bp and exxon comparative financial analysis jan 2011
DESCRIPTION
Financial analysis of oil industry and the two largest players: Exxon and BP, from a comparative perspective that was done as a project.TRANSCRIPT
Oil Industry Investor AnalysisComparison of BP, Exxon and the industry
1 Overview of Industry
2005 – 2009 Performance
2010-2011 Performance Forecasts
Investor Scorecard and Recommendation
Agenda
2
3
4
3
4
Miles
0 10 20
ANWR
Cannin
g Riv
er
Col
ville
Riv
er
LJL (April, 1997)
Sourdough
Flaxman
BPXA (Op)100%
Milne Point
Greater Prudhoe Bay
AlpineCPAI (Op) 78%Anadarko 22%
EndicottBPXA (Op) 68%Exxon Mobil 21%Unocal 11%
Greater KuparukCPAI (Op) 55%BPXA 39%Unocal 5%
Exxon Mobil 37%CPAI 37%BPXA (Op) 26%
2
3
4
6
7
8
9
10
11
12
1
United S
tates
NorthstarBPXA (Op)98%Murphy 2%
Liberty
NPRA
Pt ThomsonExxon Mobil (Op)
36%BPXA
32%Chevron
25%CPAI
5%
Anchorage
BPXA (Op)100%
Badami
North Slope
Alaska North Slope – Units and Oil Field Boundaries
5
Gulf of Mexico – Horn Mountain / Marlin
2005 2006 2007 2008 2009 2010-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
XOI DJICompany
Market Cap (US$ billions)
Exxon Mobil Corporation
337,077
PetroChina Company
233,882
Royal Dutch Shell PLC
196,075
Chevron Corporation
170,639
Petroleo Brasileiro S.A.
141,745
OAO Gasprom
133,134
BP PLC 125,937
2005-2009 Weekly Market Performance for Dow Jones and Major Oil Index
Competitive Advantage Differences
• Focus is on ownership of oil rights and oil assets
• Limited operational exposure• Tight cash management policies• Disciplined approach to investments• Culture – profit driven, standardized,
top down management
• More exposure to operational roles within partnerships which increases risk
• Accounts payable terms ~35 days• Investments based on
opportunity• Culture – consensus driven focus
Gross Margin
2005 2006 2007 2008 20090.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0% 42.8%43.8%
42.8%
39.8% 40.2%
31.6%33.5% 32.7%
31.1%29.0%
25.0%23.1% 22.8%
20.0%
24.0%ExxonExxon AdjBP
2005 2006 2007 2008 20090.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
9.7%
10.5% 10.3%9.8%
6.3%
9.2%
8.1%
7.3%
5.9%
6.8%
Exxon
BP
Profit Margin
Historical Stock Price Chart
2005 2006 2007 2008 2009 2010-70%
-50%
-30%
-10%
10%
30%
50%
70%
BP
Exxon
The Spill“The way that they are selling assets and strengthening their balance, is what you would expect them to do if they were preparing for a worse scenario such as a finding of gross negligence,"
December 1st 2010Anonymous analyst (Did not want to be seen questioning BP's public comments)
“As we believe the true liability for the Macondo accident to be nearer $25-30 billion as opposed to the around $60 billion the market is discounting.”
November 10th, 2010Richard Griffith Evolution Securities Buy recommendation
2009-2011 Gross Margins
• Crude Oil prices up $85.17 vs $78.8 or 8.1% in 2011 (US Energy Dept Fcst 11/9/10)
• 1.7% increase in World Wide consumption in 2011 (US EIA Nov-10)
2009 2010 20110.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0% 40.2% 38.9% 38.4%
29.0% 29.4% 28.9%
24.0%
4.4%
20.2%ExxonExxon AdjBP
2009 – 2011 Profit Margin
• $40B spill reserve; $30B reimbursements
2009 2010 2011-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%6.3%
7.6% 7.6%
6.8%
-4.0%
5.8%
Exxon
BP
Conclusion – Investor Scorecard
Risk Current Stock Price
Forecasted Price
ROA2011
Profit Margin
2011
Investments Oil Reserves
Gas Reserves
Med 43.27 47-57 7.4% 5.83% $18B/yr 5,658BB 40,388BCF
Low 71.85 79-87 9.9% 7.57% $25-$30B/2yr 9,215BB 34,442BCF