Although we extended the analysis of risk/opportunity beyond the discussion in the book, our risk analysis for capital budgeting must first consider the sources of risk and the potential for opportunities (exhibit 10.5) before we can quantify these risks and opportunities into the incremental cash flows needed for discounted cash flow analysis. Discuss real-life examples of the risks faced by firms in the energy industry and the opportunities with which they are presented. After looking over and familiarizing yourself with David A Woods Spectrum of Uncertainties Impacting the Oil and Gas Industry (exhibit 10.5) in the book, research news stories for various oil and gas firms and identify examples of risk and opportunities that fall into any of these categories of uncertainties.

One way to begin this search is to enter the ticker symbol for an oil and gas firm into Yahoo! Finance (http://finance.yahoo.com/) and begin reading the Headlines that are below the summary stock information (a sample list of firms is included below, but you need not limit your discussion to these firms). Examples that are older than this are also fine, but you will need to search for these a different way. Another source can be the actual websites of these and other oil and gas firms as they often highlight certain risks/opportunities that they are currently considering.

Things to consider include

1. The ways that firms have dealt with these risks, certain risks that kept firms from pursuing certain opportunities (either because they had no choice or because the risks outweighed the opportunities), ways in which firms have exploited opportunities

2. The markets reaction to the news of such risks and opportunities (market reaction is measured by the reaction of the firms stock price to certain news).

The six largest publicly owned oil and gas companies (aka, the supermajors):
Exxon Mobil (XOM)
BP (BP)
Chevron Corporation (CVX)
Royal Dutch Shell (RDSA.L)
Conoco Phillips (COP)
Total S.A. (TOT)