Premier Oil
Practice this intermediate profitability case interview question from McKinsey in the Energy sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
ProHub Comment
This case tests the candidate's ability to structure cost analysis through fixed/variable cost decomposition, identify root cause drivers of cost inflation, and perform accurate financial calculations under time pressure. The case emphasizes the importance of contextualizing quantitative findings with business risks and strategic considerations.
Estimated Time
26 minutes
Difficulty
Medium
Source
PeterK
50
/ 100
Given there is not much Premier Oil can do to increase sales, the manager wants us to focus on costs. To begin with, what are Premier Oil’s major expenses?
Clarifying Information
- The current operational expenses are £50M per year
- The current drilling costs are £40M per year
- The operational expenses don’t include drilling costs
- Current oil production is 200k barrels per day
- We can assume 360 days a year
- The foreign exchange is $2 for £1