Ivey Publishing

Product Details

Yangarra Resources Limited
Product Number:
9B11E003
Publication Date:
06/21/2011
Length:
3 pages (3 pages of text)
Product Type:
Case (Field)
Source:
Ivey
Yangarra Resources Limited, a Calgary-based junior oil and gas company, had several properties throughout Alberta comprising both solely controlled and joint ventures. The president and chief executive officer (CEO) was involved in the construction of a well on the Ferrier property — a joint venture between three companies, each holding roughly one-third of the stake. As part of the joint venture, Yangarra had signed an agreement that committed Yangarra to cover all expenses proportional to its working stake of 31.875 per cent. The well had been drilled at a higher cost than expected, with many charges not yet recorded or incurred. As a result of the cost overruns, Yangarra had been asked to provide more funding to the project. In deciding whether to commit additional resources to the Ferrier well, the CEO had to consider several factors including an existing gross overriding royalty revenue (GORR) agreement, uncertainty in estimating the recoverable quantity of oil, crown royalties, and a current legal dispute.
Learning Objective:
This case involves decision making under uncertainty, risk analysis and simulation, probability distributions, net present value, and variance reduction techniques.
Issues:
Disciplines:
Entrepreneurship,  Management Science
Setting:
United States, Medium, 2010
Intended Audience:
Undergraduate/MBA
Price:
$5.30 CAD / $5.00 USD Printed Copy
$4.50 CAD / $4.25 USD Permissions
$4.50 CAD / $4.25 USD Digital Download
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