Analysis of British Petroleum

Running head: Analysis of British Petroleum

MT482 Financial Statement Analysis

Instructor:

December 13, 2010

Analysis of British Petroleum

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Executive Summary

The British Petroleum Company plc (BP) is a global petrochemical company that provides services on a global scale, headquartered in London. One of the five largest oil companies in the world, BP is also the United Kingdom's largest corporation. BP is a pioneer in its industry discovering oil in the Middle Eastern (Iran) before World War I and eventually developed into all areas of the oil industry, from exploration to adverting and marketing (BP.com). As the mid 90’s rolled around BP was producing over 1.2 million barrels of oil and 1.5 million cubic feet of natural gas every day. At that point oil refining and marketing contributed to 70% of BP's revenues. BP is a more noticeable face to most consumers by way of its more than 16,400 service stations around the world. BP also has significant amount of interests in oil exploration, which generated about 13 percent of BP’s revenues, as well as production of chemicals and plastics, which is 7 percent of their sales. In 2009 BP accomplished revenues of $239bn, and provided employment to over 80,000 people. Products and services range from energy for heat and light, petrol forecourts, and petrochemical products for other industries.  Most recently BP has received negative press due to the horrific damage that an oil and gas pipe explosion caused in the Gulf of Mexico. The disaster let to the loss of life and millions of barrels of oil. BP’s market image and stock price have been adversely affected. BP is facing fines from “The Clean Water Act”, as well as other fines and range up to 4.5 billion. BP can face a maximum fine of $21 billion if gross negligence is found by the courts (BP.com).

Table of Contents

Introduction 1

Liquidity 2

Cash forecasting and Pro Forma analysis 3

Capital...