Bp Vs Tullow Oil Essay

3371 words - 14 pages

Industry Background

1.1 Oil and Gas Industry Background

Nowadays oil and gas are the world’s primary fuel source. The Oil and Gas industry involves different stages which are: exploration, production, refining, transportation and storage, marketing and distribution. (Yahoo Finance, 2007)

The exploration and production industries (E&P) are very diverse and fragmented (Library of Congress, 2007). The processes of exploration include many uncertainties[1] which depend on geological technology (BP Annual Report, 2006). The cost of a failed exploration, which consists of geological studies and a dry well, can vary from $5 million to $20 million per exploration site (Dickens and Lohrenz, ...view middle of the document...

Since 2004 BP has not undertaken any major acquisition (BP Annual Report, 2006).

1.3 Tullow Oil Plc Background

Tullow Oil Plc (Tullow) was founded in Ireland in 1985 (Tullow website, 2007). Tullow belongs exclusively to the E&P sector. The company has activities in 15 countries which are located in Europe, Asia, South America and Asia. Around 250 are employed by Tullow worldwide (Tullow Annual Report, 2006). In 2006 the company conducted a horizontal[5] acquisition of Hardman Resources Ltd which also belongs to the E&P sector. The total amount paid was £595m. (Tullow Annual Report, 2006). Table 1 below shows key statistics for both BP and Tullow.

Table 1: BP Plc and Tullow Oil Plc key figures.

|BP Plc | |Tullow Oil Plc |
|Data |Unit |2006 |2005 |% |

Capital Structure of Tullow Oil and BP (Similarities and Differences).

Arnold (2005) describes capital structure as “… the proportion of the firm’s capital which is equity or debt” (p. G:5). A closer look at BP’s and Tullow’s financial statements allows an understanding of the individual companies’ capital structure. The first analysis is shown in figure 1 – comparing long-term debt to the capital employed[8] by both companies.

Figure 1: Comparing Long term Debt Vs Capital Employed


Source: Thomson One Banker (2006)

The proportion of long term debt in respect of capital employed has decreased for both companies. However, BP went from around 15% in 2002 to 10% in 2006. Meanwhile, Tullow showed the same trend but with a higher absolute change from around 40% to 20% over the same period. Another important ratio when looking at capital structure is shown below.[9] Figure 2 shows the value and time trend of this indicator over a period of five years.

Figure 2: All Borrowings divided by All Borrowings plus Equity


Source: Thomson One Banker (2006)

Both companies now have almost the same level of gearing – at 20%. However, retaining this level of debt (BP) over the period analysed and at the same time decreasing the levels of long-term debt implies that especially BP relied heavily on short term debt as is show in the Figure 3.

Figure 3: Short and long term debt proportion


Source: Thomson One Banker (2006)

In 2006, short term debt was 4% and 54% of the total borrowing for Tullow and BP respectively. Arnold (2005) states that “...relying too heavily on short-term debt can lead to difficulties [...]” (p.965). However, Hutchison (1995) adds that “the maturity structure of assets and liabilities can diverge” (p. 265). To identify possible financial problems for Tullow and BP the interest cover ratio is a useful tool (Arnold, 2005). Table 2 below shows the interest cover.

Table 2: Interest...

Other Essays Like Bp vs Tullow Oil

Iran History Essay

3248 words - 13 pages - World War II and the Azarbaijan Crisis (Library of Congress) - World War II -- 60 Years After: The Anglo-Soviet Invasion Of Iran And Washington-Tehran Relations - The Tehran Conference (Yale Avalon Project) - The Tehran Conference (Gallery) - Shah & De Gaulle (Gallery) - Mossadeq and Oil Nationalization (Library of Congress) - Dr. Mossadegh visiting the US (Gallery) - Eisenhower & Mossadegh messages on oil situation - One Hundred Years of

Criminal Justice Paper

4300 words - 18 pages died in the rescue | | |effort. Over 800 people were wounded. The bomb was composed of ammonium nitrate (an agricultural | | |fertilizer) and nitromethane (a highly volatile motor-racing fuel) in a mixture also known as ANFO | | |(ammonium nitrate/fuel oil) or Kinepak

The Separation Of Capital Ownership And Control

1577 words - 7 pages The argument of whether the separation of capital ownership and control is an efficient form of organization has constantly been a controversial issue. The criticism whether the controllers’ act is in the best interest of the owners’ wills never end as long as hired managers operate management. As the number of public companies has been increasing over the course of this century, meanwhile the American style of contact based corporation has

The Versatility And Flexibility Of OLED's

1014 words - 5 pages In April 1, 2002, organic light emitting diodes gain rise in the scientific community with their published, more practical form at Ames Laboratory. “Scientists at the U.S. Department of Energy's Ames Laboratory, in collaboration with scientists at the University of Michigan, Ann Arbor, have developed and demonstrated a novel, fluorescence-based chemical sensor that is more compact, versatile and less expensive than existing technology of its

Comparing The Moral Virtues Of Antony And Julian The Apostate

1103 words - 5 pages Roman emperor Julian the Apostate and Christian leader Antony both exhibited many qualities of character during their existence. Both of them led very distinctive lives although shared several ethical values. Book 25 of “The Later Roman Empire” and the book “Early Christian Lives” show concrete evidence of this. In the following essay, I will argue how both leaders’ lives were devoted to their religious beliefs and their mutual cardinal virtues

Living In A Cashless Society

1637 words - 7 pages world. One might asked how this was possible. The system was based on barter trade in which goods are exchange for something else. My dad once told me how people from the neighboring town used to come to our town back in Edo State, Nigeria using a gallon of red oil, palm wine, cattle, and cow in exchange for a plot of land for farming. Furthermore, people from the city also exchange materials such as clothing, shoes etc in order to get a plot of

The French And Indian War: The "Real" First World War

1955 words - 8 pages The Seven Years War, or more commonly referred to as “The French and Indian War”, has been called the true First World War. In this book The French and Indian War: Deciding the Fate of North America, the author and historian Walter R. Borneman paints a detailed and elaborate picture that justifies the claim of it being the first true war of global proportions. If ever there truly was a climax to the never ending feud of the European powers

Is The Use Of Animals In Medical Research A Necessary Measure?

1513 words - 7 pages Throughout history, animals have been used in experiments to test product safety and obtain medical knowledge that benefits both humans and animals alike. Every year there are numerous medical breakthroughs, such as medications and surgical instruments, which are tested on animals to insure their safety before they are deemed acceptable for human use. Even though the results of the experiments saved millions of human lives, they are also

Education And The Evolving Job Market

2363 words - 10 pages The lives of students today are changing. They are preparing for lives and jobs that have never before existed. If teachers hope to have a significant and worthwhile impact on these quickly changing lives, they must change the way they think, prepare, and instruct our future generations. Children cannot afford to have teachers who remain stagnant in their methods and ideals. Students crave instructors that are willing to allow them to tap

Young And Relentless

1737 words - 7 pages There are numerous influences that can be responsible of teenager’s behaviors and attitude as they develop. One factor that is important to these behaviors is parental figures being over involved or uninvolved in their children’s lives. Many of these effects include illegal substance abuse, rising sexual activity, underage alcohol consumption, and tobacco use. Studies show parental participation plays a key role in the characteristics developed

The Natural Law Theory

1231 words - 5 pages Obeying by the natural law theory is the only true and moral way to live life; especially a life lived in God’s image. God’s presence is a guiding factor to obtaining a moral and virtuous life, which can only be obtained by following the natural law theory. God created a set of laws as a supreme guide for humans to live life, like any law these laws were created to ensure wellbeing for everyone. The laws he created are the civil law, the natural

Related Papers

Experiment 3 Essay

1413 words - 6 pages . Thus, it can be concluded that clove oil contains about 19.65% Eugenol. 6. Answers to Assigned Questions: Exercise 2: a. Simple distillation because you would be removing . b. Fractional because the BP difference between the two compounds is less than 40°C, so fractional distillation is the preferred method. c. Fractional, again because the boiling points of both gasoline and crude oil can differ by less than 40°C (though, the type of

Financial Market Essay

4393 words - 18 pages : Figure 1: FTSE share price index from 14 Jul 2014 to 10 Jul in 2015 (Source: londonstockexchange.com) The chart above indicates the FTSE share price index in three months from 14 Jul 2014 to 10 Jul 2015. As we can see from the chart above, there are a significant increases period of FTSE 100 share price index. It was from 15 December to 29 December 2014. In this period, due to the rapid decrease of oil price in the world market, it

Corperate Governance Report Caltex

3879 words - 16 pages Disclosures vs ‘Solicited’ Disclosures’, Australasian Accounting Business and Finance Journal, vol. 3, no. 4. Van den Hove, S, Menestrel, M, Bettignies, H 2002, “The oil industry and climate change: strategies and ethical dilemmas” Climate Policy 2, pp. 3-18 “Great Challenges and Opportunities Ahead: Ethics in the Oil & Gas Industry Forum” 2012, Fidelis International Institute, Houston, Texas

Sc4730 Assignments

5263 words - 22 pages Course Objectives and Learning Outcomes In this assignment, you will evaluate a project proposal. Assignment Requirements Watch the virtual field trip video, BP Oil Spill. Create a sketch the shows the steps in generating electricity from coal. Include inputs and outputs in your diagram. Be sure to include any waste/pollution that is an output, and any equipment used to mitigate that waste/pollution. Required Resources * Interactive