Subject: Energy Finance critiques
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked]
Date: Thu, 5 Oct 2000 06:23:00 -0700 (PDT)

David,

Here are the reviews of the UT Energy Finance program that  you requested:

From Jennifer Martinez  (MBA class of 1999, Energy Finance taken fall of 
1998):

The Energy Finance Program 2 years ago was very good, especially considering 
it was the first year of the program.  There were a lot of guest speakers 
from various energy companies who gave us a lot of practical knowledge about 
the energy industry through case studies, lectures, etc.  Basically, we 
learned all the same finance concepts and tools as in the regular finance 
classes, but all the cases and examples were energy-related.  The professors 
were good for the most part but didn't have a great deal of practical 
industry experience.  If I had to guess the reason for decreased 
participation in the program, I would probably say it is the professors.  
Ronn and Titman are great but known as being very technical and 
quantitative.  Some students prefer less technical professors and classes 
that aren't limiting to the energy industry.  Also, the fact that the class 
meets for 3 hours twice a week may not be so appealing.  Other than those 
things, I can't imagine why there has been such a drop in enrollment.  I 
especially don't understand why every single person didn't drop for Enron.  I 
wonder if it has something to do with international status.??? 

------------------------------------------------------------------------------
------------------------------------------------------------------------------
-----------------------------------------------------------------

From John Massey  (MBA class of 1999, Energy Finance taken fall of 1998):

Bottom Line -

UT Business Schools is great - Investment Fund - Best Activity available to 
students
Energy Finance program - Fairly Weak -
It was a watered down version of the futures options class crossed with a 
weak finance appendage -
The Finance teacher was pathetic - both a poor teacher, ignorant about 
industry specific analysis, devoid of industry experience, rude to outside 
lectures (from industry)
Keith Brown was the only educator that was any good and he only had a small 
portion of the class time -

Way to make Better:
Get teachers with practical industry experience -
Make it a seminar Class - Focus on Case studies, lectures - given by people 
from industry -
Promote the class within the business school - I felt like UT did a poor job 
of internally (to students) promoting the class -

------------------------------------------------------------------------------
------------------------------------------------------------------------------
-----------

From Ross Mesquita  (MBA class of 1999, Energy Finance taken fall of 1998):

To be honest, a great majority of the coursework was not energy specific.   
When energy applications were presented, it seemed more like general finance 
questions were reworded to include energy lingo.  We had some very good 
speakers, but for the most part, I did not feel like the 6 hours of class had 
enough energy focus.  I assumed that this would get better as the program 
progressed.

One reason that may account for the decline in enrollment is that Energy 
Finance is a very specific focus.  I would have probably not enrolled in the 
Energy Finance program had it been available in my first year.  I did not 
know enough about energy at that time and I had returned to B-school to 
consider several career options -- i.e., investment banking, corporate 
finance, entrepreneurship, marketing, etc.  As a new MBA student, I would not 
want to narrow my window of opportunities to only energy companies.  

Here is my perspective and probably something that is true of many MBAs--

My interest in Enron brought me to the energy industry and not vice versa.  

------------------------------------------------------------------------------
------------------------------------------------------------------------------
----------

From Billy Braddock   (MBA class of 1999, Energy Finance taken fall of 1998):

I was a participant in the inaugural Energy Finance program in the Fall of 
1998.  The primary positives to the class revolved around outside 
panels/instruction.  For example, Enron sent representatives on 2 separate 
occasions to discuss particular topics (Vince Kaminski and Gary Hickerson).  
Other notable speakers were Jeff Sandefer (independent business consultant 
and E&P professional), the Beacon Group, and Encap Investments.  Another good 
speaker was a professor from UT's school of engineering.  He brought a good 
perspective as to the "basics" of the energy business.

The class was structured via a team-based instruction approach, with 3 
professors team-teaching a 6-hour credit course.  None of the 3 professors 
had any product knowledge of the energy business.  Of the 3 professors, 2 
were research focussed/tenured with little credibility in "teaching."  One of 
the professors primary focus of research was fixed income, while the other 2 
were investments and corporate finance, respectively.  

As is the case for UT's finance program in general, and energy finance in 
particular, UT is in dire need of teaching professors (as opposed to research 
professors) that have the ability to convey finance with practical examples 
and at a level that can be more easily be understood by students without a 
finance background.  Particular to the energy program, UT needs to have more 
instruction from energy professionals (such as the instructors used for 
Enron's internal learning programs (ie. Derivatives classes, etc.).

------------------------------------------------------------------------------
------------------------------------------------------------------------------
-----------------------

From Bryan Williams  (MBA class of 1999, Energy Finance taken fall of 1998):

I participated in the first Energy Finance class offered in Fall of 1998, at 
the University of Texas.  

The curriculum was understandably &rough around the edges8 as 1998 was the 
first year the Energy Finance course was offered.  However, the instruction 
also suffered as none of the instructors had any energy background to speak 
of (The 6-credit hour class was team taught by three tenured professors). 

Two of the three professors have co-authored textbooks, and the third 
professor,s claim to fame is fixed income.  As a group, the three professors 
are research-heavy (as opposed to industry focused), and the team-teaching 
format did not incent any one of the profs to be personably accountable for 
the success of the class.  

That said, the instructors did a good job attracting some top notch outside 
speakers.  Among them: Vince 
Kaminski & Gary Hickerson, both of Enron.  They also dedicated one class 
period to a video conference call with the Beacon Group, an energy consulting 
group that I believe was recently acquired by Goldman.
Jeff Sandefer, an independent businessman, an entreprenuership instructor, 
and one of the foremost experts in the E&P sector, also spoke to the class.  
Jeff was joined by some of the executives from Houston-based Encap.

The woes of the Energy Finance could be easily remedied by injecting some 
instruction from someone from industry.    The class is too 
academic/theoretical with too few relevant examples excerpted from the energy 
sector. 

The instructors Enron uses for the Derivatives courses taught internally are 
good examples of people who can package very relevant information and 
successfully articulate it in a couple of days.  Perhaps a similar approach 
would bode well for the Energy Finance program at UT.  

------------------------------------------------------------------------------
------------------------------------------------------------------------------
----------------------------
From Yuan Tian  (MBA class of 2000, Energy Finance taken fall of 1999):

Here are my thoughts on the UT Energy Finance Program:

Pros:
- more focused on the Finance studies in the Energy Industry which is right 
now in a transition period from regulation to deregulation and thus is 
exposed to different financial perspectives from the other industries;
- there are some experienced, brand-name professors (e.g. Sheridan Titman) 
teaching in the program; 

Cons:
- the program should give the students more exposures to energy companies 
such as Enron. Specifically, it might need to help students link to the 
interview oppurtunites from these energy companies such as Enron;
------------------------------------------------------------------------------
------------------------------------------------------------------------------
--------------------------------------------------------------------------
From George Huan  (MBA class of 2000, Energy Finance taken fall of 1999):

Companies expect MBA students to have both general management (new ideas) and 
analytic (quantative) skills.  Energy industry is no exception.

Energy Finance Program offers Financial Strategy and Risk Managements courses 
which fit in the insudtry need.  However, these two courses are far from 
enough to help students understand the dynemic of industrial transformation 
and excitements and opportunities in this industry.   Other management and 
quantitive courses are needed to complete this program. 
My suggestions:

1) Seminars or lectures about energy industry and energy companies. Before 
students make their decisions, let them know:  What's happening and what's 
going to happen in this industry;  What the companies are doing now;  Who 
they are looking for.  
2) Management and/or analytical courses should be included.  Such as: 
Strategy, Financial enginering and Real Option.
3) More industry connections. Presentations and discussions.

------------------------------------------------------------------------------
------------------------------------------------------------------------------
--------------------------------

From Charlie Weldon (MBA Class of 2000, Energy Finance taken in fall of 1999)

My experience in the Energy Finance program overall was a positive 
experience.  The most rewarding part of the class was the guest speakers 
brought in during Dr. Titman's portion of the class.  This part of the course 
is taught in the second half of the semester and consisted of ~10 case 
classes all focusing on the Energy industry.  Two of the cases were based on 
Enron, and overall the case selection in my opinion was very appropriate and 
well thought out.  Value added by the professor was less than from the 
speakers and cases.

The first eight  weeks of the course covered futures and options.  Nearly all 
of the examples and problems discussed pertained directly to the energy 
industry and special emphasis was placed on increasing the student's 
understanding of the supply and demand dynamics in the power market.  The use 
of options and futures for speculating and/or hedging was stressed on 
numerous occasions and a decent attempt at explaining how to value a power 
plant project.

I believe that the University Energy Finance faculty are trying to 
continuously make improvements to the program.  However, I do not believe 
that they are moving fast enough or necessarily down the right path to 
improvement.   There is a strong need for more practical based training on 
energy derivatives similar to the course taught by Paradigm here at Enron.  
The focus of the University teachers is quite theoretical, due in large part 
to their background.  While the theoretical basis is crucial to understanding 
the basics, the real value of such a program in my opinion is the effective 
bridging of the theoretical with the practical all in one course.  

Until measures are taken to inject practicality from someone with extensive 
industry experience, I believe the Energy Finance program will continue to 
underdeliver on its objectives.  Additionally, I believe that the course 
structure should be changed to eliminate the need of having 3 consecutive 
hours of classroom instruction.