British Petroleum is one of the world's largest oil producers. The organization provides services and products to customers all around the world. The firm is in charge of natural gas and oil exploration, production, and field development. For long years, British petroleum segments have focused on marketing and refining petrochemicals, lubricants, and fuels. The major goal of the company is to lift people out of poverty and to power economic growth that aspires to bring people out of poverty. The corporation has also made an effort to reduce its carbon footprint on the earth. So far British Petroleum has produced 14.2 million tons of petrochemicals products, 1.7 million barrels of refinery oil on a daily basis. BP generate net sales and revenue of $183 billion. So far the company has employed 74500 employees and operates in more than 72 countries.
Pros
The previous sales of the company have beefed up the company’s efficiency drive. In the quest to repair its destroyed financial reputation after 2008/2009 financial crisis, the company embarked on asset disposal that saw it sell off $38 billion worth of assets; this occurred in 2012 financial year. The asset disposal strategy is aimed at reducing the company’s net operational costs. Such a strategy is likely to lead to higher revenues; this implies that investors placing funds in this institution will generate higher returns. The company has also diversified its production capacity and added other commodities that do not relate to petroleum products. Diversification of services increases sources of revenue meaning that investors have guaranteed dividends.
The company’s strategic plan is also a baseline that investors can consider when making investments in this company. The strategic plan gives an emphasis on the growth of profits that is accompanied by reduced capital inefficacy and costs. This strategy will favor investors since profits are likely to rise. Investing in this institution is, therefore, a good idea.
Investing in this company will also mean supporting global sustainability. British Petroleum was the first company to the global consensus to address climate change. The company embarked on strategies whose intention was to reduce greenhouse gas emissions. So as to reflect the changes in diversity in production and protecting the environment, British Petroleum changed its name to Beyond Petroleum.
Cons
Although the companies that are involved in hydrocarbon and petroleum products provide obligatory service that contributes to the overall growth of the global economy, investing in the oil industry comes with high risks. Some of the risks that are involved include the environmental risks. The environmental risk was seen during the British Petroleum’s Oil Spill that occurred in the Gulf of Mexico the company was forced to incur billions of dollars in clean-up exercise as well as compensating victims. What began as the as continuous offshore drilling ended up to be the most dangerous and costliest disasters of all times. As an investor in the oil industry, it's quite difficult to hedge against environmental risks.
In conclusion, despite the fast and massive returns of investment in the oil sector, it comes with serious risks. The market for the oil commodities is always fluctuating. The profitability of British Petroleum depends on both the international and local factors that are often beyond the control of the investor. Currently, the world has witnessed a drop in the oil prices; such a trend will have negative implications on the return on investment.
References
"About BP". 2017. Bp.Com. http://www.bp.com/.
Haerens, Margaret. 2010. Oil. 1st ed. Farmington Hills, Mich.: Greenhaven Press/Gale, Cengage Learning.
"Lowdown On Oil Prices". 2016. Chemistry & Industry 80 (3): 24-24. doi:10.1002/cind.803_10.x.
