BP plc is a British multinational oil and gas company headquartered in London, United Kingdom. It is one of the world’s seven oil and gas supermajors whose performance in 2012 made it the world’s sixth-largest oil and gas company, the sixth-largest energy company by market capitalization and the company with the world’s 12th-largest revenue (turnover).
Any one got any thoughts on the recent crash in share price due to a mix of the general market and the drop in oil price?
Where does this leave BP as a long term investment, is this a good moment in the current crisis to buy at a significant discount?
It depends on how quickly they can begin to cut costs. I would suggest looking at where their drill sites are located and the average age by area. This will allow you to gain some idea of the average cost per barrel and then see where BP would be left if oil hits US $20. People who think the price will rise due to increased demand do not understand how much oil Saudi Arabia can sell. Their wells are profitable at around US $8 (although the national budget is only balance at around US $80). Shell, historically, have been much more successful at cutting costs and have already begun to diversify away from oil faster. Ironically, whilst low oil prices may encourage consumption increases it may lead to the oil majors abandoning projects reducing global supply. Saudi Arabia has always planned to be the last place pumping oil and they may just get that wish at 12.3m bpd.
The cynic in me thinks Saudi and Russia are happy for this oil crisis to put shale and offshore oil under pressure / out of business. Wonder how long it will play for before the geopolitics takes over and US get angry
I completely agree. We shall see how much damage it does though. Most of the Permian Basin requires US $40-$50 to break even. We should see (in this environment of concern) producers collapsing. This may force banks to scale back loans reducing output further.
That’s quite an encouraging article.
It’s good to see BP getting ahead of its rivals and pivoting away from its core business, which has a limited life span.
With luck it will still be a major player in the energy sector after oil and gas are just distant memories. BP is such a big company, changing direction is like trying to turn an oil tanker. It needs to make moves now, to still be a viable business in 20 years time.
All the European supermajors BP, Shell and total appear to be transitioning to energy provider plays and buying up assets in this field. The American supermajors Exxon and Chevron don’t currently appear to be wanting to take the same route.