The bank incorporated a completion risk
factor of 50% into its valuation of the company, and thus lowered its price target to 17p, halved from its prior 35p target.
In addition, our proposed transaction has no financing risk as it will be fully financed with available cash and presents significantly less antitrust completion risk
than your current transaction.
This lucrative, passive form of income, combined with mineral owners' bearing no development risk, no drilling risk, no completion risk
or dry-hole risks and incurring only nominal costs to carry make it a very attractive opportunity.
(This is because many risks--such as completion risk
, cost risk, debt structure, and securitization --are borne by the concessionaire.) When combined, these additional risks usually put the ranking into in the Baa/ BBB to Ba/BB category.
At the project level, project completion risk
is mitigated by the strong track record of and back-to-back performance guarantees provided by the EPC contractor, Samsung C&T (KL) Sdn Bhd (formerly known as Samsung Engineering & Construction (M) Sdn Bhd).
Critical risk factor (CRF) loading 1 Foreign exchange fluctuation 0.858 2 Interest rate fluctuation 0.751 3 Inflation 0.750 4 Project/Operation changes 0.776 5 Completion risk
0.773 6 Conflicting and imperfect contract 0.654 7 Price change 0.521 8 Operation cost overrun 0.469 9 Government corruption 0.719 10 Inadequate law and supervision system 0.692 11 Poor public decision-making process 0.585 12 Financing risk 0.762 13 Change in market demand 0.586 14 Public credit 0.520 15 Subjective project evaluation method 0.730 16 Insufficient project finance supervision 0.654 17 Government intervention 0.862 Percentage of variance No.
The Bank previously attempted to work in this field, but was limited by the challenges of managing the completion risk
However, the completion risk
is considered a negative factor for Aquanet's ratings as part of the investments are planned to be wrapped up in 2015, relatively shortly before the new environmental rules come into full force in 2016.
The completion risk
of the project has been eliminated owing to successful achievement of Commercial Operations Date (COD) on June 09, 2010, though a little delayed.
Exploration and development projects are based on the ability to manage or mitigate risk, including subsurface risk, drilling and completion risk
, capital efficiency, market risk, environment risk, regulatory risk and fiscal risk, Lockhart explains, adding that Marathon believes that in Cook Inlet, the regulatory process for LNG exports and sales are subject to procedures that are inconsistent and bias, eliminating any potential reward for risk taking and placing the public at risk for supply reliability because they reduce the incentive to further develop gas beyond contractual obligations.
So completion risk
is one; then satisfactory power off-take arrangements have to be in place, then transmission facilities have to be in place.
In Parallel Istisna'a the IIFS may be exposed to completion risk
when an advance payment has to be paid by the IIFS and the sub-contractor does not complete the work.