Midland Energy

Resources
Group 5
IIM RAIPUR
Anshul Sehgal
Arijit C
Akshay
Chandan

Midland Company
Introduction
Midland Energy Resources: a global
energy company with operations in
Oil and Gas Exploration (E&P)
searching for potential underground or
underwater oil and gas fields, drilling of
exploratory wells, and subsequently operating
the wells that recover and bring the crude oil
and/or raw natural gas to the surface.

Refining & Marketing (R&M)

Gasoline and base-stock lubricants

Petrochemicals
Polyethylene, polypropylene, styrene, olefins,
aromatics, and fuel and lubricant additives

Current Problem
One set of Corporate and divisional cost
of capital values published by Ms.
Mortensen are utilized for multiple
purposes such as:

Capital budgeting and Financial accounting

Performance assessments
Merger & Acquisition proposals
Stock-repurchase decisions

Cost of Capital Estimates by Ms.

Mortensen were often criticized and
challenged (for assumptions and inputs)
by division presidents and controllers
Ms. Mortensen identified the need for a
users guide to interpret and use the
cost of capital estimates appropriately to
address the above issues

petroleum
unlevered

0.6186

EQUITY BETA
PETRO

0.8661

Midland
Debt/value

42.2%

Equity/Value

57.8%

BETA LEVERED

1.327494

COST OF DEBT

COST OF EQUITY

6.6

11.617471
09

WACC 9.500098291