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Risk Management at Apache

Solution Id Length Case Author Case Publisher
2536 641 Words (5 Pages) Lisa Meulbroek, Puja Malhotra Harvard Business School : 201113
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There are a variety of risk management solutions to choose from. The first strategy is that used by EOG Resources, a natural gas firm that was split out from Enron. When it comes to hedging, EOG has virtually opted to stay out of the game entirely. They purposely avoided hedging because they felt that the sector was facing a period of continuous "tight gas market conditions."

Following questions are answered in this case study solution:

  1. How could apache manage risk?

  2. What is the goal of hedging?

Case Study Questions Answers

A healthy financial sheet and the absence of significant investments in exploration or production operations make this method effective. Typically, exploration and production operations need a large initial expenditure and provide a sluggish return on investment (Return on investment).

The second most often used risk management method is to place reliance on an organization's size, liquidity, and stability. This was the strategy used by Talisman Energy, the world's biggest independent oil and gas producer located in Canada. Organizational management thought that the size and liquidity of the organization enabled them to manage a number of projects at the same time with ease. This is a high-risk method to risk management inside an organization since it often exposes the business to more volatility in commodity prices than would otherwise be the case.

In addition to divesting assets and identifying cost-cutting measures, the other two most often used risk management tactics are: Union Pacific Resources and Vastar Resources, to name a few of companies, have used these techniques.

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