Case Interview Question #00505: Sinopec Limited (China Petroleum & Chemical Corporation Limited, NYSE: SNP) is one of the major petroleum companies in China, headquartered in the Chaoyang District of Beijing. As a state-owned company, Sinopec’s business includes oil and gas exploration, refining, and marketing; production and sales of petrochemicals, chemical fibers, chemical fertilizers, and other chemical products; storage and pipeline transportation of crude oil and natural gas; import, export and import/export agency business of crude oil, natural gas, refined oil products, petrochemicals, and other chemicals.
Recently, Sinopec is interested in acquiring an Argentinean owned oil company in Indonesia. Your consulting team has been engaged to conduct a preliminary investigation if this is a good investment idea to proceed and what key areas to focus going into the due diligence round. You have been given the task of assessing this situation for the client. How would you go about the case?
Clarifying Questions about the client & environment:
- Oil & gas is a government regulated industry in China and in Indonesia. The government awards acreages to oil companies.
- The client Sinopec is a low cost producer and has the ability to reduce cost from utilizing its own technology and staff.
- The purchaser/client can opt to drop any acreage from portfolio to be bought.
The candidate should look at this situation on a broad scale. Use 3C’s framework (Company, Customers, Competitors) and