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Case Study Prompt
Your client is an oil and gas company. They own the rights to explore an offshore oil reserve in Venezuela. The oil reserve is good to exploit for 20 years.
The production from a single cell will go up in the beginning, reach its peak, and then decline in its useful life. So in order to keep the production level stable, they need to drill new wells during the reserve exploration process.
This makes their return on capital goes down. The client currently spend $100M per year on rig (every well needs a rig). They purchase rigs from USA. USA has higher labor cost than Venezuela.
The client is wondering if they should they take this opportunity to build their own rigs to make use of the opportunity, and if it is proper to do, how should they utilize the opportunity?
Case Study Overview
The best case studies are the ones that challenge you to think creatively – this case will certainly present an opportunity for that. The case involves an oil and gas company that has an opportunity to explore offshore oil reserves in a foreign country. The company would need to purchase expensive drilling rigs from the USA, where labor costs are higher than the country that has the oil reserves. The client is considering building its own rigs to save capital – is this a good opportunity or not?
You can use the Profitability Framework to help form your structure for the case, but don’t limit yourself to the basic framework. Get creative with the structure. Build something that will give you the best change of successfully completing the case and getting to a viable solution.
This case is one of many in the Case Library that will prep you for a final round case interview. The case does have several simple charts that you’ll need to interpret and analyze.
McKinsey Interview Tips
McKinsey looks for casers with an efficient problem-solving process and ability to communicate with clarity. This extends far beyond just a case interview. The company wants to be able to see how you would respond in a high-pressure situation with a client. Do you have what it takes to ace the case and land an offer?
Make the most of your time with this case by doing to the following:
- Focus on your presentation skills – are you clear and concise?
- Time yourself as you go through the case (recommended times listed on the Guidance pages)
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