Case Notes/Answers
OLEUM RESOURCES David Wood by Tom Hansen Jack
Hansen
Discussion Questions:
Typical questions to assign to students in advance:
1. How has the change in commodity prices affected the industry and Oleum?
2. Determine the net present value (NPV) or internal rate of return (IRR) of the ASP and resource
play opportunities.
3. If you were Craig Peplin, president and CEO of Oleum, what would you do and why?
Additional questions to be asked during class:
1. Does Oleum need to move from its gas exploration strategy?
2. What shift is a better fit with Oleum’s existing strengths?
3. What is better for a smaller firm?
4. How do these alternatives compare financially?
5. Where can Oleum develop a sustainable competitive advantage?
6. Given the higher risk and potential higher returns in this sector, would you commit your career
or your money to Oleum?
, W12195
Teaching Note
OLEUM RESOURCES LTD.
SYNOPSIS
It was February 2009, and Craig Peplin, president and chief executive officer (CEO) of Oleum Resources
Ltd., was looking with concern at his company’s recent performance figures. Oleum was a small
participant in the oil and gas exploration business in Western Canada. Based in Calgary in 1992, Oleum
had experienced healthy net income for the past 17 years, however, the financial crisis of 2008 had driven
down commodity prices. For the first time ever Oleum would likely record a loss for the coming year.
Despite the negative short term outlook, Peplin saw this as an opportunity for Oleum to revise its business
strategy and reconsider the potential acquisition of Acroam Energy Inc.
The goal of this case is to introduce students to an important Canadian industry. Students will learn about
the value chain of the oil and gas industry and will determine where Oleum, a small oil and gas
exploration company based in Calgary, Alberta, can maintain a competitive advantage. This case also
touches on the challenges of growing through acquisition and the risks associated with expanding beyond
a company’s core competencies.
ISSUES
The major issues that can be addressed through the case are:
1. How does the junior oil and gas industry in Canada work? How do their financials work?
2. What parts of a value chain are replicable, and what does this mean about the possibility of earning
returns?
3. How do changes in strategy affect the operations of firms whose major assets are its personnel?
4. Can a firm’s size dictate a strategy?
5. Can acquisitions be a reliable way of adding core competencies and expanding into new markets?
OLEUM RESOURCES David Wood by Tom Hansen Jack
Hansen
Discussion Questions:
Typical questions to assign to students in advance:
1. How has the change in commodity prices affected the industry and Oleum?
2. Determine the net present value (NPV) or internal rate of return (IRR) of the ASP and resource
play opportunities.
3. If you were Craig Peplin, president and CEO of Oleum, what would you do and why?
Additional questions to be asked during class:
1. Does Oleum need to move from its gas exploration strategy?
2. What shift is a better fit with Oleum’s existing strengths?
3. What is better for a smaller firm?
4. How do these alternatives compare financially?
5. Where can Oleum develop a sustainable competitive advantage?
6. Given the higher risk and potential higher returns in this sector, would you commit your career
or your money to Oleum?
, W12195
Teaching Note
OLEUM RESOURCES LTD.
SYNOPSIS
It was February 2009, and Craig Peplin, president and chief executive officer (CEO) of Oleum Resources
Ltd., was looking with concern at his company’s recent performance figures. Oleum was a small
participant in the oil and gas exploration business in Western Canada. Based in Calgary in 1992, Oleum
had experienced healthy net income for the past 17 years, however, the financial crisis of 2008 had driven
down commodity prices. For the first time ever Oleum would likely record a loss for the coming year.
Despite the negative short term outlook, Peplin saw this as an opportunity for Oleum to revise its business
strategy and reconsider the potential acquisition of Acroam Energy Inc.
The goal of this case is to introduce students to an important Canadian industry. Students will learn about
the value chain of the oil and gas industry and will determine where Oleum, a small oil and gas
exploration company based in Calgary, Alberta, can maintain a competitive advantage. This case also
touches on the challenges of growing through acquisition and the risks associated with expanding beyond
a company’s core competencies.
ISSUES
The major issues that can be addressed through the case are:
1. How does the junior oil and gas industry in Canada work? How do their financials work?
2. What parts of a value chain are replicable, and what does this mean about the possibility of earning
returns?
3. How do changes in strategy affect the operations of firms whose major assets are its personnel?
4. Can a firm’s size dictate a strategy?
5. Can acquisitions be a reliable way of adding core competencies and expanding into new markets?
