A Financial Analysis of BP within the Oil Industry, Including Effects from the Recession on BP and the Industry
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Table of contents
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DECLARATIONIII
CHAPTER01: INTRODUCTION1
Background of the Study1
Aims and Objectives of the Study2
Research Questions2
Introduction of British Petroleum2
CHAPTER 02: LITERATURE REVIEW4
Impact of Oil Price Changes on State Incomes5
Impact of Oil Price Shock on Economy6
Impact of Oil Price on Employment8
Oil prices increases and recession9
CHAPTER 03: METHODOLOGY15
Research Design16
CHAPTER 04: FINANCIAL ANALYSIS17
Financial Ratios Analysis of British Analysis17
Profitability Ratios Analysis17
Liquidity Ratios Analysis18
Debt Management Ratios Analysis19
Asset Management Ratios Analysis20
Comparison of Operating Profit Margin, and Gross profit Margin21
Comparison of Revenue, EBITDA and Net Income23
Stock Prices Analysis of BP24
CHAPTER 05: DISCUSSION25
Crisis in the Middle East and Oil Industry28
CHAPTER 06: CONCLUSION31
REFERENCES33
APPENDIX36
Income Statement36
Balance Sheet36
Cash Flow Statement37
Stock Price and Valuation38
Stock price History of BP39
CHAPTER01: INTRODUCTION
Background of the Study
The UK is a mature oil and gas producer, faced with an inevitable decline in output and exports. In 2010, it had approximately 3bn bbl of proven oil reserves located largely in the North Sea, where more than 250 oil and gas fields are in production or under development. There are more than 140 companies engaged in UK offshore operations. Oil production is falling steadily, having peaked at 2.9mn b/d in 1999. Daily output in 2011 is forecast to be 1.39mn bbl and BMI expects average output by 2015 of 1.07mn b/d. UK oil refining capacity at the end of 2010 was around 1.79mn b/d, slightly in excess of consumption, estimated to reach 1.63mn b/d in 2011.
The country's reserves of natural gas, mostly in the southern North Sea, in 2010 amounted to 256bcm (BP Statistical Review of World Energy, June 2011). The UK is also a producer of coal but output has tumbled since the 1980s because of high costs leading to the closure of many mines. Just a few years ago, the UK was probably the most energy self-sufficient country in the EU, having substantial domestic oil, gas, coal and nuclear energy resources that minimized import requirements. The rapid depletion of hydrocarbons and a gradual winding down of the coal industry and coal-fired power generation means that energy imports are on the rise. A policy decision to build new nuclear generating facilities, plus increased investment in renewable, should cap the rate of import growth. The 2010 change of government introduced a fresh element of uncertainty over nuclear plans, although there are few other large-scale energy options open to the country.