BP Plc ADRBP

Morningstar Rating

Stock Research and Analysis

by Catharina Milostan

BP's CEO Tony Hayward is making some headway with his mandate to find operational improvements after a few misdirected years that led to a string of plant accidents and depressed financial results. Faced with challenges of low oil and gas prices plus Read more

Bulls Say

BP's goals of upstream growth and refining improvements remain on track with new oil and gas discoveries in the U.S. and restoration of Texas City refinery in 2008.

BP's third goal of corporation simplification, if executed, would be helpful in managing margins amid a potential global recession.

BP's deep portfolio of growth projects, including developing promising deep-water oil and gas discoveries and restoring refining facilities, should help drive long-term growth.

BP's level of financial and operational disclosure stands out from its peers and highlights the company's efforts at transparency. Read more

Bears Say

BP's business is skewed more to the upstream than refining business, making it more vulnerable to oil and gas price volatility than more-diversified major oil companies.

BP's 50/50 joint venture in Russia, TNK-BP, generates about one fourth of the firm's production, making it more vulnerable to political risks. The recent management-restructuring agreement and CEO succession plan may help alleviate near-term political risks, but this could change quickly.

BP's safety and compliance record has come under scrutiny after incidents such as the Texas City refinery explosion, pipeline leaks in Alaska as a result of corrosion, and price-manipulation investigations.

Environmental, political, and commodity price risks are always present in the oil and gas industry. BP's production in OPEC member countries might be periodically curbed. Read more

Strategy

CEO Tony Hayward redirected BP's strategy by setting new goals of upstream growth, downstream turnaround, and corporate simplification in 2008. Upstream growth centers on developing key project areas Read more

Management

After John Browne's resignation, Tony Hayward was promoted to group chief executive in May 2007 to instill a new direction for the firm. Tony Hayward joined BP in 1982 and came up through the E&P business to eventually head that unit as chief executive Read more

Profile

London-based BP is the third-largest integrated oil major behind ExxonMobil and Royal Dutch Shell. BP's business began in 1909 and evolved to its current form and name after Read more

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