Business Case Studies & Business Publications

Sprigg Lane (A)

Bodily, Samuel E.,...

Case

Sprigg Lane (A)

Bodily, Samuel E.; Weatherford, Larry

QA-0372 | Published April 5, 1988 | 12 pages Case

Collection: Darden School of Business

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The president of a natural-resource exploration company has to decide whether to invest in a new drilling opportunity. He already has a spreadsheet that projects the most likely scenario for the well and calculates the NPV and internal rate of return. However, six uncertainties are discussed by the president and another potential investor. He also has prepared a spreadsheet for a couple of downside scenarios--one where gas is not able to be produced after the well is drilled and a second where gas is produced but all other uncertainties are at their 1% worst possible values. A student worksheet file is available for use with this case.