Foreign Direct Investment in U.S.A.

The Oil Asset Play

Energy Investment Strategies for Foreign Firms

• As “Asset Owner” or “Asset Investors”

I. Determining at what level to invest.

• As “Asset Owner”– Owner & Operator– Higher level of risk– Knowledge of full

operations necessary– Access to key data and

hands on knowledge– Responsible for total

operations

• As “ Asset Investor”– Only provide investment

funds– Not “Operator”– Partner/owner yet limited

access to operations data– “outsider” not seen as

inside the operations– Lower asset risk, but

higher operations risk due to lack of insight on operations

II. Understand the Risk

• Gulf of Mexico risk must be fully understood– Environmental– Weather– Costs of doing Business (political & Private)– Type of risks

• Offshore: Deepwater vs. Shelf• Onshore: depleting reserves vs. new reserve• Invest as Investor – risk horizon & Expected Rate of Return • Invest as Operator – Long-Term Investor, E&P company

understands time, risks, and long-term ROI

III. Competition for Assets

• Market– Multiple participants– Ability to stay up with

market – timing, pricing, understanding.

– Do Assets fit in with Long-Term strategy?

– Understanding the full potential of assets for sale.

• Methods of Acquiring– Competitive Bid

• Price driven• Time sensitive• Bid vs. relationship

• Self-Search– Time consumption– Lack of knowledge– Trusted Advisor

dependent

IV. Keys to Success

• Understand your strengths vs. weaknesses.

• Understand implications of “Foreign” Investment.

• Purpose of your Investment – invest in U.S. or invest in “Assets”.

• Knowledge and access to knowledge

• Success in “Home” country does not guarantee success in U.S.

• Understand the full “Weighted Risk-Return” – Gulf of Mexico has low political risk and history of drilling – well known territory.