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Careers in Corporate Finance in the Energy Industry

Dhairya Gupta is a Lead Consultant - Strategy & Change at IBM. Prior to IBM, he was a Finance Analyst at Irving Oil in Canada. He has an MBA from Babson College and a B.E. from Delhi College of Engineeing.

Now that Daulatguru is up and running lets partner and discuss about issues related to careers in finance. With my focus remaining on energy and finance, here is a little guidance for a successful interview for Finance positions in Energy companies.


This is an excerpt from Vault Career Guide:


In a utility, pipeline operator, or oil company, the corporate finance group plans and facilitates financing for a company's construction and acquisition activities. Typically, when the corporate finance team becomes involved in a project, a strategy or business development group has determined the parameters of the investment: what should be built, where to build it, how big and with what technology. Corporate finance people identify the means of funding the project and precisely how to structure the transaction:

 

  • Ratio of debt to equity
  • Type of debt--private placement, non-recourse, convertible, etc.
  • Price of the debt--interest rate, index, fixed vs floating rate
  • Terms--life of the loan, tranche structure, repayment covenants, etc.

 

Additionally, corporate finance validates the revenue and cost assumptions that the strategy people used to justify and receive senior management approval for the project. They prepare a valuation model to be shared with lenders, and market the investment to banks via a detailed offering memorandum and face-to-face presentations.

 

As with many careers, corporate finance comes in multiple flavors--so make sure you understand the vocabulary of functions specific to each company with which you interview. For companies not heavily involved in developing, acquiring, selling, or funding improvements of physical assets (e.g. refineries, equipment manufacturers), corporate finance groups often incorporate treasury functions: managing working capital, accounts receivable, billing, and financial reporting. They may also handle regulatory compliance, and in particular Sarbanes-Oxley compliance. Large oil companies often have separate Resource Exploration groups that evaluate and purchase rights to drill for oil, while the Corporate Finance group exclusively focuses on financing production fields.

 

To fulfill all of these responsibilities, corporate finance interfaces with internal strategy, business development, engineering, trading, accounting, and legal groups, as well as outside counsel, joint venture partners, and of course the many banks interested in lending money to the company. In a company particularly active in building, expanding or acquiring assets, the corporate finance job is akin to working in an investment bank.

 

Corporate finance employees are often generically referred to as "analysts," regardless of level. Formally, however, an "analyst" is usually someone with a B.A., and an "associate" usually has an MBA or a number of years' experience. Depending on the company culture, young associates may actually have more lofty titles such as "principal" or "assistant vice president." Corporate finance jobs don't require a "technical" degree such as engineering, math or hard sciences; however, people with such backgrounds tend to self-select into these jobs, particularly in the oil and gas sector. Generally, employers look for people with experience building complex financial models, keen attention to detail, and a demonstrated interest in their portion of the energy industry.


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