PETRO CO Petro Co. Limited (PCL) is in the oil business in Canada. There are two aspects to their operations. One is research and development of new wells, and the other is oil and gas distribution. PCL distributes oil and gas mainly throughout Canada. The exploration aspect is very expensive and PCL is continuously raising capital, usually from the equity markets, although there is sizeable long term debt on the balance sheet also. In 2009 PCL signed a ten year deal to pipe gas down to the United States for distribution and sale by another company, Distribution Limited (DL). In order to do this, PCL had to build a new pipeline since PCL’s existing pipelines were in Canada only. Since DL wanted to use the pipeline for other purposes (e.g. transportation of their own gas), PCL and DL decided to build the pipeline together. PCL found a company, Construction Limited (CL), that was willing to build the pipeline, and after negotiations with the lawyers for all three firms, the following arrangement was agreed upon:
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