Should the owners of an oil drilling operation pursue a high-risk strategy of exploring deep into unknown territory, or lease their land?
Two brothers, owners of an oil exploration company, have spent all their money acquiring Big Hill. They have dug for two years, but have nothing to show for it. And in 90 days, they must repay a $100,000 bank loan. Should they follow Al’s advice and try “wildcatting” drilling deep without knowing what they might find in the hope of striking it big? Or does the security-minded Curt, who wants to lease the land, have the better idea? In this case, students weigh potential risks and rewards in order to determine the better strategy.
Case ID: 110409