September 22, 2005
McCombs School Hosts First National Energy Finance Challenge
By Sandie Taylor

At a time when oil prices are on the rise—along with entry-level salaries in the energy industry—many MBAs are finding careers in energy increasingly appealing. With this in mind, the McCombs School’s Energy Finance Group organized and hosted the nation’s first energy finance case challenge Sept. 15-16 to give students an introduction to the industry and the issues it faces today.

Twelve teams from top business schools competed in the National Energy Finance Challenge held at McCombs. For the case, students acted as members of a corporate negotiations team for a fictional company called Nomad Petroleum located in “Jerbia,” a small, imaginary Pacific island nation. Teams were asked to address strategic options for Nomad's license agreement expiring in 2012 and the long development cycle for new oil pumping projects in Jerbia.

“The inaugural National Energy Finance Challenge was a huge success for McCombs and the University of Texas,” Graeme Martin, MBA ’06, said. “The teams were impressed with the quality of judges, the judges were impressed with the quality of the teams’ presentations, and both were appreciative of the logistical efforts of the Energy Finance Group in pulling it all together.”

The stage is set for this to be an annual event hosted in Austin, Graeme continued. “That’s the best thing about starting something new—it doesn’t necessarily end when everyone flies home.”

The University of Chicago Graduate School of Business took first place and won a $5,000 prize. Chicago GSB team members included Maynak Jaiswal, Erik Waters, Mauricio Molina, John Rhoads and Rodrigo Fenton. Second place and $2,000 went to the University of California at Berkeley; MIT took third for $1,000.

Other teams hailed from Cornell, Duke, Georgetown, Harvard, McCombs, Michigan, Washington, Virginia and Wharton.

Making Their Case
The student teams gave two 20-minute presentations, which were each followed by an intense 25-minute question-and-answer section led by judges from Chevron, Shell, ConocoPhillips, Chiron Financial, Merrill Lynch and Deutsche Bank.

“The questions asked by the judges were designed to be difficult, and they really tested us,” said Erik Waters of Chicago. “It was a great case, well-written, and we really enjoyed it.”

One of the judges, Allen Flickinger, South Africa planning advisor for Chevron International Exploration & Production, Inc. wrote the case for the challenge.

“We were extremely happy that we were able to convince someone from the industry to write the case,” event organizer Ross Richard, MBA ’06, said. “I think this was a huge accomplishment, as it added to the value of the event.” The alternative would have been to select an existing Harvard case, he added, which would not have been nearly as satisfying.

Added Benefits
“The case gave us a good idea of the challenges facing the industry right now,” said Esmeralda Megally, MIT's team captain. “It was not a theoretical case, it was very practical.”

Several students started out thinking the case was rather simple, but it turned out to be more complicated as the teams dug deeper. “The case was challenging, with a couple of twists and turns that made it interesting,” said Nicholas Jackman, MIT student. “It gave a good introduction to the softer side of negotiations, not just hard numbers.”

Besides winning the competition and cash prize, Erik Waters added that he enjoyed the opportunity to meet MBA students from other business schools. “It was interesting to hear about their school experience and summer internships,” he said.

Planting the Seed
“I don’t know who did a better job—the students who competed in the event or the ones who organized it,” said judge Eyup Isik. “It must have been especially difficult to get the schools to commit during the summer time to come to Austin for a competition that has never been done before.” Isik, MBA ’02, is a senior staff analyst at ConocoPhillips.

Officers from the Energy Finance Group (EFG), an MBA student organization, conjured up the idea for the challenge last year, hoping to create a new opportunity for students to learn more about the energy industry while giving sponsors the chance to recruit well-performing students.

Realizing that it would take months to plan, the 2005 officers did some of the groundwork—getting the lead sponsor and establishing contacts with other sponsors and schools. In January 2005, the new EFG MBA ’06 officers, Graeme Martin, Ross Richard, Richard Newman and Constantin Nicolai, took on the arduous task of planning and implementing the rest of the challenge.

Chevron Corp., Shell Oil Co., CenterPoint Energy, ConocoPhillips, Chiron Financial Group Inc. and the McCombs School Center for Energy Finance Education and Research sponsored the challenge.