Submitted by: Submitted by bcbnader
Views: 10
Words: 816
Pages: 4
Category: Business and Industry
Date Submitted: 05/23/2016 01:54 AM
Summary :
* Industry presentation: It really worth it to invest in Oil& Gas Company?
* Industry characterized by substantial volatility
* Marketing activities provide some stability
* Offshore activities entail greater risk and need more capital than onshore
* Industry average rating : BBB to BBB h (DBRS)
* Growing demand from emerging countries provides support
* Technology advancement continues to help
* Industry dependent on demand & supply
* Rising refining capacity + sluggish demand = very competitive conditions
* Volatility offset by capital structure and financial risk management
* Refining and marketing provide stability to revenues (for integrated companies)
* Economically Unregulated industry (nor strength neither weakness)
CONCLUSION:
Investing in the oil and gas industry carries a number of significant risks, including commodity price volatility risk, cutting of dividend payments for those companies that pay them, and the possibility of an oil spill or another accident during the production of oil or natural gas. However, long-term investments in oil and gas companies can be highly profitable as well
* Quick presentation of the 2 companies
North Petroleum | South Petroleum |
Integrated companyOldOnshore fields driedOffshoreDiversified customers | Integrated companyNew comerStarting new explorationOffshore + onshoreDiversified customers |
* Financial Equilibrium of the 2 companies
Working capital (in CU) | | | |
South Petrol | 4 535 269 | (2 263 628) | 2 735 068 |
North Petrol | 27 651 000 | 26 960 000 | 27 035 000 |
South Petrol shows one year negative working capital
Working capital (as % of sales) | | | |
South Petrol | 4,0% | (2,6%) | 4,0% |
North Petrol | 6,8% | 7,1% | 7,3% |
Working capital need (in CU) | | | |
South Petrol | (6 917 517) | (8 875 030) | (7 506 836) |
North Petrol | (6 330 000) | (5 888...