Ptarmigan Resources Exit Decision Case

ICBC Finance Practice

Constraints - 3 Hour Time Limit

Jul 2025

With nearly all personal wealth tied to Ptarmigan Resources, the owner had to choose between an all cash offer from an income trust and a higher risk share exchange with a growth oriented public acquirer. The work focused on net asset value, commodity price exposure, tax outcomes, and downside protection under different oil and gas price environments. By reframing the decision around personal risk concentration rather than headline valuation, the recommendation favored certainty and capital preservation over upside volatility, aligning the exit strategy with the owner’s stage of life and financial priorities.

Presentation slide titled 'Strategic Alternatives for Ptarmigan Resources Inc.' prepared for Malcolm McNair, President, October 2001, with the authors Edina Thai and Ivan Imshenetskyy.

Table with a header titled 'Executive Summary' outlining problem statement, recommendation, key stats, and results for selling a company through stock-for-stock exchange, including target stats and action points.

A business analysis chart discussing a company's 29-year history, core properties, and reserves, with a summary statement about slowed growth and uncertain leadership.

A financial analysis slide from Rio Alto Exploration Ltd, highlighting their position in Canada’s natural gas industry, growth drivers, resource assets, and exploration proximity to Ptarmigan.

A stakeholder analysis diagram with a central circle labeled 'Key Stakeholders' and surrounding circles labeled 'Malcolm,' 'Malcom's Wife,' 'Employees,' 'Acquirers,' and 'Customers.' Each surrounding circle has associated text about their interests,

A slide showing asset comparison and breakdown between Ptarmigan Resources and Rio Alto, with metrics including natural gas, oil and NGLs production, and total BOE per day. Bar charts, pie charts, and a summary note about Rio's oil-rich assets fuelin

Industry overview chart showing oil prices from 1980 to 2001, with a focus on rising prices and a marked period around 1996-2001. The chart compares Edmonton Par prices to WTI and AECO prices to Henry Hub prices, with a caption about Rio's oil acquis

Flowchart illustrating alternative strategies for a family and company meeting about stock options, including stock offers, cash offers, and waiting five years to sell with specific sell and donation percentages.

Bar chart comparing valuation ranges for an acquisition, highlighting a 5-year deal size of $38.7 million to $46.5 million, which exceeds all other valuation methods.

A table comparing key valuation drivers under low, base, and high case assumptions for oil and gas in Edmonton, showing metrics like NPV, target share price, and deal size, with an analysis summary at the bottom.

Bar graph showing impact of G&A and production synergies on operating expenses from 2001 to 2007, with separate costs for synergy and no synergy, along with assumptions and key values such as oil price, sales growth, royalty rate, and production expe

Table showing valuation recommendations and financial projections for Rio Alto from 1995 to 2007, including key metrics like sales, expenses, net income, cash flow, and free cash flow, with a summary and analysis at the bottom.

A financial analysis chart with data tables and a text box explaining share price increases and benefits.

Financial table comparing cash offer, stock offer, and lock-in value upfront, showing cash inflow, tax payable, tax credit, total cash received, and net present value with calculations and notes.

Flowchart of financial planning steps: family and company meeting for prospects, stock exchange for trading and tax deferral, and tax planning for portfolio restructuring.

Table titled 'Risks and Mitigation' with four risk items: Tax Risks, Synergies Failure, Employee Dissatisfaction, Unfair Valuation. Corresponding mitigation strategies include using donation tax credit, clear integration plan, maintaining transparenc

Table with executive summary on how to sell a company without compromising financial security or employee stability, recommending a stock-for-stock exchange, family and company meeting, accept stock offer, and tax planning. Key stats include target u

A detailed table titled 'Appendix - Tax Calculation Summary' presenting three columns of financial data related to cash offer, stock offer, and partial value lock-in, including figures for cash received, tax amounts, share prices, and other financial