Possible Answer:
There are several “qualitative” issues that need to be considered when deciding to make an investment like this.
The interviewee is expected to mention and analyze the impact of at least two of these:
Insurance costs
Countries have different regulations and might differ on the required insurance coverage that an Oil & Gas company will need to hold. Liability caps could vary by country, affecting the insurance cost.
Political stability of the region
Accessing a well site could become a challenge in politically unstable regions. Other property rights risks could also affect the risk being bared by this firm.
Volatility of oil prices
Prices below $27/bbl will make all the regions have a negative return.
Oil Quality
Differences in Oil quality could have an impact on the spot price.
More questions to be added by you, interviewer!
At the end of the case, you will have the opportunity to suggest challenging questions about this case (to be asked for instance if the interviewees solve the case very fast).
Main steps the interviewee should take: