Investment Strategy Development

IHS Investment Strategy Development is a service in which our consultants provide robust support to help you make high-stake, strategic decisions involving corporate, business unit, and major project investments. Our consultants apply an unmatched combination of data, econometric modeling, and industry expertise to align your key stakeholders on a chosen, fact-supported strategy.

Clients receive critical support to:

• Focus discussion on making a final decision
• Create an analytically rigorous framework for comparing compelling alternatives
• Identify high-value alternatives and their risks
• Align key stakeholders on a chosen strategy

Benefits

IHS Investment Strategy Development enables you to:

• Gain an overall understanding of the tradeoffs among alternatives, leading to better alignment among key stakeholders on a chosen strategy
• Incorporate uncertainty into the decision-making process by adopting consistent ranges for uncertain, decision-critical factors
• Manage multiple value metrics by making the trade-offs among them explicit
• Focus analytical effort on understanding the sources of value and making decisions
• Engage decision makers through multiple structured dialogues
• Achieve the ultimate goal of making a choice among compelling alternatives

Client Challenge:

What strategy should our business use to respond to declining market share in spite of growing energy reserves and production? What are our long-term alternatives?

IHS Consultants can help you:

• Identify and understand the tradeoffs among high-value alternative strategies and their risks
• Create a transparent process for decision-making with the goal of aligning key stakeholders on a chosen strategy
• Gain an external perspective along with data to challenge the momentum

See Case Studies #1, #2, and #3

Client Challenge:

Can we build a new facility and use the tax revenues it will generate to finance that investment?

IHS Consultants can help you:

• Assess the value of your assets in both current and future terms to enable you to better negotiate loans, build support for public bonds, manage your portfolio and ultimately make the most profitable financial planning decisions for your organization
• Implement a fact-based, forward-looking asset valuation process
• Produce credible and accurate forecasts of cash flow for specific assets and receivables over various time horizons
• Determine optimal asset and liability structure
• Evaluate credit risks, the correlation of risks and the adequacy of credit enhancements
• Put in place an objective plan to monetize assets

See Case Study #4

Client Challenge:

We need an E&P strategy either because we don't have one or our current strategy is not working. Can you help us formulate a strategy that promises a high predictability of success?

IHS Consultants can help you discover oil and gas growth opportunities via:

• Worldwide trends and market studies in the oil, gas and energy sector
• Supply and demand analysis (including dynamic gas planning)
• Foreign investment optimization and license round strategy and promotion for governments
• Establishment of national fiscal, regulatory and legal structures governing the energy sector
• Corporate acquisition targeting and divestments
• Implementation planning and dynamic modeling
• Risk management and analysis

See Case Studies #5, #6, and #7

Client Challenge:

How should we develop our energy reserves?

IHS Consultants can provide you:

Collaborative, process-driven support for making decisions on optimal development concepts and implementation plans for complex, risky, multibillion-dollar projects

• Stage-gate decision support from the feasibility stage through project sanction
• Evaluations of multiple project development alternatives during the concept selection stage
• Benchmarking and unbiased analysis of both aboveground and subsurface information used for project evaluation
• Support for facilitating decision making among joint venture (JV) partners
• Contracting strategy and project cost estimation during the definition stage

See Case Study #8

Client Challenge:

Can you help us predict whether this project is feasible before we commit major investment funds?

IHS Consultants can help you:

• Determine overall market size
• Understand your competitive position in the marketplace
• Predict future project-related demand for large infrastructure projects, such as ports, terminal facilities, highways and toll roads, and airports
• Decide whether your project will benefit the community in which your organization operates
• Induce local and regional governments to fund your infrastructure improvements or offer tax breaks based on evidence that your project will spur job growth or tax revenue
• Attract investors and encourage support from local stakeholders

See Case Study #9

Client Challenge:

How should we price a new drug we are launching?

IHS Consultants can help you:

• Develop an optimal price for new drugs and formulate market entry strategies
• Provide you with customized single- or multi-client reports focusing on business improvement and opportunity maximization strategies

See Case Study #10

Case Study #1: Southeast Asia Deepwater Gas Monetization Strategy

Challenge: A company embarking on a plan to develop multiple deepwater gas discoveries needed to evaluate alternative strategies for monetizing the gas via onshore LNG facilities.

Solution: IHS Consulting assessed alternative development strategies, recommending high grading the portfolio and pursuing an operate-by-others and partnering strategy to achieve maximum shareholder value creation and investment efficiency.

Results: The company shifted its focus to two large-scale, low-risk discoveries and agreed to be purchased by a larger, better-positioned, major international oil company.

Case Study #2: Global Growth Strategy

Challenge: An aggressive coalbed methane (CBM) producer needed a strategy to increase shareholder value in the face of a limited market for its growing reserves and production.

Solution: IHS Consulting worked with senior management to present to the Board of Directors a wide range of growth alternatives--some that significantly challenged the current business model--and the key value drivers behind them.

Results: The company tripled its share price within two years after the Board adopted the proposed two-phased strategy to develop liquefied natural gas (LNG) for local sales and expand into CBM in other countries.

Case Study #3: Evaluating Long-Term Options

Challenge: A major US mid-continent refined products pipeline company needed an evaluation of its long-term strategic options.

Solution: IHS Consulting conducted a scenario analysis of multiple long-term strategies, based on extensive interviews and scenario-development sessions with senior management.

Results: The client received a robust 20-year strategy for expansion and investment, outlining the range of potential uncertainties and expansion options.

Case Study #4: Incremental Tax Financing

Challenge: An international consumer products firm needed to project future incremental tax revenues that would be generated by and used to finance a facility it was seeking to build in a new location.

Solution: IHS Consulting built a market demand model of the producer's industry that integrated supply and demand sides to project the future stream of incremental tax revenues expected upon completion and operation.

Results: Study dimensions entailed:

• A 30-year demand forecast
• Tailored insights into economic and financial criteria
• Alternative scenario projections
• Detailed discussion of risks to the forecast

Case Study #5: Pioneering a New Upstream Strategy

Challenge: A Russian oil company needed a new E&P strategy, given that its upstream business increasingly accounted for most of its revenues and costs. Despite ambitions to grow its international business, the client faced several constraints: a regionally focused production base, highly depleted resources and rising operating costs.

Solution: IHS Consulting benchmarked the company's E&P performance against national and global competitors and analyzed underlying performance drivers. We screened nearly 400 global basins with the client to identify opportunities that aligned with the company's capabilities and goals. The screening served as a platform for formulating a new E&P strategy based on geographical focus, acquisition type and level, investment pace, mature field technologies and partnering.

Results: The client defined a new E&P strategy based on our work, which provided critical insights to senior management on the impact of alternative upstream strategies on key business metrics.

Case Study #6: Formulating a Regional Gas Business Strategy

Challenge: A independent Russian gas company needed to create a regional business strategy for an area where it had significant oil production.

Solution: IHS Consulting developed a road map for the client, outlining seven distinct strategic alternatives, their full value chain considerations, their main value drivers and risks. For each alternative, we presented a rigorous economic risk evaluation so the client could better understand the gas resource potential before committing major investment funds.

Results: Our report enabled the company's regional business unit and corporate headquarters to align on a regional gas business strategy and to redirect exploration resources and gas plant investments to accommodate the new strategy.

Case Study #7: Deferring a Declining Production Base

Challenge: A key player in the mature Alaskan North Slope, facing declining long term production, needed a renewal strategy to extend its production base.

Solution: IHS Consulting developed a valuation model that defined and assessed the trade-offs for multiple renewable strategies, including the option of building an unconventionals business. We then refined the renewal options to propose various hybrid strategies that would improve operational and financial performance metrics.

Results: The client obtained a strategic road map outlining the trade-offs for alternative renewable strategies and specifying short-term actions needed for resolving major uncertainties. The client used this map to accomplish the near-term milestones, enabling it to obtain the information it needed to make major long-term investments for its chosen renewal strategy.

Case Study #8: Oil Sands Investment Support

Challenge: A major North American oil company had 3-5 billion barrels of recoverable oil sands reserves. Launching an oil sands business was a major part of the company's long-term growth strategy.

Solution: IHS Consulting worked with the client to frame the key development decisions, including development phasing, fuel, technology, and water sourcing. We defined three fundamentally different strategic alternatives for the initial development and created new probabilistic models for reservoir production as well as the investment economics.
We evaluated the alternatives across a range of parameters including commodity prices, recovery performance, costs and availability of key equipment and services, supply risk of purchased fuel and water, project execution, and regulatory requirements.

Results: The client decided to pursue a full field development strategy that had the lowest expected full life-cycle costs. This involved an initial phase project that maintained the option for incremental capital investment to mitigate risks or capture additional value as uncertainties evolved.

Case Study #9: Cost-benefit Analysis of Rail Infrastructure

Challenge: A southeastern US state government wanted a cost-benefit analysis of a rail infrastructure re-investment project.

Solution: Our consultants leveraged the IHS Global Insight Regional Transportation Impact Model to analyze more than 30 existing railroads individually, each with differing mixes of use by manufacturing and service sectors in the state.

Results: Our analysis informed the state's determination regarding the future of the rail network and if public money should be used to maintain the track or if the network would be retired.

Case Study #10: Healthcare Reimbursement and Pricing Strategies

Challenge: A client needed support in determining a world-wide pricing strategy

Solution: IHS Consulting compiled an extensive client report using our World Markets Pricing and Reimbursement service that contains daily news on the top 25 markets, a reference pricing matrix tool covering 31 countries and a P&R database of guideline differences across 22 markets.

Results: The client received a detailed report on factory prices and reimbursement decisions for select markets.