The following are some of the points to work on for the case. The main point is to (1) understand how project finance structuring helps spread and mitigate risks and (2) apply project valuation techniques.

1. How does financing for the Field System differ from the financing fo the Export System (pipline and off-shore loading system)? Why? What is Project Finance versus corporate finance? Why is project finance a better way to spread risk and mitigate project risks?

2. In Exhibit 4b, it is shown that for the first 10 years after operation the Private Sponsors will get more than half of the Field System cashflow, whereas for the remaining years the Chad government would get more than half of the cashflows. Does this cashflow-allocation structure make sense? Is it a good way to allocate risks differently among participants?

3. Assume that no matter which financing structure would be adopted, ExxonMobil would like to keep a 40% equity stake in the whole project while the other two sponsors would take the remaining equity stake (Petronas 35% and Chevron 25%). Consider three possible structures: (I) both Field System and Export System are 100% financed through corporate finance (all equity financing, and no other agencies or governments would be involved); (II) Field System corporate-financed while Export System project-financed (as is the structure described in the case); and (III) both are project-financed, with 40% of total capital from the 3 sponsors/owners and the remaining 60% from debt structured using project finance. What are the positives and negatives of each of the three alternative structures from ExxonMobil's perspective? What are the respective capital committments by ExxonMobil under the alternative scenarios? Why does ExxonMobil prefer structure (II)? Why does ExxonMobil want to use project finance at all for this project given that it can raise capital on its own more cheaply through corporate financing?

4. Analyze the risk and returns to Chad, Cameroon and the Private Sponsors.  Is the deal fair for all participants from the perspective of return allocation? Is it fair from the perspective of risk allocation?

5. What are the main drivers of returns? How sensitive are returns to changes in the main drivers? Are the assumptions on future crude oil prices well-grounded for arriving at the calculations in Exhibit 5? What about the same 10% discount rate applied to all participants? Will the project still be attractive to ExxonMobil if the appropriate discount rate for its part is 13% (taking into account the political risk and country risk, and so on)?

6. What is the role of the World Bank/IFC in this deal? Are they likely to be successful?

7. Will the Revenue Management Plan work? Are there aspects of the plan that you think should be changed?

8. Would you approve the deal as a World Bank/IFC board member? Why? Discuss the risk factors from the World Bank's perspective.