a financial analysis of risks in poland from the perspective of eog september 11 2013
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A Financial Analysis of Risks in Poland from the perspective of EOG September 11, 2013. Christopher Denny Elena Shrestha Vera Uboytseva Ayodele Sonupe. Background Info. $48 billion company spun off of Enron in 1999 (pre-bankruptcy) First mover in the Bakken Shale play in 2008

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a financial analysis of risks in poland from the perspective of eog september 11 2013

A Financial Analysis of Risks in Poland from the perspective of EOGSeptember 11, 2013

Christopher Denny

Elena Shrestha

Vera Uboytseva

Ayodele Sonupe

background info
Background Info.
  • $48 billion company spun off of Enron in 1999 (pre-bankruptcy)
  • First mover in the Bakken Shale play in 2008
  • First mover in the Eagle Ford Shale play in 2010
  • Acquired large plots of land at very attractive rates at the time
  • Divested dry gas assets to focus more on liquid assets before the collapse in natural gas prices
  • Has grown production at a CAGR of 38% over the last seven years
economic outlook
Economic Outlook

Foreign Exchange

Potential causes for foreign exchange movement

  • The Zloty has reacted to the Eurozone crisis
  • The Polish Central Bank intends to intervene in the foreign exchange market to strengthen the Zloty
  • Interest rates in Poland is high
  • Poland intends to adopt the Euro

Source: Global Insight Economic Data

Source: Global Insight Economic Data

economic outlook1
Economic Outlook

Interest & Inflation Rate

Inflation

  • Domestic demand in Poland may increase
  • Close attention is paid to monetary policies
  • Poland needs to ensure that interest rates remain at no more than 1.5 percentage points above the average of the three European Union countries with the lowest inflation.

Interest Rates

  • Euro crisis is eroding growth in Poland
  • Inflation is expected to remain low
  • The polish central bank intends to strengthen the Zloty

Source: Global Insight Economic Data

Source: Global Insight Economic Data

economic outlook2
Economic Outlook

Fiscal Policy & Balance of Payments

Fiscal Policy

  • Poland has no tax regulations around upstream extractions
  • Revenues are projected to fall below target but the polish government cannot continue to cut spending because of domestic demand stimulus

Balance of Payments

  • There is a decline in the amount of imported goods
  • Exports in Poland is dependent on the demand from Euro buyers
  • Domestic demand in Poland is struggling.
financial market
Financial Market

Factors involved in the development of financial market:

  • One of the fastest growing economies in Europe
    • In 2010, the Polish economic growth rate was 3.9%
  • The growth of the Warsaw Stock Exchange (WSE) facilitated the development of Poland’s capital market
  • Derivative instruments for currencies and interest rates started being traded in the mid-1990s
  • Polish banks and foreign banks actively participated in the OTC derivatives market.
  • Liquidity is primarily created by foreign banks.
  • Foreign investors play a major role in the futures and options market of the WSE.
financial market derivative instruments
Financial Market – Derivative Instruments
  • Investor structure on the options market. 
  • Investor structure on the futures market. 
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