British Petroleum ( Bp ) Essay

Valuation is the estimation of an asset’s value, whether real or financial, based on variables perceived to be related to future investment returns, on comparison with similar assets, or, when relevant, on estimates of immediate liquidation proceeds (Pinto, Henry, Robinson, Stowe; 2010). Correct valuation of real assets can present challenges to financial analysts. Different models can be used to arrive at the closest estimate of value and yet certain issues will always arise. This case attempts to tackle two approaches in real asset valuation: Discounted Cash Flow (DCF) analysis and the issues surrounding such, as well as the Black-Scholes Model for Real Options. Questions to be addressed in the study are:

In 2016, the crude oil price movement prices were unpredictable. The OPEC reference basket dropped 10 percent to $43.22 per pound. The ICE Brent and NYMEX WTI both went down by 8.4 percent with ICE Brent at $47.08 per pound and NYMEX WTI at $45.76 per pound. This showed that there were uncertainties in the petroleum market. The future prices were predicted for 2017 that it would move higher. The World’s economic growth predictions was the same at 2.9% for 2016 but increased to 3.1% for 2017. Because of the 3rd quarter of 2016 in Japan and US, the OCED growth went from 1.6% to 1.7%. The demand for oil growth in 2016 has been increasing slightly to 1.24 mb/d. In 2017, the demand will be predicted with a decrease to 1.15 mb/d. OECD will

Currently headquartered in London, BP is one of the largest producers of both oil and natural gas. BP provides its customers with fuel for transportation and energy for heat and light. BP’s core business is gas exploration and production division and their main sources of production include Angola, Argentina, Australia, Azerbaijan, Egypt, Trinidad, the United Arab Emirates, the United Kingdom and the United States (BP PLC (BP) Company Profile | Reuters.com. (n.d.). Retrieved October 27, 2015.). In 2013, BP produced 628,000 barrels of oil each day in the US and was the sixth largest producer of natural gas. Each day, BP sells 50 million gallons of fuel in the US consisting of 7,500 BP branded locations located in 13 states. BP is always seeking new opportunities for advancement in technology so that their operation is safer and more efficient. The company is leading the way in in the energy industry with the world’s largest supercomputer used for commercial research, located in Houston and also the first to use drones in the United States. To further place themselves ahead in the industry, BP has invested over $160 million in 2 dozen companies for advancements in technology. BP currently has 17,000 employees and on average, donates approximately $30 million each year to community

Valuation is the estimation of an asset’s value, whether real or financial, based on variables perceived to be related to future investment returns, on comparison with similar assets, or, when relevant, on estimates of immediate liquidation proceeds (Pinto, Henry, Robinson, Stowe; 2010).

The British Petroleum (BP) Oil Spill occurred in April of 2010 and hurt many people, animals, businesses, and the economy of the many cities it impacted. It is recognized as the “worst oil spill” in the history of the United States, killing eleven people. The spill occurred due to a leak in a pipe that spilled oil into the Gulf of Mexico. The BP Oil well was not capped until 87 days later, by which 3.19 million barrels of oil had already spilled into the the Gulf of Mexico. The BP Oil spill did not only impact humans but sea animals too, including shrimp, lobsters, dolphins, turtles, and more. To clean up the spill, more chemicals were dumped into the ocean to reduce the size of the oil droplets causing the chemicals to also enter the food chain of these sea creatures as well. Over one thousand miles of the Gulf of Mexico shoreline was affected by the British Petroleum oil spill. But while the BP oil spill caused many damages to the Gulf of Mexico, it also brought some benefits, including jobs for immigrants and the national economic financial crisis started to withdraw.

British Petroleum, also known as BP PLC, merged with Amoco Corporation of the United States in 1998, becoming one of the world’s largest oil companies. The oil rig Deepwater Horizon was

BP is a giant oil company which has faced a major disaster in 2005 in its Texas city oil refinery killing 15 people and injuring 180 people which cost the company $2 Billion and damages and lawsuits (Murry, B. 2010).There are several laws that affected the operations of BP for ignoring the safety procedures and got into trouble waters paying fines. The incident attracted global attention and created uproar in government circles and communities. The media too played its part in making a mockery of the situation and escalating it to newer levels that tarnished the image of BP. The economy in USA is mixed and it has to weigh the capitalistic and socialistic principles. BP resorted to capitalism for profits at the cost of lives of employees, communities, and ecology. BP was severely reprimanded and imposed fines as it crossed the lines of safety .The American economy is a mixed economy of socialism and capitalism and though the giant companies like BP try to show off their might are always controlled by the government laws and economic policies. However, BP is a giant company that always which always found ways and means to get out of such critical situations. Dependency on oil is on an increasing trend due to increase in population and it is assumed that oil reserves will get dried up and result in a phenomenon called as “Peak oil” (Fieser, J. 2015). Oil is an important commodity as it plays a vital role in the lives of communities and governments. The geological survey

British Petroleum (BP) was originated in 1866 and is one of the main providers of oil and gasoline in the world, and the single largest in North America. The company functions in 28 countries worldwide, refining an average 2,352 barrels of oil per day.

that has had a track record of continuously wrecking and damaging multiple economies. BP is based in London, it was founded in 1908, originated in the northern eastern hemisphere from Persia . BP merged with Amoco and works with Transocean,and Halliburton, BP has been at fault for quite a few oil leaks, explosions, Safety Lapses, refinery explosions, and the list goes on, and they have just repeatedly, falsely promised to to fix their mistakes and then pay for the damages and lawsuits ( Mouawad 1). On April 20, 2010 British petroleum was Deep water drilling in the Gulf of Mexico for crude oil. All of a sudden when the BOP( blowout preventer )

BP, formerly known as British Petroleum, is the third largest oil and gas producer in the world, producing almost 3.8 million barrels per day. BP was founded in 1908 by William Knox D’Arcy in London, United Kingdom. The company operates worldwide in several sectors of the oil and gas industry such as generating low carbon energy, moving oil and gas, and off and onshore oil and gas extraction (BP, 2014). However, the offshore Deepwater Horizon oil spill that happened on April 20th, 2010 in the Gulf of Mexico was one of the greatest oil spills that took place in history. The disaster caused the loss of the lives of 11 workers, severely injuring 17 workers, and the aftermath had a great impact on the environment in the Gulf of Mexico.

BP plc, unsurprisingly, is a British company. It was founded in 1908 and owes its early prosperity to exploitation of Iranian (formally Persian) oilfields, where it continued to operate until the revolution in Iran in 1979. Although having lost access to the Iranian oilfields, BP plc had expanded operations to the North Sea and Alaska during the 1960s and 1970s. During the 1980s the British government sold off its holdings in the company under the privatization drive. At the end of the decade the company underwent severe corporate restructuring and downsizing. In the 1990s BP plc undertook several corporate acquisitions which resulted in BP becoming the second largest oil company at that time. Moving forward to the present day, according to the Forbes Global 2000

British Petroleum or BP is among the six largest oil and gas companies in the world with a large multinational presence. BP is a British multinational organization with headquarters in London, England, and that pursues commercial interests throughout the world. BP has a strong global presence due to its production and marketing operations in several regions of the world. The global operations of BP comprise a large geographical area due to the effective vertical integration of the organization in all sectors of the oil and gas industry. This organization is relatively gigantic as compared to other organizations of this industry and that is why several stakeholders trust its viability. BP manages operations in exploration, drilling, refining, production, distribution, and marketing of oil and oil based products including petroleum products. Although BP is a British organization, a large portion of the revenue of the company depends on foreign locations. BP relies on several international regions for achieving strategic objectives including the United States, Africa, Middle East, and Asia-Pacific. BP faces several cultural issues due to its interactions with stakeholders in various geographical locations.

BP plc[3][4] (LSE: BP, NYSE: BP) is a British multinational oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-largest company in the world measured by 2011 revenues and is one of the six oil and gas "supermajors".[5][6] It is vertically integrated and operates in all areas of the oil and gas industry, including exploration and production,refining, distribution and marketing, petrochemicals, power generation and trading. It also has renewable energy activities in biofuelsand wind power.

Located in Southern Iraq, 20 miles from the Kuwaiti border, is the Rumaila oil field (Fig. 1). It is one the biggest oil fields in the world and the biggest in Iraq. Discovered in 1953 by the Basrah Petroleum Company (BPC) at 2.4 km below the surface, an associate company of the Iraq Petroleum Company, this super-giant oil field’s first estimated volume was thought to be 30 billion barrels in oil reserves (Bb) (Vassiliou 2009); it is now estimated to be 17 Bb (Hydrocarbons Technology n.d.). Since 1961, it has been under control of the Iraqi Government and has been heavily developed (Shwadran 1977). The field makes up around 40% of Iraq’s oil production with around 200 land wells operating. On November 3rd, 2009, British Petroleum (BP) along with the China National Petroleum Corporation (CNPC) bid on the field and signed a joint contract acquiring a share of acreage and production with Iraq’s state-owned South Oil Company (SOL), the company that had run the oil field since its inception with the state. In the contract BP received 38% of production share, its partner CNPC gaining 37%, and 25% for the Iraqi government’s State Oil Marketing Organization (SOMO) (BP 2014). BP and CNPC aimed to increase production from 1.1 million barrels a day to 2.85 by 2016. By October 2012, the field was producing around 1.33 million barrels of oil per day (UK Trade and Investment 2014).

ExxonMobil is one of the largest integrated oil companies in the world besides the Royal Dutch Shell and BP. The company involves in various oil and gas processes such as oil exploration, production, supply, transportation and marketing. It had proved oil reserves of 24.7 billion barrels in the whole country and 23 refineries in 14 different countries with a holding capacity of 5 million barrels per day. Furthermore, their gas tank supplied gasoline to more than 19,000 gas stations worldwide while the majority being supplied in the US itself. On the other hand, they are also one of the biggest petrochemical producer downstream.