BP began as the Anglo Persian Oil Company in the early 1900’s. The company was founded and financed by Mr. D’Arcy of London and the Burmah Oil Company. The oil excavation in Persia took many tumultuous years, with set back after set back that almost led Mr. D’Arcy to financial ruin “But vindication was in the air. By the early morning of 26 May 1908, the whole camp reeked of sulphur. At four o’clock the drill reached 1,180 feet and a fountain of oil spewed out into the dawn sky” (Our History: BP, 2013, pg.1).
In the beginning the Anglo Persian Oil Company was limited in their abilities to provide services for oil. The oil market was already dominated by another company and cars were owed by few. Because the snitch from the gas was so potent the company was unable to make money by selling it to heat homes during the cold winter months “Besides that, refining couldn’t remove the Persian oil’s strong, sulphurous stench. It couldn’t be sold as kerosene for home heating, one of the main consumer uses for oil at the time” (Our History: BP, 2013, pg.2).
At this point Mr. D’Arcy found himself facing yet another financial crisis, but he received help from an unlikely ally that would change the future of the Anglo Persian Oil Company forever. Winston Churchill convinced the British Parliament that it would be in the best interest of Great Britain to invest in the Anglo Persian Oil Company and the Parliament agreed “The resolution passed resoundingly, and the UK government became a major shareholder in the company.
Churchill had ended Anglo-Persian’s cash crisis, and no one had long to quietly ponder the long-term implications of a company entwining its financial interests with a political entity” (Our History: BP, 2013, pg.2). After the Anglo Persian Oil Company regained its financial momentum it acquired British Petroleum in 1917. This merger allowed to company to finally achieve its endeavor, which was to provide oil for machines, automobiles and trains. In the early 1900’s BP’s major customer was the British Navy, but by the mid 1900’s BP began to supply oil primarily to car owners.
Cars had now become a necessity for many and there was now a need for gas stations to supply the product toconsumers. As time progressed and technology evolved so did BP. By the beginning of 2000 the company demonstrated leadership in their innovation and consciousness of the future “Under this new banner BP took bigger and bigger steps towards addressing climate change. It installed solar panels at its service stations, brought solar power to remote villages in the Philippines, helped bring hydrogen-fuelled buses to London and introduced new, cleaner types of motor fuel” (Our History:
BP, 2013, pg.6). BP is a long standing company with a long standing reputation for commitment and sustainability. The company continues to grow and discover new ways to stay ahead market. ExxonMobil is an oil company with a long standing reputation that has exceeded 100 years. The company started from modest beginnings in mid-1800’s in Pennsylvania.
A man by the name of Colonel Edwin Drake found oil while drilling in his back yard. After excavating the oil in 1870, Rockefeller stepped in and initiated Standard Oil “Rockefeller and his associates form the Standard Oil Company (Ohio), with combined facilities constituting the largest refining capacity of any single firm in the world. The name Standard is chosen to signify high, uniform quality” (About Us: ExxonMobile, 2013). Throughout the late 1800’s Standard Oil expanded into separate entities and began investing in other companies, and product innovation.
The company was able to generate profits by selling the oil as a lubricant. By the early 1900’s Standard Oil is no longer one entity “Following a landmark U.S. Supreme Court decision, Standard Oil breaks up into 34 unrelated companies, including Jersey Standard, Socony and Vacuum Oil” (About Us: ExxonMobil, 2013). Standard Oil sold its products primarily to innovators and those who operated machinery. Around this time the company began to gain recognition for its quality for gas performance “Ralph De Palma, winner of the Indianapolis 500, is the first of many Indy winners to use Mobil products.
His average speed: 89.84 mph” (About Us: ExxonMobil, 2013). At this time gas was becoming a vital essential in American and car drivers were now Standard Oil’s top customers. In the early 1920’s Standard Oil takes on the trade marked name of ESSO, which was embossed on gas station signs. Standard Oil leads the way in innovation during the 1940’s with the implementation of a new gasoline “The process, developed by four Jersey Standard researchers known as the “four horsemen,” improved on the Houdry method for cat cracking and eventually became the industry standard
for producing gasoline. Fortune magazine called it “the most revolutionary chemical-engineering achievement of the last 50 years.”(About Us: ExxonMobil, 2013). By the mid 1960’s the company had made history in regards to its products and reputation.
The name of the company subsequently changed to Mobile Oil Corporation, but the name would soon be altered. Right before 2000 Mobile Oil Corporation joined with Exxon to form ExxonMobil “On November 30, 1999, Exxon and Mobil join to form Exxon Mobil Corporation “This merger will enhance our ability to be an effective global competitor in a volatile world economy and in an industry that is more and more competitive,” said Lee Raymond and Lou Noto, chairmen and chief executive officers of Exxon and Mobil, respectively” (About Us: ExxonMobil, 2013).
ExxonMobil has remained at the top of the leadership board in the gas industry. Due to the company’s high standards and integrity their products have been used by individuals such as the Wright Brothers and Amelia Earhart. ExxonMobil has made great strides to change the gas industry throughout the years. The company continues to advance and create better products that will help increase the longevity of engines and protect the environment. Timeline:
The conclusion that can be drawn from the stock market price is that BP closed at 77.62 on Jan. 4, 1977 and closed at 44.75 on Jan. 4, 2012. The price of the stock has dropped significantly since the 2010 gulf coast oil spill. ExxonMobil stock market prices closed at 62.00 on Jan.2, 1970 and closed at 86.02 on Jan.4, 2012. The company’s stock has continued to increase over the years. Currently, ExxonMobil is having a favorable few years on the stock market, but that could change shortly due to the oil spill in Arkansas.
The 2010 oil spill caused detrimental harm to sea life, fishermen and states surrounding the gulf coast. BP took responsibility for the oil leak and made great efforts to rectify the situation “This is another important step towards meeting our goal of returning the shoreline to as close to pre-spill conditions as possible while managing the scale of the response to meet conditions on the ground,” Coast Guard Capt. Duke Walker said in a statement” (Press, 2013, para.5).
The oil spill cost the company billions of dollars to clean the water, shorelines compensate workers and they also had to pay fines. The government and the U.S. citizensheld BP accountable for their cleanup efforts. BP’s stock began to decrease substantially after the oil spill. The company has not been able to regain its stock market value. Recently BP merged with Rosneft, an oil company that is based out of Europe “The European Commission has cleared under the Merger Regulation the proposed acquisition of sole control of TNK-BP by OJSC Oil Company Rosneft of Russia”
(Mergers: Commission clears acquisition of TNK-BP by Rosneft, 2013, para.1). Rosneft is a reputable and financially established corporations. It can be assumed that the purpose of acquiring shares is to bring the profitability of BP back up. As stated above the company’s stock continues to decrease and many investors may see this as an opportunity to buy low with the expectations of the stock price increasing due to the recent merger with Rosneft. Personally, I believe this would be a prime opportunity to buy BP’s stock at its lowest price and benefit from it later.
The company will regain its financial status on the stock market. ExxonMobil is much like its counterpart BP in regards to their inability to properly contain their oil. The company is now facing a law suit for damages caused by a recent oil spill “The Justice Department and the state of Arkansas filed suit against the oil giant ExxonMobil over a March 29 pipeline rupture that spilled 210,000 gallons of oil into a residential neighborhood and waterways in the small town of Mayflower” (Upton, 2013, para.2). Although the spillage was not as catastrophic as BP’s and it was easily contained, to say the least.
ExxonMobil’s efforts to rectify the situation should have been prompt and should not have initiated any need for the court system to become involved. The company should have rectified the situation immediately by cleaning up the area and providing financial assistance to those who were affected. The stock price for ExxonMobil has not dropped and that could be due to the fact that the oil spill has not been broadcast as widely as it should. ExxonMobil must have invested in a really good public relations department.
At the present time I do not foresee an issue with investing in the company. However, I would wait a few days to see if there is any stock market price decrease. On April 17, of this year 6 employees working at an ExxonMobil plant were injured when a fire broke out due to mechanically failure. The company does not know exactly how the fire took place but they just attributed it to the heat and high pressure of hydrogen within the machine “The hydrotreater is part of the refinery’s system for removing harmful substances from feedstock so the motor fuels produced will comply with federal environmental regulations. It uses hydrogen under high pressure in the process” (Reuters, 2013, para.7).
This incident did not cause a decrease in the stock market price, nor was it highly publicized. After careful consideration and research I would presume the ExxonMobil is a financially stable company despite the oil spill and fire controversy. It would be wise to invest in the company immediately, especially since the price of stock continues to increase. BP has continued to make great strides to become a dominate contender in the oil industry and I believe had they not had the set back of the gulf coast oil spill the stock market price would reflect that.
The company is currently experiencing some difficulty in regaining its financial momentum on the stock market. With that being said BP is still a strong oil company and with the recent merger with Rosneft it will be a force to be reckoned with in the near future. After reviewing the company’s balance sheet for the past three years.
I saw a significant change in the company’s assets. There was a decrease between 2010 and 2011, but BP made a tremendous effort to increase their assets in 2012. This merger is a key characteristic why now would be and opportune time to invest in the company. Stockholders equity also fell at this time but has also increased in 2012. The stock price is low making it financially possible for those who wish to acquire stock to do so. I foresee this merger as the catapult BP needs to reinvent itself. The company has made great efforts in regards to innovation and I believe under new leadership and financially backing the company will be better than ever in a few years.
I foresee the company introducing new products that will help reduce car pollution drastically if not completely, by going green within the next five years. An investor who likes challenges would view BP as an excellent candidate. The company would appear at first glance to be a risk, but many company’s do go through a period of struggle and then regain their financial strength.
BP is on the cusp of turning things around and would be a prime company for an investor to purchase stock in at this current time. BP is the company to watch out for and I’m ecstatic to see what births from this merger. ExxonMobil has a long standing history in the U.S. The company continues to expand its resources to develop better ways to enhance gas mileage, car performance and environmental protection. These aspects are key characteristics for investing in the company and it also displays why the company is at the top of the oil industry.
After reviewing the balance sheet for ExxonMobile, the company exhibited steady increase in total current assets over the past three years and stockholders equity has continued to rise tremendously. ExxonMobil has maintained its place on the stock market and its stock price continues to increase yearly. The company demonstrates financially stability and would be an ideal investment opportunity for those who have the resources to invest. I foresee the company flourishing over the next year and perhaps merging or acquiring stock with another oil company to help double the company’s profitability.
I also believe the oil giant will benefit from partnering with Kia or Honda to expand upon fuel efficiency and green cars. Honda hybrid cars are doing well, but are still very expensive for some. ExxonMobil can use this opportunity to catapult the oil industry into the future and create a more eco-friendly gas that is also cost efficient for the consumer. An investor would look at the longevity and financial stability of ExxonMobil and be assured that investing their money with this company would yield great financial results immediately and in the years to come. The financial accuracy and reliability for BP is approximately 65%.
I believe that there is room for error and adjustment. The merger with Rosneft will definitely make the company more profitable and thus increase the price of stock. BP has finally finished cleaning up the gulf coast and made excellent strides to help those who were unable to regain financial stability due to loss of livelihood. The financial figures from the balance sheet indicate that the company is heading in the right direction. BP’s assets are increasing and short term debt is decreasing, therefore the company is generation enough revenue to pay down its debt, and still maintain a profit. The financial accuracy and reliability for ExxonMobil is approximately 80%.
The company has a long standing financial reputation, but I do believe that will the recent incidents that the stock will take a slight dip. But nothing that will cause alarm to prohibit investors from buying stock. ExxonMobil is doing very well financially and the balance sheet indicates that the company continues to generate revenue each year. The company that I would recommend investing in would be ExxonMobil.
ExxonMobil has shown significant financial stability throughout the years. Its commitment to quality and living up to a standard of excellence supersedes its reputation. I would advise my client to look at the financial data that exemplifies the level of consistency ExxonMobil has displayed.
The company continues to grow and with the development of new innovations in regards to the quality of products it can be assumed that investing in ExxonMobil would be the ideal thing to do. Stock prices for the company continues to rise daily, therefore investors will not only see the future benefits of ExxonMobil, but they are able to make a clear determination that shareholders are ensuring the success of the company. The balance sheet gives a clear indication that the company is willing to take financial risks that ultimately benefit the company.
ReferencesAbout Us: ExxonMobile. (2013). Retrieved from ExxonMobile Web site: http://www.exxonmobil.com/Corporate/history/about_who_history_alt.aspx Mergers: Commission clears acquisition of TNK-BP by Rosneft. (2013, March 8). Retrieved from Europa Web site: http://europa.eu/rapid/press-release_IP-13-214_en.htm Our History: BP. (2013). Retrieved from BP Web site: http://www.bp.com/en/global/corporate/about- bp/our-history/history-of-bp/first-oil.html
Press, A. (2013, June 1). $14 billion dollars later, BP’s oil spill is cleaned from 3 of 4 affected states . Retrieved from The Christian Science Monitor Web site:http://www.csmonitor.com/Business/Latest-News-Wires/2013/0610/14-billion-dollars-later-BP- s-oil-spill-is-cleaned-from-3-of-4-affected-statesReuters, T. (2013, April 17). Fire at Exxon refinery in Texas injures 12 workers. Retrieved from The Global and Mail Web site: http://www.theglobeandmail.com/report-on-business/industry- news/energy-and-resources/fire-at-exxon-refinery-in-texas-injures-12- workers/article11350361/?cmpid=rss1&utm_source=feedburner&utm_medium=feed&utm_ca mpaign=Feed%3A+TheGlobeAndMail-Front+%28The+Glo
Upton, J. (2013, 14 June). Feds, Arkansas sue Exxon over tar-sands spill . Retrieved from Gritsmill Web site: