Oil and Gas IB Interview Practice Test

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• What does 2P stand for in the reserves framework?
• Which company is listed as a major independent upstream E&P?
• SCOOP/STACK refers to
• Which term is the split of distribution rights between GP and LPs?
• Which term refers to coal, oil, and natural gas?
• Which statement best describes SCOOP/STACK?
• What is OPEC?
• Name regulatory factors that influence oil and gas project economics (tax regime, royalties, subsidies, local content rules).
• Which price level did crude oil briefly surpass in mid-2008?
• Which term denotes the liquid form of natural gas produced for easier storage or transportation?
• In 2014, fracking combined with which technique led to a surge in supply and a price drop?
• Which item is NOT typically considered a key factor in valuing an LNG project?
• Which term represents the cost necessary to maintain EBITDA at current levels?
• In oil and gas joint ventures with host governments, which term describes a mechanism by which the government shares production or revenue?
• What are Natural Gas Liquids (NGLs)?
• One reason for excluding exploration expense in EBITDAX is to ...
• Explain the accounting treatment for exploration and evaluation expenditures under US GAAP and IFRS.
• In the 3P reserves framework, which set of reserves is included in 3P?
• Which term means using derivatives on commodity prices for a period of time by hedging?
• Under Moelis Deals, which deal is listed?
• Which term refers to the allocation of distribution rights between the general partner and limited partner in a master limited partnership?
• Distributable cash flow is the cash available to common unit holders after payments to the GP; calculated as EBITDA minus interest expense minus capital expenditures. Which statement is true?
• EV/Daily Production is best described as:
• Which statement best captures why someone would want to work in energy investment banking?
• Which statement best describes National Oil Companies (NOCs)?
• Under IFRS and US GAAP, which are common impairment triggers?
• In the NAV model, how is the hedge book treated?
• Which statement about sensitivity of OFS valuation to market conditions is true?
• Which company is NOT listed among major players in the Permian region?
• How do you compute free cash flow for an oil and gas company, and why is it a preferred measure for investors?
• Why are Master Limited Partnerships (MLPs) common in midstream sectors?
• MLPs are restricted to entities that transport or store natural resources that generate qualifying income; which statement is true?
• Why is project finance commonly used in oil and gas projects?
• MLPs are pure financial engineering and have no employees.
• Consensus in energy markets is the consensus monthly forecast of what?
• Strip price is
• Which approach is used in discounted cash flow valuation to reflect risk beyond the base case?
• What is a Wellhead?
• In impairment testing, impairment is measured against which values?
• In oil and gas hedging, which instrument fixes a fixed price for a specified future period?
• How do you account for decommissioning obligations in project cash flows and financial statements?
• Weatherford RX is listed under which firm's deals?
• How is deferred tax accounted for in oil and gas assets with specialized tax regimes and credits?
• In this context, what does the term 'Trend' refer to in oil and gas terminology?
• BOE stands for which of the following?
• Which valuation multiples are most commonly used by energy equity investors, and what are their limitations?
• Cushing, OK is the major American trading hub and delivery point for which contracts?
• When evaluating a bolt-on acquisition for an existing offshore platform, what synergies and metrics would you look for?
• Decline rate refers to which concept in oil production?
• What is a Well?
• Which statement best describes off-take certainty in LNG project economics?
• Which term denotes international oil companies; refers to international super majors like ExxonMobil?
• What is a sensitivity matrix (tornado analysis) in oil project modeling, and what are the typical axes?
• Tallgrass Energy and Blackstone are associated with which firm's deals?
• Explain the concept of barrels of oil equivalent (BOE) and any caveats when using it in reporting.
• Which statement best describes a gas sale agreement (GSA) or a PPA in the gas industry?
• Reserves are measured in which units?
• Which statement about MLPs is correct?
• Derrick is which of the following?
• In reserve-based lending, why is reserves reporting critical to debt capacity?
• What is hydraulic fracturing and what effect does it typically have on oil prices?
• What is basis risk in commodity hedging and its impact on cash flows?
• Henry Hub is associated with the market for which commodity?
• Which valuation method is included for analyzing vertically integrated supermajors?
• Which term refers to a natural gas distribution hub in Louisiana that is the required price settlement point for NYMEX natural gas futures?
• ChampionX is the result of Apergy's deal with which company's upstream OFS business?
• What kind of information is typically verified by third-party reserves auditors in an energy deal, and why is it important?
• Proved reserves (P1) have what level of certainty, and how are they subdivided?
• In impairment testing, recoverable amount and fair value relationship?
• Spot price is
• In reserves-based lending, what do 2P and 3P stand for?
• The Permian Basin includes which basins?
• Which of the following represents the main value levers when structuring an upstream acquisition?
• Which term describes not the same as NGLs; natural gas mixed with ethane and converted into liquid form for ease of storage or transportation?
• Which of the following is NOT a common valuation methodology for MLPs?
• Which term is the cost necessary to maintain EBITDA at current levels?
• Under Lazard Deals, which deal is listed?
• In probabilistic risk assessment for exploration, what is Monte Carlo simulation used for?
• How do you compute the reserve life index (RLI)?
• Possible reserves (P3) have what level of certainty?
• Which company completed a ~$38 billion acquisition of Anadarko according to the material?
• What caveats should analysts consider when using BOE to compare oil and gas volumes?
• What is unitization in oil and gas, and why is it important for revenue and cost sharing?
• What is a farm-out agreement in upstream oil and gas?
• Which statement about a decommissioning provision is correct?
• Which statement correctly describes the role of a General Partner in an MLP?
• Why might investors accept a higher reserve replacement ratio (RRR) despite higher exploration risk?
• What is a natural hedge in currency risk management?
• Peak oil refers to
• Which company cut its dividends by 75%?
• PV-10 is
• Which major IPO was anticipated to occur in 2020 according to the material?
• A&D in oil and gas refers to which activity?
• Which data provider is commonly referenced for rig counts in the US?
• Why is NAV used for upstream valuations instead of DCF?
• Why is EBITDAX used to compare financial health in oil and gas companies?
• What is a supermajor in the oil industry?
• Crude oil is defined as which of the following?
• Take-or-pay contracts primarily affect which aspects of project economics?
• What are the two core functions of upstream E&P companies?
• Which statement best describes unconventional drilling?
• What mechanism allows sponsor to grow MLP while increasing GP cash flow via IDRs?
• In upstream terminology, what does a working interest grant?
• When presenting a deal in a short pitch deck, which metrics should you highlight to communicate value?
• Which item is listed under Other general Houston Deals?
• Under the Full Cost accounting method, how are exploration costs treated?
• Shale is
• What is the depletion expense formula in units of production accounting?
• Why do E&P companies pay relatively little in taxes according to the material?
• Which reserve classification has the highest confidence of recovery?
• In the 3P framework, what does P50 represent?
• EV/2P is best described as:
• Midstream contracts are typically:
• Which decline models are commonly used to fit historical production data in field planning?
• How do oil and natural gas price trajectories influence corporate strategy for integrated energy groups?
• Which verticals are associated with the highest leverage due to being the least risky?
• What action is commonly taken to mitigate risk from sanctions and geopolitical events?
• There are three common reserve categories known as the three P's. Which set constitutes them?
• What is the Type Curve used for in upstream valuation?
• Which term is a vertical in the oil and gas value chain?
• In a take-or-pay contract, who is commonly the buyer?
• Besides the base price path, which factors are commonly tested in price risk modeling?
• Which term best describes a dry hole?
• Asset drop-downs typically require what for fairness?
• In an oil and gas IB deal, which segments constitute the typical value chain?
• How do sanctions or geopolitical events affect oil asset valuations and risk management?
• In 2014, what event contributed to a drop in crude prices?
• What does take-or-pay mean in a gas contract?
• What best describes project finance in the oil and gas industry?
• Which statement about margins in the downstream vertical is true?
• Which features contribute to the Permian Basin's attractiveness for E&P?
• How do reserve revisions affect a reserves-based lending (RBL) facility?
• Under the Successful Efforts accounting method, exploration costs are:
• Lower 48 plays overview: how is a typical reservoir formed?
• For 1P reserves, P90 indicates what about production probability under current conditions?
• Which option best captures the primary purpose of a hedging policy?
• What is the difference between a base case and an upside case in oil asset modeling, and how should you present them?
• In oil project financing, how do front-end loaded and back-end loaded capex differ, and why does that matter to lenders and sponsors?
• Downstream refers to refining, processing, marketing, and distribution of oil, natural gas, and NGLs.
• In hedge accounting, what determines whether gains and losses are recognized in the P&L or in other comprehensive income?
• Rig count measures
• Which statement best describes the core business of OFS companies?
• Which of the following best describes midstream activities?
• Which of the following is NOT a typical covenant in a reserve-based lending facility?
• Why include probability weights and key drivers alongside NPVs/IRRs when presenting asset scenarios?
• In NAV, what assumption is made about reserves?
• As of 3/23, what were the typical trading prices for WTI, Brent, and NYMEX natural gas?
• Which term describes a natural gas settlement point used for NYMEX futures contracts?
• Why does WTI trade at a discount to Brent?
• Downstream margins are most affected by which factors?
• Which of the following are key drivers of LNG project economics that differentiate them from crude oil projects?
• Which is a common strategy to manage currency risk when project costs are in local currency but revenues are in USD?
• Which deal involved ADNOC and Blackstone/KKR as midstream partners at around 40%?
• Which development in the 2010s affected crude trade by lifting sanctions on a major producer?
• Which deal is listed under Evercore Deals?
• Which reserves framework uses 1P/2P/3P units for U.S. reporting?
• PDNP stands for which of the following?
• In evaluating exploration risk, which probabilistic method maps outcomes such as success or failure with probabilities and payoffs?
• Contango describes a market where future prices are what relative to spot prices?
• Which is NOT an OFS major player?
• Which statement describes full cost vs successful efforts accounting?
• The uncertainty in reserve estimates arises primarily from which factors?
• What does 'Working interest' mean?
• Which crude is the benchmark for the price of US crude oil?
• Which vertical has the highest beta according to the data?
• When valuing an upstream asset with a discounted cash flow model, which item is NOT a typical input?
• The Permian Basin is described as a layer cake because it contains what feature?
• How do upstream, midstream, and downstream margins differ and influence overall valuation?
• Which segment of the oil and gas value chain is responsible for refining and marketing?
• Price differentials are:
• Whiting Petroleum RX involved what restructuring step in Chapter 11?
• The term '12-month strip' refers to
• Which database is typically used to source reserve data for NAV modeling?
• What does production level primarily determine in Upstream economics?
• In a basic NAV model, which components are included?
• Which factor is most central to the rationale for vertical integration in oil and gas?
• Which market condition primarily drove the oil price crash in 2014-2016?
• In a DCF assessment of an oil asset, how is the breakeven price determined?
• Which of the following best describes WTI crude?
• What does a high reserve replacement ratio (RRR) indicate?
• In breakeven calculations, what does sustaining capex represent?
• In restructuring, which group often organizes and hires advisors?
• How do hedges influence a company's P&L and balance sheet, and what would you disclose to investors?
• Which variable most directly affects the utilization-based revenue potential of an LNG project?
• Brent crude originates from which region?
• Which organization is described as an economic cartel of twelve major oil-exporting countries?
• How is the reserve replacement ratio (RRR) calculated?
• In Chapter 11 restructuring, which party is the debtor?
• Which statement is true about WTI relative to Brent?
• Which term best describes international oil companies such as ExxonMobil?
• What does 1P refer to in the reserves framework?
• Which of the following is not a primary driver of LNG project economics?
• What determines the borrowing base in a reserve-based lending facility most directly?
• What is the primary mechanism by which hydraulic fracturing affects oil prices?
• Which term describes the scenario when the IDR split between GP and LPs reaches 50/50, the highest tier?
• Which term is defined as the process of separating NGLs from pure natural gas?
• Which is NOT a primary driver of operating expenditure (OPEX) per barrel, when projecting costs over an asset’s life?
• The subdivisions of Proved reserves (P1) include which terms?
• Which major independent upstream E&P company is listed here?
• Which midstream company purchased Andeavor for $14 billion?
• Which price-path scenarios are typically tested when modeling price risk for an oil project?
• In price risk modeling, what is the purpose of hedging?
• Which of the following is a commonly used valuation multiple for an E&P company that relates enterprise value to daily production?
• Which statement about IFRS reserve valuation is true?
• Which statement about IRR is most accurate for non-conventional cash flows?
• If you had $50 million to invest in any of the listed verticals, which would you choose?
• In an MLP, what is the purpose of IDRs?
• What best describes a 'Take or Pay' contract?
• When calibrating a production decline curve, which data is typically required?
• In A&D deals, there is usually no control premium paid for assets. Which option states this correctly?