Content I. Introduction……………………………………………………………………………..…p2 i. Oil & gas industry……………………………………………...………….p2 ii. Big oil…………………………………………………………….…………p2 II. Capital structure…………………………………………………………………..………p3 III. Dividend and other distribution policies…………………………………………...……p4 IV. Mergers and acquisitions…………………………………………………………...……p5 i. Upstream. …………………………………………………………………p6 ii. Midstream………………………………………………………………….p8 iii. Downstream…………………………………………………………….…p8 V. Conclusion…………………………………………………………………………….…p10 I. Introduction` i. Oil & gas industry The oil & gas industry is among the largest industries in the world. The sector generates large revenues and employs a large number of people in order to meet the worldwide demand for energy. The industry is divided into three distinct sectors including the upstream, midstream and downstream sectors. The upstream sector includes the exploration and production of crude oil as well as the exploration and production of natural gas. This sector has experienced the largest amount of deals in terms of mergers and acquisitions, which will be further discuss in section III. The midstream sector involves the transportation of extracted petroleum from the upstream sector through pipelines, rail, barge, truck as well as storage. Finally, the downstream sector connects the end consumers through derived products such as gasoline, liquefied natural gas (LPG), liquefied natural gas (LNG), kerosene (aircrafts), and diesel… The oil & gas sector faces specific risks affecting its financial performances. The main variables affecting the industry are political, geological, price, fiscal, supply and demand as well as cost risks. Given the specific risks, the demand for energy is still gr... ... middle of paper ... ...ancial Statements and Supplemental Information 2013. Ernst & Young . (2013). Global oil and gas transactions review 2013. Deloitte. (2013). Deloitte Oil & Gas Mergers and Acquisitions Report Year-end 2013. Modigliania, F., & Miller, M. H. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review. Msn Money: http://money.msn.com/stocks/ Royal Dutch Shell. (2013). Annual Report 2013. Royal Dutch Shell Total. (2013). Form 20-F 2013. Total Ycharts. (n.d.). From www.ycharts.com: http://ycharts.com/charts/fundamental_chart/#/?securities=id:BP,include:true,,id:CVX,include:true,,id:XOM,include:true,,id:TOT,include:true,,id:RDS.A,include:true,,id:COP,include:true&calcs=id:price,include:false,,id:dividend_yield,include:true&zoom=5&startDate=&endDate=&format=real&recessions=false&chartView=
While studying the industry as well as the Chevron Corporation, I have been able to found a gap between consumption and production capacity which is expected to widen more from now with the demand side for energy exceeding the supply side of them same. Reserves has started to yield lesser outputs, as per the statistics of HIS energy, which claim such case to be applicable nearly 90% of all known energy reserves. In addition to that, the discoveries of new oil fields have slowed down, and studies have revealed that a new groundbreaking discovery of any oil reserve is yet to be made since 2002. These studies can easily provides enough evidence to conclude that the production patterns will only continue to diminish in futures, if dependency is on the existing ones, unless some new discoveries are made, many of the related projects being still in the pipeline, with no reliable or expected date of production start. This usually restricts companies in such industries to organically grow, leaving them with the only financial growth option to merge, horizontally or vertically, with another in the same or related industry.
America is dependent on other nations for their ability to create energy. The United States is the world’s largest consumer of oil at 18.49 million barrels of oil per day. And it will continue to be that way for the foreseeable future considering the next largest customer of oil only consumes about 60% of what the U.S. does. This makes the U.S. vulnerable to any instability that may arise in the energy industry. In 2011, the world’s top three oil companies were Saudi Aramco (12%), National Iranian Oil Company (5%), and China National Petroleum Corp (4%). The risk associated with these countries being the top oil producers is twofold. One, they are located half way around the world making it an expensive to transport the product logistically to a desired destination. And two, the U.S. has weak, if not contentious,...
1. Market Resources is the major producer of income driving segments of the business. Natural gas (nonregulated) is 86% of its focal point on evaluating crude resources for process through “gas management” (5).
Oil provided new fuel for transportation and manufacturing, even railroads were able to convert to oil. Oil helped manufacturing plants and farms move to a cheaper source of energy. Another significant factor of oil is that it helped encourage automobile production as well as roads. The production of the Interstate highway led to the movement of people and goods (Champagne, Harpham 13). Rapid industrialization of the Gulf Coast region sparked. By 1929 in Harris County, 27 percent of all manufacturing employees worked in refineries. By 1940 the capacity of the refineries had increased fourfold. The oil and gas industries carried a boom-and-bust mentality (Oliena 1). The economy flourish at times and failed other times, because the prices would rise and fall. When new oil was discovered in a particular place it brought about more people, overcrowding the schools and new housing. Yet a couple years later the town could experience a bust creating poverty and making the town a ghost town. The oil and gas industry transformed the government and its role with the economy. The Texas Railroad Commission was extended to regulate energy and to promote well-spacing rules. Higher education benefitted through the oil and gas industry ( Munch, Francis, and Rundell 604). In 1923 oil was discovered in the West Texas Permian Basin on university land. The Permanent University Fund was split up between the
Also, industry is the largest consumer of natural gas, accounting for 43 percent of natural gas
According to the GAO report, the U.S. petroleum refining industry experienced a period of high product prices and industry profits from the early 2000s through to 2007. ( United States Government Accountability Office , 2014). Since the recession of 2007 to 2009,the industry has been in transition ( United States Government Accountability Office , 2014). The three major changes that have recently affected the domestic petroleum refining industry include:
Brealey, Richard A., and Myers, Stewart C. Principles of Corporate Finance. Sixth ed. McGraw Hill, New York, © 2000.
Oklahoma's oil and natural gas industry is giving us unstoppable progress for energy solutions, but the other parts of the nation are still searching for theirs. While providing jobs for the thousands of people who live in Oklahoma, the oil and natural gas industry not only donates to America's petroleum production, but it also produces millions of dollars for our state’s economy, schools, and roads. Making new headways in our industry every day, artificial technology, scientific breakthroughs, adequate new exploration, and drilling methods took place. Without these upgrades, we would not be able to extract oil and natural gas from challenging fields more efficiently than we can now. As capability rises, environmental impact will continue to go down. In 1897, a tower of surging oil divided the Bartlesville sky. Oklahoma's preliminary drilling swaged badly, brought forth by the federal controls on wellhead prices of natural gas applied to interstate commerce in the 1950s. By 1982, oil prices hit an all time high of $37.60 per barrel. Furthermore, the number of progressive drilling rigs in Oklahoma also hit a record of 882. The total quantity produced from the soul and natural gas industry in Oklahoma reached about 40 billion dollars in 2007. Also, through the gross production tax, oil and natural gas producers and royalty owners gave more than 2 billion dollars to Oklahoma used for teacher retirement, public schools, wildlife management, bridges, roads, and state colleges. Petroleum remains an indispensable Sooner State industry. Natural gas continued to grow in the early 1990s despite of the entire staggering bust that was caused by the plummeting world crude oil p...
Simmons estimates crude oil prices to average $24 WTI for 2000 and $21 WTI for 2001, with 1Q00 at $28, 2Q00 at $24, 3Q00 at $23 and 4Q00 at $21. For 2001, they see 1Q01 at $22, 2Q01 at $20, 3Q01 at $21 and 4Q01 stable at $21. Their thesis, relying on inventory-price dependence, is as follows.
finding new ways to drill for oil and also refine it more efficiently to ensure that
The oil industry can not be discussed without mentioning the name John D. Rockefeller. Rockefeller changed the business of oil distribution. In the 19th century Rockefeller began his humble beginnings with a small investment, along with two other partners, in the oil refining business. Eventually Rockefeller upset at the direction of the company bought out his partners. He was now buying into refining and developing kerosene and other petroleum-based products. He later named this company The Standard Oil Company which by 1872 nearly owned all the oil refineries in Cleveland. In 1882, Rockefeller took all his holdings and merged them into the Standard Oil Trust. Through smart business practices and some deception, Rockefeller was able to control three-fourths of the petroleum industry by the 1900’s. After his retirement the company faced problems. (Rockefeller archive) The U.S. government believed that the Standard Oil Trust was a monopoly and ordered its breakup much like the process that is taking place today with Microsoft.
Furthermore met more than 60% of worldwide vitality request by the oil and gas industry. Advancement undertakings and foundation as far and wide as possible, depend on the business. The oil and gas industry is a basic industry globally. The business might be isolated into five parts:
The Natural gas industry is divided into four sectors, called producers, transportation sector (pipelines), local distribution and marketing, and consumers. Before 1985, the industry was traditional and vertically integrated which supported monopoly in the industry. Distribution companies could not chose pipelin...
The Oil Industry has existed since the early 1800’s. As The History Channel’s website states, it has been “an illuminant for medicine, and as grease for wagons and tools.” The first break for the oil industry was with the discovery of kerosene. John Austin, a New York merchant, had observed cheap and efficient oil lamp in his travels. Upon returning home he then manufactured them to be used on kerosene. Shortly after the United States oil business boomed as whale...
Fossil fuels are used and burned for the engines of ships, cars, airplane and helicopter engines, lawn appliances, saws, and other machineries. Since the less dense liquid products are in heavy demand for engines for combustion, a refinery will use its ability to convert dense hydrocarbons and less dense gaseous components into numerous higher value products. Petroleum refineries produce millions and millions of crude oil. Interestingly, one oil refinery located in Israel is capable of making up to nine millions tons of crude oil just in one year! The cooling towers of this facility extend so high up into the air, making magnificent landmarks!