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Printable Handouts
Navigable Slide Index
- Introduction
- Offshore oil drilling: background
- Offshore oil drilling: the business
- Offshore oil drilling: capital structure
- Spin-offs and master limited partnerships
- Master limited partnerships
- Noble Corp: Side by side spin-off comparison
- Transocean: Side by side MLP comparison
- Pros and cons to business structure changes
- Drilling Rigs Inc. faces a challenge
- Drilling Rigs Inc. financials
- Drilling Rigs Inc. decision time
This material is restricted to subscribers.
Topics Covered
- Overview of the offshore drilling industry
- Growth vs. value oriented firms
- Master limited partnership
- Spinoff vs. MLP comparison
- Hypothetical firm profile
Talk Citation
McDonald, M. (2015, May 7). Assessing business structure: a case study in the energy industry [Video file]. In The Business & Management Collection, Henry Stewart Talks. Retrieved August 31, 2024, from https://doi.org/10.69645/DITW4277.Export Citation (RIS)
Publication History
Extended-form Case Study
Assessing business structure: a case study in the energy industry
Published on May 7, 2015
27 min
Transcript
Please wait while the transcript is being prepared...
0:00
Hello.
My name's Michael McDonald.
Today I'll be talking about
assessing business structure.
This is a case study
in the energy industry.
There's been a great deal of
change and evolution in the way
that firms look at business
structure in the last few years.
In particular, spin-offs
have become much more common
with the rise of activist investors.
Further, for the first time, Master
Limited Partnerships, or MLPs,
are becoming a major form
of business structure.
Given these changes in the way
that companies are structuring
their operations, it's useful
to understand the objectives
that companies look at when
assessing their business structure,
and what their
different options are.
0:43
One area where these challenges
are particularly acute
is in the offshore
oil drilling industry.
Now, just to give
a bit of background
on the offshore oil drilling
industry. Drilling for oil
can be done either
on land or at sea.
When it's done at sea, it's
called offshore oil drilling.
Offshore oil drilling relies on
large floating vessels drilling
oil wells into the earth's crust.
And then the oil beneath the
sea is extracted as a result.
Major oil companies like
Exxon, and national companies
like, Cnooc or Petrobras
are the most common users
of offshore oil drilling.
Offshore oil drilling
is very expensive
and very time-consuming and very
technologically challenging.
Therefore, it's not generally
done by smaller oil firms.
And in fact, even large
oil firms don't generally
drill the oil wells themselves.
Instead, they hire third-party
companies that perform the work.
Again, as I said, that's because
this oil drilling is expensive
and technologically challenging.
But moreover, the vessels
that drill the oil wells
need to be constantly
in use because they cost
so much money in the first place.
Most oil companies simply aren't
prepared to drill well after well
after well.
As a result, they hire a
third-party company, like say
Transocean or Noble or Seadrill.
That company comes
and then drills the well.
And then once that well is complete,
they move on to another well,
potentially for another company.
So that level of usage in terms of
these offshore oil drilling vessels
is not something that most oil
companies can simply commit to.
In this study, we're going to
examine the business structure
of several different
offshore oil drilling firms
and then posit a
hypothetical firm which
is asking students what changes
should be made to their structure.