Message-ID: <7327723.1075856637787.JavaMail.evans@thyme>
Date: Thu, 5 Oct 2000 06:23:00 -0700 (PDT)
From: v.weldon@enron.com
To: david.haug@enron.com
Subject: Energy Finance critiques
Cc: mike.roberts@enron.com, vince.kaminski@enron.com
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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=20
1998):

The Energy Finance Program 2 years ago was very good, especially considerin=
g=20
it was the first year of the program.  There were a lot of guest speakers=
=20
from various energy companies who gave us a lot of practical knowledge abou=
t=20
the energy industry through case studies, lectures, etc.  Basically, we=20
learned all the same finance concepts and tools as in the regular finance=
=20
classes, but all the cases and examples were energy-related.  The professor=
s=20
were good for the most part but didn't have a great deal of practical=20
industry experience.  If I had to guess the reason for decreased=20
participation in the program, I would probably say it is the professors. =
=20
Ronn and Titman are great but known as being very technical and=20
quantitative.  Some students prefer less technical professors and classes=
=20
that aren't limiting to the energy industry.  Also, the fact that the class=
=20
meets for 3 hours twice a week may not be so appealing.  Other than those=
=20
things, I can't imagine why there has been such a drop in enrollment.  I=20
especially don't understand why every single person didn't drop for Enron. =
 I=20
wonder if it has something to do with international status.???=20

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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=
=20
students
Energy Finance program - Fairly Weak -
It was a watered down version of the futures options class crossed with a=
=20
weak finance appendage -
The Finance teacher was pathetic - both a poor teacher, ignorant about=20
industry specific analysis, devoid of industry experience, rude to outside=
=20
lectures (from industry)
Keith Brown was the only educator that was any good and he only had a small=
=20
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=
=20
from industry -
Promote the class within the business school - I felt like UT did a poor jo=
b=20
of internally (to students) promoting the class -

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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.  =
=20
When energy applications were presented, it seemed more like general financ=
e=20
questions were reworded to include energy lingo.  We had some very good=20
speakers, but for the most part, I did not feel like the 6 hours of class h=
ad=20
enough energy focus.  I assumed that this would get better as the program=
=20
progressed.

One reason that may account for the decline in enrollment is that Energy=20
Finance is a very specific focus.  I would have probably not enrolled in th=
e=20
Energy Finance program had it been available in my first year.  I did not=
=20
know enough about energy at that time and I had returned to B-school to=20
consider several career options -- i.e., investment banking, corporate=20
finance, entrepreneurship, marketing, etc.  As a new MBA student, I would n=
ot=20
want to narrow my window of opportunities to only energy companies. =20

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. =
=20

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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=
=20
1998.  The primary positives to the class revolved around outside=20
panels/instruction.  For example, Enron sent representatives on 2 separate=
=20
occasions to discuss particular topics (Vince Kaminski and Gary Hickerson).=
 =20
Other notable speakers were Jeff Sandefer (independent business consultant=
=20
and E&P professional), the Beacon Group, and Encap Investments.  Another go=
od=20
speaker was a professor from UT's school of engineering.  He brought a good=
=20
perspective as to the "basics" of the energy business.

The class was structured via a team-based instruction approach, with 3=20
professors team-teaching a 6-hour credit course.  None of the 3 professors=
=20
had any product knowledge of the energy business.  Of the 3 professors, 2=
=20
were research focussed/tenured with little credibility in "teaching."  One =
of=20
the professors primary focus of research was fixed income, while the other =
2=20
were investments and corporate finance, respectively. =20

As is the case for UT's finance program in general, and energy finance in=
=20
particular, UT is in dire need of teaching professors (as opposed to resear=
ch=20
professors) that have the ability to convey finance with practical examples=
=20
and at a level that can be more easily be understood by students without a=
=20
finance background.  Particular to the energy program, UT needs to have mor=
e=20
instruction from energy professionals (such as the instructors used for=20
Enron's internal learning programs (ie. Derivatives classes, etc.).

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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, a=
t=20
the University of Texas. =20

The curriculum was understandably =01&rough around the edges=018 as 1998 wa=
s the=20
first year the Energy Finance course was offered.  However, the instruction=
=20
also suffered as none of the instructors had any energy background to speak=
=20
of (The 6-credit hour class was team taught by three tenured professors).=
=20

Two of the three professors have co-authored textbooks, and the third=20
professor=01,s claim to fame is fixed income.  As a group, the three profes=
sors=20
are research-heavy (as opposed to industry focused), and the team-teaching=
=20
format did not incent any one of the profs to be personably accountable for=
=20
the success of the class. =20

That said, the instructors did a good job attracting some top notch outside=
=20
speakers.  Among them: Vince=20
Kaminski & Gary Hickerson, both of Enron.  They also dedicated one class=20
period to a video conference call with the Beacon Group, an energy consulti=
ng=20
group that I believe was recently acquired by Goldman.
Jeff Sandefer, an independent businessman, an entreprenuership instructor,=
=20
and one of the foremost experts in the E&P sector, also spoke to the class.=
 =20
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=
=20
instruction from someone from industry.    The class is too=20
academic/theoretical with too few relevant examples excerpted from the ener=
gy=20
sector.=20

The instructors Enron uses for the Derivatives courses taught internally ar=
e=20
good examples of people who can package very relevant information and=20
successfully articulate it in a couple of days.  Perhaps a similar approach=
=20
would bode well for the Energy Finance program at UT. =20

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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=
=20
now in a transition period from regulation to deregulation and thus is=20
exposed to different financial perspectives from the other industries;
- there are some experienced, brand-name professors (e.g. Sheridan Titman)=
=20
teaching in the program;=20

Cons:
- the program should give the students more exposures to energy companies=
=20
such as Enron. Specifically, it might need to help students link to the=20
interview oppurtunites from these energy companies such as Enron;
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From George Huan  (MBA class of 2000, Energy Finance taken fall of 1999):

Companies expect MBA students to have both general management (new ideas) a=
nd=20
analytic (quantative) skills.  Energy industry is no exception.

Energy Finance Program offers Financial Strategy and Risk Managements cours=
es=20
which fit in the insudtry need.  However, these two courses are far from=20
enough to help students understand the dynemic of industrial transformation=
=20
and excitements and opportunities in this industry.   Other management and=
=20
quantitive courses are needed to complete this program.=20
My suggestions:

1) Seminars or lectures about energy industry and energy companies. Before=
=20
students make their decisions, let them know:  What's happening and what's=
=20
going to happen in this industry;  What the companies are doing now;  Who=
=20
they are looking for. =20
2) Management and/or analytical courses should be included.  Such as:=20
Strategy, Financial enginering and Real Option.
3) More industry connections. Presentations and discussions.

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From Charlie Weldon (MBA Class of 2000, Energy Finance taken in fall of 199=
9)

My experience in the Energy Finance program overall was a positive=20
experience.  The most rewarding part of the class was the guest speakers=20
brought in during Dr. Titman's portion of the class.  This part of the cour=
se=20
is taught in the second half of the semester and consisted of ~10 case=20
classes all focusing on the Energy industry.  Two of the cases were based o=
n=20
Enron, and overall the case selection in my opinion was very appropriate an=
d=20
well thought out.  Value added by the professor was less than from the=20
speakers and cases.

The first eight  weeks of the course covered futures and options.  Nearly a=
ll=20
of the examples and problems discussed pertained directly to the energy=20
industry and special emphasis was placed on increasing the student's=20
understanding of the supply and demand dynamics in the power market.  The u=
se=20
of options and futures for speculating and/or hedging was stressed on=20
numerous occasions and a decent attempt at explaining how to value a power=
=20
plant project.

I believe that the University Energy Finance faculty are trying to=20
continuously make improvements to the program.  However, I do not believe=
=20
that they are moving fast enough or necessarily down the right path to=20
improvement.   There is a strong need for more practical based training on=
=20
energy derivatives similar to the course taught by Paradigm here at Enron. =
=20
The focus of the University teachers is quite theoretical, due in large par=
t=20
to their background.  While the theoretical basis is crucial to understandi=
ng=20
the basics, the real value of such a program in my opinion is the effective=
=20
bridging of the theoretical with the practical all in one course. =20

Until measures are taken to inject practicality from someone with extensive=
=20
industry experience, I believe the Energy Finance program will continue to=
=20
underdeliver on its objectives.  Additionally, I believe that the course=20
structure should be changed to eliminate the need of having 3 consecutive=
=20
hours of classroom instruction.