil financing strategy and determine the best way to finance its share of the $8 billion Full Field Development Project. Should it use internal funds, project finance, or a mixture of the two?
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