BP (BP)

	SUMMARY

	BULLS

	BEARS

	TOPICS

	DATA CENTRAL

	STOCK CHART

	SEC FILINGS

	BALANCE

	INCOME

	CASH FLOW

Revision as of 10:34, March 20, 2012

BP (NYSE:BP) is one of the world's largest oil and gas companies in terms of production capacity and revenue. BP explores for oil and natural gas in approximately 30 countries and posses proved reserves of 18.1 billion barrels of oil equivalent. Through its 16 refineries, BP processes 4 million barrels of crude oil per day. It markets these products in 80 countries and through its network of 22,400 gas stations.^[1]

In 2010, one of BP's deepwater rigs in the Gulf of Mexico exploded, killing 11 workers and spilling millions of gallons into the Gulf of Mexico. The explosion and spill not only resulted in severe financial fines, but also hurt the company's reputation. Under CEO Robert Dudley, BP is undergoing a strategic change to pay for economic losses attributable to the explosion and improve its reputation.

1 Company Overview
- 1.1 Business Segments
2 Key Trends and Forces
3 Competition
4 References

Company Overview

In the aftermath of the Horizon disaster in the US Gulf of Mexico, BP's 2010 earnings reflect both the extent of the disaster on BP's financial strength as well as the implementation of a new global strategy. In 2010, BP reported a loss before interest and taxation of $3.7 billion, compared to a profit of $26.4 billion in 2009. While the earnings in every segment rose compared to 2009 performance, BP recorded a loss of $40.8 billion before interest and taxation in response to the US Gulf oil spill. Profit from exploration and production rose to $30.89 billion from $24.80 billion in 2009 partially due to higher crude oil prices. Due to improved margins over the year, refining and marketing reported earnings of $5.55 billion, compared to $743 in 2009.

For 2011, the spill in the Gulf and potential regulations has the potential of impacting BP's financial performance. In addition, BP inked a multibillion deal with Rosneft in early 2011.^[2]

Business Segments

Exploration and production (2010 sales of $66.26 Billion): Through its Exploration and Production segment, BP engages in the search for undeveloped oil and gas reservoirs, the development of reservoirs, and the production and transportation of oil and natural gas from developed wells. BP’s upstream activities include the exploration and extraction of crude oil and natural gas from wells in eight different countries.

In 2010, BP reported sales from operations of $66.26 billion, compared to $57.6 billion in 2009. Realizations on crude oil increased substantially year-over-year, rising from $59.86 per barrel in 2009 to $77.54 per barrel in 2010. Realizations on NGLs also increased. Average realization for NGL was $42.78 per barrel in 2010, compared to $29.60 per barrel in 2009. Overall production dropped slightly in 2010. BP reported production of 3.82 million barrels per day in 2010 compared to production of 3.99 million barrels per day in 2009.

Refining and Marketing (2010 sales of $266 million): BP’s Refining and Marketing operations include the processing of crude oil into refined petroleum products and the sale of those products to wholesalers and retailers located in over 100 countries around the world.

In 2010, global oil demand increased by 2.8 million barrels per day. In response to higher demand, petro-product prices rose internationally.^[3] BP's annual global indicator refining margins were $4.44 per barrel, compared to $4.00 per barrel in 2009.In addition, total refinery throughputs 2.43 million barrels per day in 2010, compared to 2.29 million barrels per day in 2009. Replacement cost profit before interest and tax for 2010 was $5.55 billion, compared with $743 million for 2009.

Key Trends and Forces

Rosneft deal means short-term costs, but potential long term gain

BP's $16 billion share swap and joint-venture deal with Rosneft has the potential of producing substantial long term gains for the company and its Russian partner. However, BP has to bear much of the short-term costs. Since BP is exchanging 5% of its shares with 9.5% of Rosneft's better rated stock, the stock swap is likely to prove dilutive for BP's earnings per share. In addition, BP has to pay for the early costs of developing oil and gas reserves in Russia Kara Sea; costs which are estimated at $2 billion. However, the blocks BP-Rosneft plan on exploring have the potential of containing as much oil and gas as three times Rosneft and BP's 2010 combined reserve base. As a result, BP has inked a deal with substantial growth opportunities in a sector made up by state-owned companies. Because the deal is long-term, both political and financial risk remain largely unknown. BP has a 37% stake in the venture, which gives it less control over the ventures direction. In addition, the price and demand of oil have the potential of changing substantially in the long-term. These factors are likely to play an important role in how profitable the venture becomes for BP.

As of February 2011, the deal with Rosneft is on hold due to a British court order won AAR, the Russian shareholders who own half of the TNK-BP project. AAR has charged that the deal with Rosneft violates its exclusive agreement with them. While there are several proposed resolutions, including the sale of AAR's stake to BP or Rosneft, the legal troubles BP has faced with the TNK-BP project illustrate the potential dangers surrounding large-international oil ventures. Because the TNK-BP project involves a high degree of complexity in regards to ownernship control and international regulations, legal problems have plagued the project for a long time and have the potential of impacting the project's operations as well as the operations of the Rosneft deal.^[4] Russian energy czar Igor Sechin urged both BP and AAR to come to an agreement and not let their legal battles hinder BP's deal with Rosneft. To support his warnings, Sechin has threatened legal action against BP and its partners if they sabotaged the $16 billion deal.

Damages from 2010 Offshore Gulf Explosion

In April 2010, a major fire on an oil rig in the Gulf of Mexico owned by BP and operated by Transocean has the potential of hampering the development of offshore oil production and costing both companies millions in order to fix the situation. Although the exact cause has not been determined, people at Transocean believe the blaze is from an uncontrolled burst of oil and gas from the well. The Gulf of Mexico produces 30% of the U.S. oil output and is an important source of revenue for oil majors like BP.^[5]

In July 2010, BP temporarily capped the oil spill using a pipe "cork." To control pressure, oil is released through pipes up to ships, which collect it. As of July 18, 2010, BP plans to use this method until mud and cement are used to plug the well for good. With spill capped successfully, the BP outlined its $20 billion fund set aside for to pay for damages to companies, organizations, and individuals significantly impacted by the spill. raise money for this fund, BP plans to sell up to $12 billion of assets to Apache (APA) in order to cover some of its liabilities.^[6]

In late July 2010, Tony Hayward, who has held the position of CEO since 2007, announced that he plans to step down as CEO effective October 2010. Hayward was succeeded by Bob Dudley, who previously ran the unit responsible for clean-up operations and compensation programs in the Gulf of Mexico. While Dudley has noted that cleaning up the Gulf Spill has the potential of being his first priority as CEO, the company has also suggested that its near-future strategy incorporates several divestitures deemed non-core or risky. The divestitures have the potential of raising cash to pay for BP's $20 billion Gulf-relief fund and reducing the company's risk exposure to another drilling accident. As suggested in interviews and press releases, BP's strategy includes selling assets in places such as Egypt and Vietnam that BP bought in recent years to diversify its reserve base. Assets that have the highest potential for up for sale are those that BP deemed risky or non-core.^[7] While it is still uncertain how much BP plans to sell, it appears clear a focus on core assets and operations has the potential of becoming a principle strategy of a Dudley-run BP.

Through joint ventures, BP enters the oilsands production market

In 2009 and 2010, BP inked several deals with oilsand production companies that have the potential of increasing BP's exposure to that type of production. Since March 2010, the deals struck by BP have typically followed a "combination" approach, which basically slice the management of particular asset between the two companies while allowing both to receive revenue from them. The result of these deals make it possible for both companies to retain a portfolio of assets without requiring that they have to run all of the assets. BP announced in March 2010 a $7 billion dollar deal with Devon Canada Corporation. The two companies agreed to work together on the Kirby oilsands lease south of Fort McMurray, Alta. However, Devon is designated as the project´s operator. From the deal, Devon's share of the oilsands production market as well as the size of BP's offshore production operations have the potential of expanding. BP has made similar deals involving oilsands production. In 2007, BP and Husky Energy Inc. struck a deal evenly splitting the ownership of BP´s refineries in the United States and Husky´s oilsands leases. However, each company would operate their own side of the venture. In March 2010, BP agreed to make capital contributions to Value Creation Inc., a privately held production company, in exchange for an operating stake in Value Creation's oilsand's leases.^[8]

To increase production BP's moves operations abroad, exposing the company to political risks

As one an oil majors, BP controls oil resources in countries around the world. 72% of BP's oil comes from North America and Europe, but the company's exploration and production segment has a strong incentive to push forward and explore in countries that are less politically stable. By expanding around the globe, BP has the potential of increasing its production capacity and reserve life.^[9] At the end of 2008, BP had invested 67% of its capital in Organizations for Economic Cooperation and Development(OECD) countries, and its U.S. and Europe operations are the company’s largest. . While its refining operations are located almost completely in the U.S. and Europe, BP’s has exploration and production operations are located in 29 countries. Major development projects are located in the Gulf of Mexico, Azerbaijan, Algeria, Angola, and parts of Pacific Asia. Although BP’s expanding global reach is capable of increasing its production capabilities, political instability in many of these countries has the potential of damaging or destroying BP’s operations. The company believes its operations most exposed to political risk are located in Iran, Cuba, Syria, and Russia.^[10]

BP is Vulnerable to Natural Disasters, like the Hurricane Season

The Gulf of Mexico, where 21% of BP's 2008 production occured^[11], is prone to violent hurricanes during the last few months of summer. These storms can damage drilling rigs and refineries, and injure workers. Like most oil companies in the region, BP reduces production during hurricane months. Still, some storms can do real harm. In 2008, Hurricane Ike and Gustav resulted in a significant amount of rig shut downs. The impact of both hurricanes was a reduction equivalent to approximately 24mboe per day for 2008.^[12] BP's Thunder Horse operations, completed in 2009, are also susceptible to hurricane destruction. iioooo

Competition

BP competes with global players Exxon Mobil (XOM), Chevron, Royal Dutch Shell (RDS'A) , Sunoco (SUN), Valero Energy (VLO), Petrobras (PBR), LUKOIL, and ConocoPhillips (COP).

References

Energy Companies
Anadarko Petroleum • BP • ChevronTexaco • Arch Coal • Cameco • ConocoPhillips • Enbridge • Consolidated Edison • Entergy • Exelon • Exxon Mobil • Frontier Oil • GE • Halliburton • Philips • Massey Energy • Occidental Petroleum • PG&E • Peabody Energy • Shell • Sasol • Schlumberger • Sinopec • Suncor • Sunoco • SunPower • Suntech • Suzlon • Toshiba • Valero • Xcel

Retrieved from "http://www.wikinvest.com/stock/BP_(BP)"

Categories: Energy | Mature | Oil & Gas Majors

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.

Mobile | Advertise | Licensing & Partnerships | Blogger Tools | Jobs

-{{hide_logo|path=[[Image:bp logo.jpg|left]]}}'''BP (NYSE:BP)''' is one of the world's largest [http://www.wikinvest.com/industry/Oil_%26_Gas_Majors oil and gas] companies in terms of production capacity. In 2009, the company's exploration and production segment produced approximately 2.53 million barrels of oil per day as well as 8.48 million cubic feet of natural gas per day while the company's refining throughput averaged 2.28 million barrels/day.<ref>[http://www.marketwatch.com/story/bp-swings-to-profit-on-oil-price-rise-cost-cuts-2010-02-02?dist=WSJfeed&siteid=WSJ Market Watch: BP swings to profit on oil price rise, cost cuts, January 2009]</ref>  BP expands its production capacity through improved  rig equipment and technology as well as expansions into other countries.<ref>[http://www.bp.com/bodycopyarticle.do?categoryId=4428&contentId=7050397 BP Annual Review 2008]</ref>  As of April 2009, BP's operates in 29 countries including Mexico, Russia, Algeria, and many others in the Middle East and Africa.<ref>[http://www.bp.com/bodycopyarticle.do?categoryId=4428&contentId=7050397 BP Annual Review 2008]</ref> While BP's global reach gives the company an ability to access "untapped" reserves, many of its operations are exposed to political risk in those countries. In particular, BP's Russian operations faced significantly managerial problems in  2008, but these tensions eased in January 2010 with the appointment of Maxim Barsk to CEO.<ref>[http://www.bp.com/bodycopyarticle.do?categoryId=4428&contentId=7050397 BP Annual Review 2008]</ref>
+'''BP (NYSE:BP)''' is one of the world's largest [http://www.wikinvest.com/industry/Oil_%26_Gas_Majors oil and gas] companies in terms of production capacity and revenue. BP explores for oil and natural gas in approximately 30 countries and posses proved  reserves of 18.1 billion barrels of oil equivalent. Through its 16 refineries, BP processes 4 million barrels of crude oil per day. It markets these products in 80 countries and through its network of 22,400 gas stations.<ref>[http://www.hoovers.com/company/BP_plc/hxxkti-1.html Hoovers: Company Profile: BP, March 2011]</ref>
-BP's production and refining operations are exposed to world-wide oil and natural gas prices and consumption.<ref>[http://www.bp.com/bodycopyarticle.do?categoryId=4428&contentId=7050397 BP Annual Review 2008]</ref>  Due to low consumption of oil and natural gas products in late 2008 and early 2009, BP  laid off  thousands of workers and cut capital expenditures significantly as part of the company's plan to reduce annual costs from $32 billion in 2007 to $28 billion in 2009.<ref>[http://www.marketwatch.com/story/bp-swings-to-profit-on-oil-price-rise-cost-cuts-2010-02-02?dist=WSJfeed&siteid=WSJ Market Watch: BP swings to profit on oil price rise, cost cuts, January 2009]</ref>  BP's fourth quarter profit of $4.3 billion quarterly reflected both the success of these strategies as well as a improvement in oil prices.<ref>[http://www.marketwatch.com/story/bp-swings-to-profit-on-oil-price-rise-cost-cuts-2010-02-02?dist=WSJfeed&siteid=WSJ Market Watch: BP swings to profit on oil price rise, cost cuts, January 2009]</ref> Although energy consumption is low relative to 2007 levels, the company believes that world energy demand could be 45% higher by 2030, and its world-wide operations have the potential of giving it an advantage over its competitors.<ref>[http://www.bp.com/bodycopyarticle.do?categoryId=4428&contentId=7050397 BP Annual Review 2008]</ref> In 2009 and early 2010, BP formed several joint ventures in both the oilsands and biofuel production markets in order to improve its production capacity and enter non-traditional energy production markets.<ref>[http://www.oilweek.com/news.asp?ID=27305 Oilweek.com: Devon VP sees Kirby following same formula as Jackfish oilsands operation, March 2010]</ref> BP has also created a separate business that specializes in alternative, renewable forms of energy known as BP Alternative.<ref>[http://www.bp.com/productlanding.do?categoryId=7041&contentId=7046652 BP alternative: About Us]</ref> Through investments of $2.9 billion from 2005 to 2009, BP Alternative is capable of profiting from the use of [[renewable energy]] and reducing BP's reliance on oil and gas.<ref>[http://www.bp.com/productlanding.do?categoryId=7041&contentId=7046652 BP alternative: About Us]</ref>
+In 2010, one of BP's deepwater rigs in the Gulf of Mexico exploded, killing 11 workers and spilling millions of gallons into the Gulf of Mexico. The explosion and spill not only resulted in severe financial fines, but also hurt the company's reputation. Under CEO Robert Dudley, BP is undergoing a strategic change to pay for economic losses attributable to the explosion and improve its reputation.
 ==Company Overview==
-In 2009, both rising oil prices and BP's ability to cut costs during the fourth quarter contributed significantly to the $4.3 billion quarterly profit.<ref>[http://www.marketwatch.com/story/bp-swings-to-profit-on-oil-price-rise-cost-cuts-2010-02-02?dist=WSJfeed&siteid=WSJ Market Watch: BP swings to profit on oil price rise, cost cuts, January 2009]</ref> During the same quarter in 2008, BP reported losses of  $3.34 billion.<ref>[http://www.marketwatch.com/story/bp-swings-to-profit-on-oil-price-rise-cost-cuts-2010-02-02?dist=WSJfeed&siteid=WSJ Market Watch: BP swings to profit on oil price rise, cost cuts, January 2009]</ref>  For the quarter, oil prices increased 12% sequentially. Daily production rose 2.5% sequentially to 4.05 million barrels of oil equivalent. While the rise in oil prices benefited its production segment, rising prices coupled with low sales led to sub par performance in its refining division.<ref>[http://www.marketwatch.com/story/bp-swings-to-profit-on-oil-price-rise-cost-cuts-2010-02-02?dist=WSJfeed&siteid=WSJ Market Watch: BP swings to profit on oil price rise, cost cuts, January 2009]</ref>  In regards to natural gas, prices fell 28% in the fourth quarter 2009.<ref>[http://www.marketwatch.com/story/bp-swings-to-profit-on-oil-price-rise-cost-cuts-2010-02-02?dist=WSJfeed&siteid=WSJ Market Watch: BP swings to profit on oil price rise, cost cuts, January 2009]</ref>
-BP's ability to reduce operating costs by 40% over the course of 2009 also contributed to annual and quarterly profits.<ref>[http://www.marketwatch.com/story/bp-swings-to-profit-on-oil-price-rise-cost-cuts-2010-02-02?dist=WSJfeed&siteid=WSJ Market Watch: BP swings to profit on oil price rise, cost cuts, January 2009]</ref> For 2009, BP reported earnings $16.58 billion, down 22% from 2008. Annual daily production for 2009 increased approximately 4% from 2008 averaging 3.98 mboe/d. Tony Hayward, the CEO of BP, attribute the rise in production to superior  production performance from its wells and rigs and the relative low damage to rigs during hurricane season.<ref>[http://www.marketwatch.com/story/bp-swings-to-profit-on-oil-price-rise-cost-cuts-2010-02-02?dist=WSJfeed&siteid=WSJ Market Watch: BP swings to profit on oil price rise, cost cuts, January 2009]</ref> The refining and marketing unit earned $15 million before interest and taxes, which was much lower than Wall Street expectations of $571 million. For 2009, the average refining margin was $1.49 per barrel compared to $5.20 in 2008.<ref>[http://www.marketwatch.com/story/bp-swings-to-profit-on-oil-price-rise-cost-cuts-2010-02-02?dist=WSJfeed&siteid=WSJ Market Watch: BP swings to profit on oil price rise, cost cuts, January 2009]</ref>
+In the aftermath of the Horizon disaster in the US Gulf of Mexico, BP's 2010 earnings reflect both the extent of the disaster on BP's financial strength as well as the implementation of a new global strategy. In 2010, BP reported a loss before interest and taxation of $3.7 billion, compared to a profit of $26.4 billion in 2009. While the earnings in every segment rose compared to 2009 performance, BP recorded a loss of $40.8 billion before interest and taxation in response to the US Gulf oil spill. Profit from exploration and production rose to $30.89 billion from $24.80 billion in 2009 partially due to higher crude oil prices. Due to improved margins over the year, refining and marketing reported earnings of $5.55 billion, compared to $743 in 2009.
-'''Quarterly Analysis'''
+For 2011, the spill in the Gulf and potential regulations has the potential of impacting BP's financial performance. In addition, BP inked a multibillion deal with Rosneft in early 2011.<ref>[http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/downloads/pdf/BP_Summary_Review_2010.pdf BP Summary Review
-''3Q 2010:''  Excluding non-operating items totaling $3.7 billion, replacement cost profit for BP was $5.5 billion compared to $3.7 billion in the third quarter 2009.<ref>[http://www.forbes.com/2010/11/02/bp-earnings-oil-markets-equities-energy.html Forbes:Oil Spill Still A Drain On BP Earnings,  November 2010]</ref> Over the quarter, BP incrred costs of $8.7 billion tied to the oil spill.<ref>[http://www.forbes.com/2010/11/02/bp-earnings-oil-markets-equities-energy.html Forbes:Oil Spill Still A Drain On BP Earnings,  November 2010]</ref> Total income for the third quarter 2010 was $4 billion compared to $6.4 billion in the comparable quarter for 2009. For the third quarter 2010, BP realized average per-barrel price of $70.47 for crude oil and $3.92 per mcf for natural gas.<ref>[http://www.forbes.com/2010/11/02/bp-earnings-oil-markets-equities-energy.html Forbes:Oil Spill Still A Drain On BP Earnings,  November 2010]</ref>
+, February 2011]</ref>
-''2Q 2010:''  The financial burden of the Gulf oil spill are well reflected in BP's 2010 second quarter results. When reporting the result, BP announced that it was taking a charge of $32.2 billion to reflect the impact of the oil spill, include, including costs to date of $2.9 billion for the response and a charge of $29.3 billion for future costs, including the funding of the $20 billion escrow fund.<ref>[http://www.bp.com/extendedgenericarticle.do?categoryId=2012968&contentId=7063921 BP.com: BP announced today that it has taken a pre-tax charge of $32.2 billion for the Gulf of Mexico oil spill, including the $20 billion escrow compensation fund previously announced, July 2010]</ref>  As a result, BP reported a headline replacement cost loss for the second quarter in 2010 of $17 billion.<ref>[http://www.bp.com/extendedgenericarticle.do?categoryId=2012968&contentId=7063921 BP.com: BP announced today that it has taken a pre-tax charge of $32.2 billion for the Gulf of Mexico oil spill, including the $20 billion escrow compensation fund previously announced, July 2010]</ref>  Second-quarter underlying replacement cost profit was $5 billion after adjusting for all non-operating items and fair value accounting effects, compared to $2.9 billion in the second quarter of 2009.<ref>[http://www.bp.com/extendedgenericarticle.do?categoryId=2012968&contentId=7063921 BP.com: BP announced today that it has taken a pre-tax charge of $32.2 billion for the Gulf of Mexico oil spill, including the $20 billion escrow compensation fund previously announced, July 2010]</ref>  From an operations perspective, oil and gas prices rose and overall production declined, which led to a loss in the company's Exploration and Production business.  Strong sales of lubricants and petrochemcials contributed to the increase in profits in the Refining and Marketing segment.<ref>[http://www.bp.com/extendedgenericarticle.do?categoryId=2012968&contentId=7063921 BP.com: BP announced today that it has taken a pre-tax charge of $32.2 billion for the Gulf of Mexico oil spill, including the $20 billion escrow compensation fund previously announced, July 2010]</ref>  BP generated  $8.9 billion in second quarter operating cash flow, an increase of 31% compared with the same quarter 2009.<ref>[http://www.bp.com/extendedgenericarticle.do?categoryId=2012968&contentId=7063921 BP.com: BP announced today that it has taken a pre-tax charge of $32.2 billion for the Gulf of Mexico oil spill, including the $20 billion escrow compensation fund previously announced, July 2010]</ref>  In the second half of 2010, BP used its operating cash flow to reduce its net debt by $2.9 billion. A strong balance has the potential of being a vital strategy for BP, and the company plans to reduce its net debt level down to a range of $10-$15 billion within the next 18 months, compared to net debt of $23 billion at the end of June 2010.<ref>[http://www.bp.com/extendedgenericarticle.do?categoryId=2012968&contentId=7063921 BP.com: BP announced today that it has taken a pre-tax charge of $32.2 billion for the Gulf of Mexico oil spill, including the $20 billion escrow compensation fund previously announced, July 2010]</ref>
-''1Q 2010:'' Due to higher oil prices, BP's first quarter 2010 profits were $6.08 billion compared to $2.56 billion in the first quarter of 2009.<ref>[http://www.dailyfinance.com/story/company-news/bp-profits-soar-but-rig-explosion-oil-spill-fears-push-shares/19455997/ dailyfinance.com: BP Earnings Soar, but Rig Explosion, Oil Spill Fears Drive Shares Down, April 2010]</ref> Oil prices nearly doubled their 2009 levels; oil prices averaged $78 per barrel in first quarter of 2010 versus $40 per barrel in 2009.<ref>[http://www.dailyfinance.com/story/company-news/bp-profits-soar-but-rig-explosion-oil-spill-fears-push-shares/19455997/ dailyfinance.com: BP Earnings Soar, but Rig Explosion, Oil Spill Fears Drive Shares Down, April 2010]</ref> The year-over-year rise in oil prices has resulted from increases in energy demand as well as declines in inventory. In terms of production, the first quarter did not show significant increases in production; rather, they reflected an increase in startup projects.<ref>[http://www.dailyfinance.com/story/company-news/bp-profits-soar-but-rig-explosion-oil-spill-fears-push-shares/19455997/ dailyfinance.com: BP Earnings Soar, but Rig Explosion, Oil Spill Fears Drive Shares Down, April 2010]</ref>  New projects coming underway include a few deepwater Gulf of Mexico wells as well as the company's Noel natural gas project in Canada.<ref>[http://www.dailyfinance.com/story/company-news/bp-profits-soar-but-rig-explosion-oil-spill-fears-push-shares/19455997/ dailyfinance.com: BP Earnings Soar, but Rig Explosion, Oil Spill Fears Drive Shares Down, April 2010]</ref>
-<center>
-{| class="toccolours" border="1" cellpadding="3" style="border-collapse:collapse"
-|+ '''BP Historical Performance'''{{fact}}
-|- bgcolor= lightblue
-!
-!2005
-!2006
-!2007
-!2008
-!2009
-|-
-|'''Crude Oil Production'''<br>(Thousand barrels per day)
-|2,562
-|2,475
-|2,414
-|2,401
-|2,535
-|-
-|'''Natural Gas Production'''<br>(Million cubic feet per day)
-|8,424
-|8,417
-|8,143
-|8,334
-|8,485
-|-
-|'''Refinery Throughput'''<br>(Thousand barrels per day)
-|2,399
-|2,198
-|2,127
-|2,155
-|2,287
-|-
-|'''Refinery Capacity Utilization'''
-|88%
-|78%
-|84%
-|N/A
-|N/A
-|-
-|'''Number of Retail Sites'''
-|25,200
-|24,600
-|24,100
-|N/A
-|N/A
-|}
-</center>
 ===Business Segments===
-'''Exploration and production(22% of 2008 Revenues):''' Through its Exploration and Production segment, BP engages in the search for undeveloped oil and gas reservoirs, the development of reservoirs, and the production and transportation of oil and natural gas from developed wells.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 13-14]</ref> BP’s upstream activities include the exploration and extraction of crude oil and natural gas from wells in eight different countries.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 13-14]</ref> In 2008, the company completed nine major production projects. On December 31, 2008, production began at four wells in BP's Thunder Horse field, the world’s largest semi-submersible oil platform in terms of reserves, with production capacity around 200,000 barrels of oil equivalent per day.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 13-14]</ref>  BP processes and transports the extracted crude oil and natural gas through a series of pipeline networks, processing facilities and terminals, and LNG facilities.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 13-14]</ref>
+'''Exploration and production (2010 sales of $66.26 Billion):''' Through its Exploration and Production segment, BP engages in the search for undeveloped oil and gas reservoirs, the development of reservoirs, and the production and transportation of oil and natural gas from developed wells. BP’s upstream activities include the exploration and extraction of crude oil and natural gas from wells in eight different countries.
-High energy prices and increased production resulted in record profits for BP in 2008. Profit before tax and interest was $37.9 billion, 39% higher when compared to annual profit for 2007. BP’s 2008 profits were higher primarily because of rising oil prices, which peaked at $147 per barrel in July 2008.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 13-14]</ref> For BP, the average prices of crude oil and natural gas liquids in 2008 respectively increased 30.8% and 8.5% when compared to average prices in 2007.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 13-14]</ref>  Production of natural gas and oil increased 5% and also contributed to 2008 profits.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 13-14]</ref> Production in 2008 totaled 3,838 million of barrels of oil equivalent per day. <ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 13-14]</ref>In September 2009, BP announced the discovery of a deepwater oil field in the Gulf of Mexico. The oil field, which is capable of holding 3 billion barrels of oil equivalent, is 4,000 feet below water.<ref>[http://marketplace.publicradio.org/display/web/2009/09/02/am-bp-oil/ Marketplace.publicradio.org: BP weighs profits of deep sea oil, September 2009]</ref>  Putting the oil from this discovery on the market has the potential of taking up to 10 years.<ref>[http://marketplace.publicradio.org/display/web/2009/09/02/am-bp-oil/ Marketplace.publicradio.org: BP weighs profits of deep sea oil, September 2009]</ref>
+In 2010, BP reported sales from operations of $66.26 billion, compared to $57.6 billion  in 2009. Realizations on crude oil increased substantially year-over-year, rising from $59.86 per barrel in 2009 to $77.54 per barrel in 2010. Realizations on NGLs also increased. Average realization for NGL was $42.78 per barrel in 2010, compared to $29.60 per barrel in 2009. Overall production dropped slightly in 2010. BP reported production of 3.82 million barrels per day in 2010 compared to production of 3.99 million barrels per day in 2009.
-In December 2009, BP sold its interest in Kazakhstan's Tengiz oil field and pipeline carrying oil between Kazakhstan and Russia for $1.6 billion to [[Lukoil]].<ref>[http://online.wsj.com/article/BT-CO-20091211-709020.html WSJ: BP Sells Lukarco To LukOil For $1.6B, December 2009]</ref>
+'''Refining and Marketing (2010 sales of $266 million):''' BP’s Refining and Marketing operations include the processing of crude oil into refined petroleum products and the sale of those products to wholesalers and retailers located in over 100 countries around the world.
-In March 2010, BP announced the closing of a deal with [[Devon Energy]] that consisted of exchanges in cash and assets held by the companies. For $7 billion in cash, BP acquires some of [[Devon Energy]]'s assets in Brazil, Azerbaijan and the US deepwater Gulf of Mexico.<ref>[http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7060559 BP Press Release:  BP today announced a transaction that will deliver a material exploration position in the deepwater offshore Brazil and significantly enhance its position in core strategic areas, March 2010]</ref> In addition,  Devon Energy acquires a 50 per cent stake in BP's Kirby oil sands interests in Alberta, Canada, for $500 million.<ref>[http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7060559 BP Press Release:  BP today announced a transaction that will deliver a material exploration position in the deepwater offshore Brazil and significantly enhance its position in core strategic areas, March 2010]</ref> The deal makes BP's Kirby interest a 50/50 joint venture with Devon as the operator. From these transactions, both companies acquire interests in areas they specialize in. BP acquires several new deepwater oil and gas projects while Devon, whose 2010 strategy has been to focus on land-based oil and gas, increases its oil sands assets.<ref>[http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7060559 BP Press Release:  BP today announced a transaction that will deliver a material exploration position in the deepwater offshore Brazil and significantly enhance its position in core strategic areas, March 2010]</ref>
+In 2010, global oil demand increased by 2.8 million barrels per day. In response to higher demand, petro-product prices rose internationally.<ref>[http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/downloads/pdf/BP_Annual_Report_and_Form_20F.pdf BP Press Release: Annual Report, February 2011]</ref> BP's annual global indicator refining margins were $4.44 per barrel, compared to $4.00 per barrel in 2009.In addition, total refinery throughputs 2.43 million barrels per day in 2010, compared to 2.29 million barrels per day in 2009. Replacement cost profit before interest and tax for 2010 was $5.55 billion, compared with $743 million for 2009.
-In April 2010, BP announced that it will temporarily cut production at its Thunder Horse platform due to maintenance on its undersea manifolds.<ref>[http://www.reuters.com/article/idUSN0920700620100409?type=marketsNews Reuters.com: UPDATE 1-BP to cut Thunder Horse output by half -sources, April 2010]</ref>  Production at the Thunder Horse platform, which is capable of producing 250,000 barrels of oil per day, is going to be cut in half during the maintenance.<ref>[http://www.reuters.com/article/idUSN0920700620100409?type=marketsNews Reuters.com: UPDATE 1-BP to cut Thunder Horse output by half -sources, April 2010]</ref> The temporary cut in production is expected to reduce annual production by 10,000 BOE/day.<ref>[http://www.reuters.com/article/idUSN0920700620100409?type=marketsNews Reuters.com: UPDATE 1-BP to cut Thunder Horse output by half -sources, April 2010]</ref> The maintenance was expected, and BP has accounted for the reduction in production in their 2010 projections.<ref>[http://www.reuters.com/article/idUSN0920700620100409?type=marketsNews Reuters.com: UPDATE 1-BP to cut Thunder Horse output by half -sources, April 2010]</ref>
-'''Refining and Marketing( 78% of 2008 Revenues):''' BP’s Refining and Marketing operations include the processing of crude oil into refined petroleum products and the sale of those products to wholesalers and retailers located in over 100 countries around the world. In 2008, the Refining and Marketing segment was reorganized into the fuels value chains (FVCs) and international businesses (IBs)  groups.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 27-28]</ref> The FVCs integrate the activities of refining, logistics, marketing, supply and trading, on a regional basis.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 27-28]</ref> The IBs include the manufacturing, supply and marketing of lubricants, petrochemicals, liquefied petroleum gas (LPG) and aviation and marine fuels.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 27-28]</ref> In total, BP operates 17 refineries worldwide with total throughput capacity of 2,155 million barrels per day.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 27-28]</ref> As of December 31, 2008, BP’s worldwide retail network consisted of 22,600 stations branded BP, Amoco, ARCO and Aral.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 27-28]</ref>
-In 2008, crude oil prices had a significant effect on the profits BP made from processing and selling petroleum products like diesel and gasoline.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 27-28]</ref> While revenue increased 27.7% in 2008, BP had a net loss of $1.9 billion for 2008,compared to a net profit of $6.1 billion in 2007.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 27-28]</ref> Rising crude prices in the first half of 2008 cut the price differential between the selling price of refined petroleum products and the cost of making those products and lead to BP's net loss in 2008.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, pages 27-28]</ref>  BP’s profitability was also negatively effected by the declining value of BP’s inventories when gasoline prices dropped in the second half of 2008.
-'''BP Alternative Energy:''' In 2008, BP created BP Alternative Energy, a separate company that focuses on low-carbon energy sources.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, page 33]</ref>  In 2008, BP invested $1.4 billion in BP Alternative Energy as  part of BP's commitment to spend $8 billion between 2005 and 2015 on the development of alternative energy sources like wind, solar, biofuels, and carbon capture and storage systems.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, page 33]</ref>  In 2008, BP's solar capacity declined by 15 megawattts.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, page 33]</ref>  On the other hand, wind energy capacity increased 251% due to increased investments in the construction of wind farms and turbines.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, page 33]</ref>  In May 2009, BP's chief executive Tony Hayward said that solar power remains an inefficient source of energy compared to crude oil and natural gas.<ref>[http://www.ft.com/cms/s/0/d7b2a18e-3ff3-11de-9ced-00144feabdc0.html Financial Times: Sun sets on BP’s solar hopes, May 2009]</ref>  BP has been closing factories around the world, and announced a  cut in its investment in alternative energies  from $1.4bn in 2008 to $1bn in 2009.<ref>[http://www.ft.com/cms/s/0/d7b2a18e-3ff3-11de-9ced-00144feabdc0.html Financial Times: Sun sets on BP’s solar hopes, May 2009]</ref> In 2009, BP solar began using sub-contractors in China to manufacture its solar products. Outsourcing manufacturing has given BP the capacity to produce about double 2008 output.<ref>[http://www.ft.com/cms/s/0/d7b2a18e-3ff3-11de-9ced-00144feabdc0.html Financial Times: Sun sets on BP’s solar hopes, May 2009]</ref> However, BP Alternative Energy's production of energy and  profits have the potential of declining in 2009 when compared to 2008 as a result of weak demand for alternative energy sources, such as solar power.<ref>[http://www.ft.com/cms/s/0/d7b2a18e-3ff3-11de-9ced-00144feabdc0.html Financial Times: Sun sets on BP’s solar hopes, May 2009]</ref>
-Although a separate company, BP Alternative Energy reports its earnings to BP's  other
-businesses and corporate segment.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, page 33]</ref>  Revenue for 2008 was $5 billion, compared to $3 billion in 2007. However, BP's alternative energy operations had a net loss of $1,258 million in 2008 and $1,233 million in 2007.<ref>[http://www.bp.com/sectiongenericarticle.do?categoryId=2012810&contentId=2018941 BP 2008 20-F, page 33]</ref>
-in August 2009, BP formed a joint venture with [[Martek Biosciences (MATK)]] in order to develop biofuels out of sugars.<ref>[http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7055476 BP.com: BP and Martek Biosciences Enter a Joint Development Agreement to Deliver Advanced Biodiesels August 2009]</ref> While [[Martek Biosciences (MATK)]] has developed the technology to convert sugars into fuel, the joint venture seeks to build that technology for use on a large scale.<ref>[http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7055476 BP.com: BP and Martek Biosciences Enter a Joint Development Agreement to Deliver Advanced Biodiesels August 2009]</ref>
 == Key Trends and Forces ==
-===Offshore rig fire has potential of costing BP billions in damages, bringing forth new regulations  and management changes===
+===Rosneft deal means short-term costs, but potential long term gain===
-In April 2010, a major fire on an oil rig in the Gulf of Mexico owned by [[BP]] and operated by [[Transocean]] has the potential of hampering the development of offshore oil production and costing both companies millions in order to fix the situation.<ref>[http://online.wsj.com/article_email/SB10001424052748704133804575197613591134990-lMyQjAxMTAwMDIwODEyNDgyWj.html WSJ: Blast Jolts Oil World, April 2010]</ref>   Although the exact cause has not been determined, people at [[Transocean]] believe the blaze is from an uncontrolled burst of oil and gas from the well.
+BP's $16 billion share swap and joint-venture deal with Rosneft has the potential of producing substantial long term gains for the company and its Russian partner. However, BP has to bear much of the short-term costs. Since BP is exchanging 5% of its shares with 9.5% of Rosneft's better rated stock, the stock swap is likely to prove dilutive for BP's earnings per share. In addition, BP has to pay for the early costs of developing oil and gas reserves in Russia Kara Sea; costs which are estimated at $2 billion. However, the blocks BP-Rosneft plan on exploring have the potential of containing as much oil and gas as three times Rosneft and BP's 2010 combined reserve base. As a result, BP has inked a deal with substantial growth opportunities in a sector made up by state-owned companies.  Because the deal is long-term, both political and financial risk remain largely unknown. BP has a 37% stake in the venture, which gives it less control over the ventures direction. In addition, the price and demand of oil have the potential of changing substantially in the long-term. These factors are likely to play an important role in how profitable the venture becomes for BP.
-From 2007 to 2010, exploration in the Gulf region has increased as oil companies attempt to uncover new sources of oil deep under the ocean. <ref>[http://online.wsj.com/article_email/SB10001424052748704133804575197613591134990-lMyQjAxMTAwMDIwODEyNDgyWj.html WSJ: Blast Jolts Oil World, April 2010]</ref>   The number of deepwater rigs grew 43% over 2006 to April 2010. Oil produced from deepwater rigs has played an important role in U.S. oil and gas output. The Gulf of Mexico produces 30% of the U.S. oil output and is an important source of revenue for [[oil majors]] like BP.<ref>[http://online.wsj.com/article_email/SB10001424052748704133804575197613591134990-lMyQjAxMTAwMDIwODEyNDgyWj.html WSJ: Blast Jolts Oil World, April 2010]</ref>  As offshore drilling has gained popularity, it has been harder for contractors to find experienced workers willing and able to work these rigs safely.  Not only does the fire illustrate the potential dangers these rigs pose, but also it has the potential of creating more strict safety and environmental regulations to avoid possible dangers to human life and the surrounding marine environment.<ref>[http://online.wsj.com/article_email/SB10001424052748704133804575197613591134990-lMyQjAxMTAwMDIwODEyNDgyWj.html WSJ: Blast Jolts Oil World, April 2010]</ref>  From strictly a production standpoint, preventing production fires and overall rig safety are crucial for producers to meet their annual production expectations. While the loss of any single rig is unlikely to significantly reduce annual output for many of the majors, this plant has the potential of costing BP $600 million to replace and potentially thousands of barrels of oil lost during the fire and repair.<ref>[http://online.wsj.com/article_email/SB10001424052748704133804575197613591134990-lMyQjAxMTAwMDIwODEyNDgyWj.html WSJ: Blast Jolts Oil World, April 2010]</ref>   In addition, BP is spending $6 million a day deploying 32 ships and 5 aircraft in order to remove the thickest parts of the oil slick and spray dispersant chemicals over the less affected areas. Also the company has deployed two rigs to drill $100 million relief wells that will stem the flow of oil.<ref>[http://blogs.wsj.com/source/2010/04/29/political-consequences-loom-as-gulf-oil-slick-spreads-faster/?mod=wsjcrmain WSJ:Political Consequences Loom As Gulf Oil Slick Spreads Faster, April 2010]</ref>
+As of February 2011, the deal with Rosneft is on hold due to a British court order won AAR, the Russian shareholders who own half of the TNK-BP project. AAR has charged that the deal with Rosneft violates its exclusive agreement with them. While there are several proposed resolutions, including the sale of AAR's stake to BP or Rosneft, the legal troubles BP has faced with the TNK-BP project illustrate the potential dangers surrounding large-international oil ventures. Because the TNK-BP project involves a high degree of complexity in regards to ownernship control and international regulations, legal problems have plagued the project for a long time and have the potential of impacting the project's operations as well as the operations of the Rosneft deal.<ref>[http://www.marketwatch.com/story/russian-energy-czar-warns-bp-2011-02-21 marketwatch: Russian Energy Czar Warns BP, Partners, Feb 2011]</ref> Russian energy czar Igor Sechin urged both BP and AAR to come to an agreement and not let their legal battles hinder BP's deal with Rosneft. To support his warnings, Sechin has threatened legal action against BP and its partners if they sabotaged the $16 billion deal.
-About half way through July, BP's stock priced showed signs of a potential rebound amid a successful plug and talks of asset sales.  In July, BP  temporarily capped the oil spill using a pipe "cork."  To control pressure, oil is released through pipes up to ships, which collect it. As of July 18, 2010, BP plans to use this method until mud and cement are used to plug the well for good.<ref>[http://www.google.com/hostednews/ap/article/ALeqM5gIXWYBTpLtSayJtg41LKXpxSxVPAD9H1FMTG0 AP:BP: Well cap may bottle oil until permanent plug, July 2010]</ref> With the cap showing signs of success, the next steps for BP involve payments from its $20 billion fund and cleaning up the oil spill.<ref>[http://latimesblogs.latimes.com/greenspace/2010/07/gulf-oil-spill-cash-may-flow-from-bp-fund-soon.html LA Times: Gulf oil spill: Cash may flow from BP fund soon, July 2010]</ref>  To raise money for this fund, BP plans to sell up to $12 billion of assets to [[Apache (APA)]] in order to cover some of its liabilities.<ref>[http://www.marketwatch.com/story/bp-apache-12-billion-deal-may-come-by-july-27-2010-07-18 Market Watch:BP, Apache $12 billion deal may come by July 27,  July 2010]</ref>
+===Damages from 2010 Offshore Gulf Explosion===
-In late July 2010, Tony Hayward, who has held the position of CEO since 2007, announced that he plans to step down as CEO effective October 2010.<ref>[http://www.chron.com/disp/story.mpl/business/steffy/7143660.html chron.com: 'Shrinking to grow' becoming BP strategy for survival, August 2010]</ref> Hayward is likely to be succeeded by Bob Dudley, who currently runs the unit responsible for clean-up operations and compensation programs in the Gulf of Mexico.<ref>[http://www.chron.com/disp/story.mpl/business/steffy/7143660.html chron.com: 'Shrinking to grow' becoming BP strategy for survival, August 2010]</ref> While Dudley has noted that cleaning up the Gulf Spill has the potential of being his first priority as CEO, the company has also suggested that its near-future strategy incorporates several divestitures deemed non-core or risky.<ref>[http://www.chron.com/disp/story.mpl/business/steffy/7143660.html chron.com: 'Shrinking to grow' becoming BP strategy for survival, August 2010]</ref> The divestitures have the potential of raising cash to pay for BP's $20 billion Gulf-relief fund and reducing the company's risk exposure to another drilling accident.  As suggested in interviews and press releases, BP's strategy includes selling assets in places such as Egypt and Vietnam that BP bought in recent years to diversify its reserve base.<ref>[http://www.chron.com/disp/story.mpl/business/steffy/7143660.html chron.com: 'Shrinking to grow' becoming BP strategy for survival, August 2010]</ref> Assets that have the highest potential for going up for sale are those that BP deems risky or non-core.<ref>[http://www.chron.com/disp/story.mpl/business/steffy/7143660.html chron.com: 'Shrinking to grow' becoming BP strategy for survival, August 2010]</ref> While it is still uncertain how much BP plans to sell, it appears clear a focus on core assets and operations has the potential of becoming a principle strategy of a Dudley-run BP.<ref>[http://www.chron.com/disp/story.mpl/business/steffy/7143660.html chron.com: 'Shrinking to grow' becoming BP strategy for survival, August 2010]</ref>
+In April 2010, a major fire on an oil rig in the Gulf of Mexico owned by [[BP]] and operated by [[Transocean]] has the potential of hampering the development of offshore oil production and costing both companies millions in order to fix the situation. Although the exact cause has not been determined, people at [[Transocean]] believe the blaze is from an uncontrolled burst of oil and gas from the well.  The Gulf of Mexico produces 30% of the U.S. oil output and is an important source of revenue for [[oil majors]] like BP.<ref>[http://online.wsj.com/article_email/SB10001424052748704133804575197613591134990-lMyQjAxMTAwMDIwODEyNDgyWj.html WSJ: Blast Jolts Oil World, April 2010]</ref>
-In August 2010, BP announced its plans to use oil sales from Angola and Azerbaijan to back  $5 billion of loans that are intended to go toward the $20 billion compensation fund for BP's Gulf spill.<ref>[http://www.benzinga.com/markets/company-news/buybacks/10/08/430130/bp-to-use-angola-azerbaijan-oil-to-back-spill-fund benzinga.com:
-BP To Use Angola, Azerbaijan Oil To Back Spill Fund, August 2010]</ref>
-===With oil spill contained, BP outlines payment plans and cost-savings structure===
+In July 2010, BP  temporarily capped the oil spill using a pipe "cork."  To control pressure, oil is released through pipes up to ships, which collect it. As of July 18, 2010, BP plans to use this method until mud and cement are used to plug the well for good. With spill capped successfully, the BP outlined its $20 billion fund set aside for to pay for damages to companies, organizations, and individuals significantly impacted by the spill. raise money for this fund, BP plans to sell up to $12 billion of assets to [[Apache (APA)]] in order to cover some of its liabilities.<ref>[http://www.marketwatch.com/story/bp-apache-12-billion-deal-may-come-by-july-27-2010-07-18 Market Watch:BP, Apache $12 billion deal may come by July 27,  July 2010]</ref>
-To pay for the oil spill, BP announced in late June 2010 that it plans to cut dividend payments and capital expenditures.<ref>[http://www.marketwatch.com/story/bp-quiet-on-escrow-demand-before-obama-meeting-2010-06-16 marketwatch.com: BP OKs $20 billion spill fund; suspends dividend, June 2010]</ref>  After meeting with White House officials, top BP officials announced that the company will establish a $20 billion escrow fund to compensate victims of the Gulf oil disaster. BP developed a payment system that has the potential of paying out the $20 billion by the end of 2013.<ref>[http://www.marketwatch.com/story/bp-quiet-on-escrow-demand-before-obama-meeting-2010-06-16 marketwatch.com: BP OKs $20 billion spill fund; suspends dividend, June 2010]</ref> The payment structure is outlined below:
+In late July 2010, Tony Hayward, who has held the position of CEO since 2007, announced that he plans to step down as CEO effective October 2010. Hayward was succeeded by Bob Dudley, who previously ran the unit responsible for clean-up operations and compensation programs in the Gulf of Mexico. While Dudley has noted that cleaning up the Gulf Spill has the potential of being his first priority as CEO, the company has also suggested that its near-future strategy incorporates several divestitures deemed non-core or risky. The divestitures have the potential of raising cash to pay for BP's $20 billion Gulf-relief fund and reducing the company's risk exposure to another drilling accident.  As suggested in interviews and press releases, BP's strategy includes selling assets in places such as Egypt and Vietnam that BP bought in recent years to diversify its reserve base. Assets that have the highest potential for  up for sale are those that BP deemed risky or non-core.<ref>[http://www.chron.com/disp/story.mpl/business/steffy/7143660.html chron.com: 'Shrinking to grow' becoming BP strategy for survival, August 2010]</ref> While it is still uncertain how much BP plans to sell, it appears clear a focus on core assets and operations has the potential of becoming a principle strategy of a Dudley-run BP.
-* $3 billion in the third quarter 2010<ref>[http://www.marketwatch.com/story/bp-quiet-on-escrow-demand-before-obama-meeting-2010-06-16 marketwatch.com: BP OKs $20 billion spill fund; suspends dividend, June 2010]</ref>
-* $2 billion in the fourth quarter 2010<ref>[http://www.marketwatch.com/story/bp-quiet-on-escrow-demand-before-obama-meeting-2010-06-16 marketwatch.com: BP OKs $20 billion spill fund; suspends dividend, June 2010]</ref>
-*Payments of $1.25 billion will be made per quarter until a total of $20 billion has been paid.<ref>[http://www.marketwatch.com/story/bp-quiet-on-escrow-demand-before-obama-meeting-2010-06-16 marketwatch.com: BP OKs $20 billion spill fund; suspends dividend, June 2010]</ref>
-A suspension of the company's 2010 dividend payments as well as reduction in capex spending have the potential of freeing up as much as $17 billion.<ref>[http://www.marketwatch.com/story/bp-quiet-on-escrow-demand-before-obama-meeting-2010-06-16 marketwatch.com: BP OKs $20 billion spill fund; suspends dividend, June 2010]</ref> Also, BP plans to sell $12 billion of assets to [[Apache]].<ref>[http://www.marketwatch.com/story/bp-quiet-on-escrow-demand-before-obama-meeting-2010-06-16 marketwatch.com: BP OKs $20 billion spill fund; suspends dividend, June 2010]</ref> While capex cuts and the sale of assets is necessary for BP to raise enough money to pay for damages from the oil spill, these strategies have the potential of curbing long-term growth, according to many Wall Street analysts.<ref>[http://www.marketwatch.com/story/bp-quiet-on-escrow-demand-before-obama-meeting-2010-06-16 marketwatch.com: BP OKs $20 billion spill fund; suspends dividend, June 2010]</ref>
-In October 2010, BP announced the sale of four oil and gas stakes in the Gulf of Mexico to [[Marubeni Corp (NAG:8002)]]  for $650 million.<ref>[http://www.neurope.eu/articles/BP-sells-off-Gulf-of-Mexico-oil-fields-/103487.php neurope.com:BP sells off Gulf of Mexico oil fields, October 2010]</ref> The sale of these assets is designed to raise money to pay for damages from its oil spill.<ref>[http://www.neurope.eu/articles/BP-sells-off-Gulf-of-Mexico-oil-fields-/103487.php neurope.com:BP sells off Gulf of Mexico oil fields, October 2010]</ref> However, the sale of these Gulf assets is not expected to severly effect BP's production numbers in the area.<ref>[http://www.neurope.eu/articles/BP-sells-off-Gulf-of-Mexico-oil-fields-/103487.php neurope.com:BP sells off Gulf of Mexico oil fields, October 2010]</ref>
-===BP’s U.S. operations are a question mark and are capable of remaining so for a while===
-Although the spill has been plugged, there is a lot of uncertainty surrounding the future of BP’s operations in the U.S.<ref>[http://online.wsj.com/article/SB10001424052748704858304575497690008871132.html WSJ.com: BP Seals Well, Faces Further Challenges]</ref>  As of September 2010, BP has the potential of facing civil fines of $1,100 per barrel of oil spilled. Those fines are capable of rising to $4,300 per barrel if gross negligence is found because BP will have to shoulder 100% of costs associated with the spill.<ref>[http://online.wsj.com/article/SB10001424052748704858304575497690008871132.html WSJ.com: BP Seals Well, Faces Further Challenges]</ref>
-Aside from potential financial burdens, BP is also facing regulatory restrictions from the federal government.<ref>[http://online.wsj.com/article/SB10001424052748704858304575497690008871132.html WSJ.com: BP Seals Well, Faces Further Challenges]</ref> A proposal passed by the House of Representatives would prevent BP from obtaining future offshore drilling leases, based on its previous safety record.<ref>[http://online.wsj.com/article/SB10001424052748704858304575497690008871132.html WSJ.com: BP Seals Well, Faces Further Challenges]</ref> BP is the largest producer by volume in the Gulf of Mexico's deep waters, and the company has nearly doubled its output from the Gulf over the past three years to 450,000 barrels of oil equivalent a day. U.S. operations account for 26.6% of BP's global oil and gas production.<ref>[http://online.wsj.com/article/SB10001424052748704858304575497690008871132.html WSJ.com: BP Seals Well, Faces Further Challenges]</ref> However, some analysts argue that this bill is unlikely to pass given BP’s expertise in deepwater drilling. <ref>[http://online.wsj.com/article/SB10001424052748704858304575497690008871132.html WSJ.com: BP Seals Well, Faces Further Challenges]</ref>
-===After difficult year, BP expresses its 'oil outlook' for 2010 and its strategy for the future===
-In November 2009, BP CEO Tony Hayward argued that oil prices are unlikely to reach their 2007 levels and suggested the need of finding a strategy to account for declining oil demand. Annual gasoline consumption in the United States fell 3.2% in 2008 when compared to a year earlier.<ref>[http://online.wsj.com/article/BT-CO-20091120-705802.html?mod=wsjcrmain WSJ: BP CEO Says US Gasoline Demand Peaked In 2007, November 2009]</ref> Lower prices and oil consumption in 2008 due to the economic recession beginning in 2007 contributed to BP's 4.2% drop in annual sales.<ref>[http://online.wsj.com/article/BT-CO-20091120-705802.html?mod=wsjcrmain WSJ: BP CEO Says US Gasoline Demand Peaked In 2007, November 2009]</ref> Hayward argued that oil consumption in developed economies is likely to decline in the future due to an emphasis on renewable energies and increases in energy efficiency.<ref>[http://online.wsj.com/article/BT-CO-20091120-705802.html?mod=wsjcrmain WSJ: BP CEO Says US Gasoline Demand Peaked In 2007, November 2009]</ref> However, Hayward also said that oil consumption has the potential of increasing significantly in developing countries as people in China and India purchase more motor vehicles.<ref>[http://online.wsj.com/article/BT-CO-20091120-705802.html?mod=wsjcrmain WSJ: BP CEO Says US Gasoline Demand Peaked In 2007, November 2009]</ref> In order to benefit from these changing market conditions, BP plans to adjust its operations to produce more biofuel and increase its market penetration in developing economies.<ref>[http://online.wsj.com/article/BT-CO-20091120-705802.html?mod=wsjcrmain WSJ: BP CEO Says US Gasoline Demand Peaked In 2007, November 2009]</ref> BP has began developing biofuels such as biobutanol and forming joint ventures with ethanol companies to build larger-capacity plants.<ref>[http://online.wsj.com/article/BT-CO-20091120-705802.html?mod=wsjcrmain WSJ: BP CEO Says US Gasoline Demand Peaked In 2007, November 2009]</ref>
-According to BP's management, the year-over-year improvement in 2009 may not be repeatale in 2010.<ref>[http://www.cnn.com/2010/BUSINESS/02/02/bp.outlook.ft/index.html CNN: BP offers downbeat outlook for 2010, Feb 2010]</ref>  Increased production volumes, improved oil prices and stronger cost controls were the reasons behind 2009's earning results. However, these positives were partially offset by low natural gas prices and small refining margins. Tony Hayward expects a "slow and gradual" rebound of BP's refining business and natural gas operations.<ref>[http://www.cnn.com/2010/BUSINESS/02/02/bp.outlook.ft/index.html CNN: BP offers downbeat outlook for 2010, Feb 2010]</ref> Seasonal hurricanes, which avoided BP's facilities in 2009, are also likely to reduce production to a greater extent than in 2009.  The anticipated slow recovery in the U.S. and Europe as well as potential weather damage has led BP to expect a year-over-year lower production in 2010.<ref>[http://www.cnn.com/2010/BUSINESS/02/02/bp.outlook.ft/index.html CNN: BP offers downbeat outlook for 2010, Feb 2010]</ref>
-===BP finds potentially 3 billion barrels of oil in the Gulf of Mexico, but is it worth drilling?===
-In September 2009, BP announced the discovery of a field in the Gulf of Mexico that potentially holds more than 3 billion barrels of oil equivalent.<ref>[http://marketplace.publicradio.org/display/web/2009/09/02/am-bp-oil/ MarketPlace: BP weighs profits of deep sea oil, September 2009]</ref> However, the oil, which is located under 4,000 feet of water and another 35,000 feet  of sea bed, is hard to extract at a profit. Oil located in the Gulf's lower tertiary requires extremely advanced, and expensive technology. To drill each well costs about $200 million and also requires deepwater pipelines and floating facilities.<ref>[http://online.wsj.com/article/SB125189057895179241.html WSJ: BP's Big Oil Find Cements Gulf's Revival, September 2009]</ref> As a result, the deepwater find has the potential of being unprofitable unless oil prices rise or new technology reduces the costs of drilling.<ref>[http://marketplace.publicradio.org/display/web/2009/09/02/am-bp-oil/ MarketPlace: BP weighs profits of deep sea oil, September 2009]</ref> Despite the potential costs, many Western oil companies have begun exploring deepwater regions in order to expand their oil sources.<ref>[http://marketplace.publicradio.org/display/web/2009/09/02/am-bp-oil/ MarketPlace: BP weighs profits of deep sea oil, September 2009]</ref> Many countries like Saudi Arabia, Venezuela, and potentially Brazil are nationalizing oil production, which has left [[oil majors]] like BP with few places to explore and drill.<ref>[http://marketplace.publicradio.org/display/web/2009/09/02/am-bp-oil/ MarketPlace: BP weighs profits of deep sea oil, September 2009]</ref>
 ===Through joint ventures, BP enters the oilsands production market===
-In 2009 and 2010, BP inked several deals with oilsand production companies that have the potential of increasing BP's exposure to that type of production. Since March 2010, the deals struck by BP have typically followed a "combination" approach, which basically slice the management of particular asset between the two companies while allowing both to receive revenue from them.<ref>[http://www.oilweek.com/news.asp?ID=27305 Oilweek.com: Devon VP sees Kirby following same formula as Jackfish oilsands operation, March 2010]</ref> The result of these deals make it possible for both companies to retain a portfolio of assets without requiring that they have to run all of the assets. BP announced in March 2010 a $7 billion dollar deal with Devon Canada Corporation.<ref>[http://www.oilweek.com/news.asp?ID=27305 Oilweek.com: Devon VP sees Kirby following same formula as Jackfish oilsands operation, March 2010]</ref> The two companies agreed to work together  on the Kirby oilsands lease south of Fort McMurray, Alta. However, Devon is designated as the project´s operator. From the deal, Devon's share of the oilsands production market as well as the size of BP's offshore production operations have the potential of expanding.<ref>[http://www.oilweek.com/news.asp?ID=27305 Oilweek.com: Devon VP sees Kirby following same formula as Jackfish oilsands operation, March 2010]</ref>  BP has made similar deals involving oilsands production. In 2007,  BP and Husky Energy Inc. struck a deal evenly splitting the ownership of BP´s refineries in the United States and Husky´s oilsands leases. However, each company would operate their own side of the venture. In March 2010, BP agreed to make capital contributions to Value Creation Inc., a privately held production company, in exchange for an operating stake in Value Creation's oilsand's leases.<ref>[http://www.oilweek.com/news.asp?ID=27305 Oilweek.com: Devon VP sees Kirby following same formula as Jackfish oilsands operation, March 2010]</ref>
+In 2009 and 2010, BP inked several deals with oilsand production companies that have the potential of increasing BP's exposure to that type of production. Since March 2010, the deals struck by BP have typically followed a "combination" approach, which basically slice the management of particular asset between the two companies while allowing both to receive revenue from them. The result of these deals make it possible for both companies to retain a portfolio of assets without requiring that they have to run all of the assets. BP announced in March 2010 a $7 billion dollar deal with Devon Canada Corporation. The two companies agreed to work together  on the Kirby oilsands lease south of Fort McMurray, Alta. However, Devon is designated as the project´s operator. From the deal, Devon's share of the oilsands production market as well as the size of BP's offshore production operations have the potential of expanding.  BP has made similar deals involving oilsands production. In 2007,  BP and Husky Energy Inc. struck a deal evenly splitting the ownership of BP´s refineries in the United States and Husky´s oilsands leases. However, each company would operate their own side of the venture. In March 2010, BP agreed to make capital contributions to Value Creation Inc., a privately held production company, in exchange for an operating stake in Value Creation's oilsand's leases.<ref>[http://www.oilweek.com/news.asp?ID=27305 Oilweek.com: Devon VP sees Kirby following same formula as Jackfish oilsands operation, March 2010]</ref>
-===BP’s profits fall 57% in first half of 2009, business strategy becomes “Simplicity and Efficiency”===
-BP’s net profit after taxes for the first quarter of 2009 was $2.38 billion, down 62% from the first quarter of 2008.<ref>[http://www.ft.com/cms/s/0/0e0346e8-33c5-11de-83af-00144feabdc0.html?ftcamp=rss FT.com: BP’s 62% profit drop sets tone for big oil , April 2009]</ref> The decline in BP’s profits is primarily the result of the low price of oil. Averaging $43 per barrel in the first quarter of 2009, oil prices were 56% lower in the first quarter of 2009 when compared to prices for the first quarter of 2008.<ref>[http://www.ft.com/cms/s/0/0e0346e8-33c5-11de-83af-00144feabdc0.html?ftcamp=rss FT.com: BP’s 62% profit drop sets tone for big oil , April 2009]</ref>  Lower prices had such a strong effect on BP’s net profits because the price of oil affects BP in two ways.<ref>[http://www.ft.com/cms/s/0/0e0346e8-33c5-11de-83af-00144feabdc0.html?ftcamp=rss FT.com: BP’s 62% profit drop sets tone for big oil , April 2009]</ref>   Lower oil prices reduce both the profit BP receives from the sale of its oil products and the value of its oil inventories. [[Oil majors]] like BP have have not had to cut capital spending as severely as independent refiners and producers. However, BP funded its first quarter 2009 capital expenditures by drawing from fund investments or dividends, and the first quarterly profits of 2009 barely covered BP’s dividend payments according to the ''Financial Times''.<ref>[http://www.ft.com/cms/s/0/0e0346e8-33c5-11de-83af-00144feabdc0.html?ftcamp=rss FT.com: BP’s 62% profit drop sets tone for big oil , April 2009]</ref>
-For BP, second quarter profits declined 53% from profits for the second quarter 2008. Profits from exploration and production operations fell 53% too as a result of lower earnings from its equity-accounted entities like TNK-BP.<ref>[http://www.bp.com/extendedgenericarticle.do?categoryId=2012968&contentId=7054754 www.bp.com: Second Quarter 2009 Results]</ref> However, year-over-year production increased 4% for the quarter due to the completion of offshore projects in the first quarter of 2009.<ref>[http://www.bp.com/extendedgenericarticle.do?categoryId=2012968&contentId=7054754 www.bp.com: Second Quarter 2009 Results]</ref> Within BP's Fuels Value Chains, refining margins in the first half of 2009 decreased when compared to refining margins in the first half of 2008.<ref>[http://www.bp.com/extendedgenericarticle.do?categoryId=2012968&contentId=7054754 www.bp.com: Second Quarter 2009 Results]</ref> BP's refining margins were  lower than the global average due to BP's highly upgraded facilities, which were negatively impacted by a  narrow light-heavy crude spread.<ref>[http://www.bp.com/extendedgenericarticle.do?categoryId=2012968&contentId=7054754 www.bp.com: Second Quarter 2009 Results]</ref>
-In an effort to offset declining profits, BP has reduced capital spending for 2009 and taken additional measures to cut operating costs. Through numerous layoffs and cuts in capital expenditures, BP has the potential of reducing annual costs from $32 billion in 2007 to $28 billion in 2009.<ref>[http://www.ft.com/cms/s/0/d0560730-341f-11de-9eea-00144feabdc0.html FT.com: Simplification and efficiency are key at BP, April 2009]</ref> According to BP’s chief executive Tony Hayward, BP’s cost reductions in the first quarter of 2009 reflect the company’s, “continued focus on simplification and efficiency.”<ref>[http://www.ft.com/cms/s/0/d0560730-341f-11de-9eea-00144feabdc0.html FT.com: Simplification and efficiency are key at BP, April 2009]</ref> The completion of the expensive Thunder Horse Platform in early 2009 is capable of reducing costs in the remaining quarters of 2009 as well.<ref>[http://www.ft.com/cms/s/0/d0560730-341f-11de-9eea-00144feabdc0.html FT.com: Simplification and efficiency are key at BP, April 2009]</ref>
-For the third quarter of 2009, BP reported profits that were 34% lower than for the same quarter in 2008.<ref>[http://online.wsj.com/article/SB10001424052748704335904574498673577014410.html?mod=wsjcrmain WSJ: BP's Net Slips, Beats Forecasts, October 2009]</ref> Although its profit slipped in 2009, BP's ability to reduce costs across its operations improved its profitability.<ref>[http://online.wsj.com/article/SB10001424052748704335904574498673577014410.html?mod=wsjcrmain WSJ: BP's Net Slips, Beats Forecasts, October 2009]</ref> Restructuring and increases in efficiency accounted for almost half of the cost cuts in the third quarter.<ref>[http://online.wsj.com/article/SB10001424052748704335904574498673577014410.html?mod=wsjcrmain WSJ: BP's Net Slips, Beats Forecasts, October 2009]</ref> The remaining cost reductions came from foreign currency effects and lower energy costs.<ref>[http://online.wsj.com/article/SB10001424052748704335904574498673577014410.html?mod=wsjcrmain WSJ: BP's Net Slips, Beats Forecasts, October 2009]</ref> As a result of these efforts, the costs associated with producing oil and gas fell 18% during the quarter, BP experienced positive cash flow, and net debt fell $800 million from the second quarter.<ref>[http://online.wsj.com/article/SB10001424052748704335904574498673577014410.html?mod=wsjcrmain WSJ: BP's Net Slips, Beats Forecasts, October 2009]</ref> In June 2009, BP predicted that its overall cost cuts had the potential of reaching $3 billion in 2009. Given the Company's success at reducing costs in the third quarter, BP is predicting that cuts have the potential of reaching $4 billion by the end of 2009.<ref>[http://online.wsj.com/article/SB10001424052748704335904574498673577014410.html?mod=wsjcrmain WSJ: BP's Net Slips, Beats Forecasts, October 2009]</ref>
-=== To reduce costs, BP restructures its alternative energy operations,and plans for biofuel rebound===
-Between 2005 and 2015, BP plans to spend $8 billion in developing energy from wind turbines, solar cells, biofuels, and carbon capture systems.<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 37]</ref> Through these investments in cleaner forms of energy, BP has the potential of financially benefiting from U.S. Government mandates for cleaner fuel.  BP began  restructuring its solar operations in 2009 as part of the company's plan to reduce operating costs and make solar power an economically competitive form of energy.
-Despite these planned reductions, BP's global manufacturing capacity has the potential to increase in 2009 and 2010 due to manufacturing contracts that BP Solar signed in 2008 to supplement its own manufacturing capacity.<ref>[http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7052153 BP.com: BP Solar lowers cost in drive toward grid competitive electricity, March 2009]</ref> In 2009 BP Solar has the raw material resources and capacity to produce and sell 320MW in modules, a 100% increase from 2008.<ref>[http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7052153 BP.com: BP Solar lowers cost in drive toward grid competitive electricity, March 2009]</ref>
-In order to profit from the U.S.’s renewable fuel mandates, BP and Verenium have formed a 50-50 partnership to build a commercial-scale cellulosic ethanol plant in the U.S. by 2010 and begin ethanol production by 2012.<ref>[http://www.ft.com/cms/s/0/e5af8724-fe1d-11dd-932e-000077b07658.html?nclick_check=1 Financial Times Online: BP and Verenium in biofuels joint venture, February 2009]</ref> BP’s partnership with Verenium is in response to Federal mandates from the U.S. Government which aim to increase concentration of cleaner-burning biofuels in gasoline mixtures.  By 2022, the U.S. government is expected to require that 36 billion gallons of biofuel be mixed with the U.S. gasoline supply according to ''the New York Times.''<ref>[http://www.nytimes.com/2008/07/26/business/26ethanol.html New York Times Online: In Gas-Powered World, Ethanol Stirs Complaints, July 2008]</ref>  At the end of 2008, most U.S. refiners received their ethanol from contracts with third party producers and mixed it in with their refinedgasoline.<ref>[http://www.nytimes.com/2008/07/26/business/26ethanol.html New York Times Online: In Gas-Powered World, Ethanol Stirs Complaints, July 2008]</ref> In 2007, 6.5 billion gallons of ethanol were mixed into a supply of 142 billion gallons of gasoline.<ref>[http://www.nytimes.com/2008/07/26/business/26ethanol.html New York Times Online: In Gas-Powered World, Ethanol Stirs Complaints, July 2008]</ref>  BP’s biofuel partnership has the potential to profit from higher biofuel standards not only because BP will not have to purchase ethanol from outside sources but the company will also be able to sell its ethanol to U.S. refiners required to mix the fuel with their refined fuel products.<ref>[http://www.ft.com/cms/s/0/e5af8724-fe1d-11dd-932e-000077b07658.html?nclick_check=1 Financial Times Online: BP and Verenium in biofuels joint venture, February 2009]</ref>
-Despite it efforts to reduce solar costs and increase its biofuel capacity, BP has begun to reduce spending on its alternative energy operations.<ref>[http://www.ft.com/cms/s/0/b8626bf4-6b20-11de-861d-00144feabdc0.html Ft.com: Back to petroleum, July 2009]</ref> In July 2009, BP closed its BP Alternative Energy office in London. Additionally, CEO Tony Hayward said in July that BP's strategy in 2009 focuses on its oil and gas operations rather than its wind, solar, and biofuel operations.<ref>[http://www.ft.com/cms/s/0/b8626bf4-6b20-11de-861d-00144feabdc0.html Ft.com: Back to petroleum, July 2009]</ref> Hayward said that BP's shift away from alternative energy is a result to rising costs and declining profits in the alternative energy industry. In the first quarter of 2009, BP Alternative Energy provides less than 1 per cent of BP’s revenues and none of its profit.<ref>[http://www.ft.com/cms/s/0/b8626bf4-6b20-11de-861d-00144feabdc0.html Ft.com: Back to petroleum, July 2009]</ref>
 ===To increase production BP's  moves operations abroad, exposing the company to political risks ===
-As one an oil majors, BP controls oil resources in countries around the world. 72% of BP's oil comes from North America and Europe, but the company's exploration and production segment has a strong incentive to push forward and explore in countries that are less politically stable.<ref>[[stock:BP_%28BP%29/Filing/20-F/2008/F1234144 | BP 2007 20-F]]</ref>  By expanding around the globe, BP has the potential of increasing its production capacity and reserve life.<ref>[[stock:BP_%28BP%29/Filing/20-F/2008/F1234144 | BP 2007 20-F]]</ref> At the end of 2008, BP had invested 67% of its capital in [http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html Organizations for Economic Cooperation and Development(OECD)] countries, and its U.S. and Europe operations are the company’s largest. .<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 16]</ref> Of BP’s assets, 41% are located in the US and 20% in Europe.
+As one an oil majors, BP controls oil resources in countries around the world. 72% of BP's oil comes from North America and Europe, but the company's exploration and production segment has a strong incentive to push forward and explore in countries that are less politically stable. By expanding around the globe, BP has the potential of increasing its production capacity and reserve life.<ref>[[stock:BP_%28BP%29/Filing/20-F/2008/F1234144 | BP 2007 20-F]]</ref> At the end of 2008, BP had invested 67% of its capital in [http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html Organizations for Economic Cooperation and Development(OECD)] countries, and its U.S. and Europe operations are the company’s largest. .  While its refining operations are located almost completely in the U.S. and Europe, BP’s has  exploration and production operations are located in 29 countries.  Major development projects are located in the Gulf of Mexico, Azerbaijan, Algeria, Angola, and parts of Pacific Asia.  Although BP’s expanding global reach is capable of increasing its production capabilities, political instability in many of these countries has the potential of  damaging or destroying BP’s operations. The company believes its operations most exposed to political risk are located in Iran, Cuba, Syria, and Russia.<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 16]</ref>
-<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 16]</ref>  While its refining operations are located almost completely in the U.S. and Europe, BP’s has  exploration and production operations are located in 29 countries.<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 16]</ref>  Major development projects are located in the Gulf of Mexico, Azerbaijan, Algeria, Angola, and parts of Pacific Asia.<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 16]</ref>  Although BP’s expanding global reach is capable of increasing its production capabilities, political instability in many of these countries has the potential of  damaging or destroying BP’s operations. The company believes its operations most exposed to political risk are located in Iran, Cuba, Syria, and Russia.<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 16]</ref>
-===BP's Russian Ventures Meet Resistance from Co-Investors===
-In 2003, BP formed a 50-50 joint venture with several high-worth Russians to create TNK-BP, an integrated oil company operating in Russia and Ukraine.<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 27]</ref> Since December 2008, BP and its Russian partners in TNK-BP have tried to agree on a suitable chief executive for Russia's third largest oil company in terms of production capacity.<ref>[http://www.ft.com/cms/s/0/a4f8c0e0-4a1e-11de-8e7e-00144feabdc0.html Financial Times: BP and Russians put nominees forward, May 2009]</ref> BP has been unable to agree with its co-investors on who should head the company, and both parties have agreed to put forward nominees for CEO in June 2009.<ref>[http://www.ft.com/cms/s/0/a4f8c0e0-4a1e-11de-8e7e-00144feabdc0.html Financial Times: BP and Russians put nominees forward, May 2009]</ref> Robert Dudley, TNK-BP's former CEO, was forced to resign after management disputes and accusations from Russian investors that his actions  favored BP's interests.<ref>[http://online.wsj.com/article/SB122939129977609281.html WSJ: Misreading the Kremlin Costs BP Control in Russian  Venture, December 2008]</ref> The six month temporary term of Mr. Dudley's replacement, Tim Summers, expires in June 2009, and Russian investors and BP are fighting for control over the top executive position.<ref>[http://www.ft.com/cms/s/0/a4f8c0e0-4a1e-11de-8e7e-00144feabdc0.html Financial Times: BP and Russians put nominees forward, May 2009]</ref> Although Tim Summers' interim contract has the potential of being renewed, neither BP nor its Russian partners have expressed interest in keeping Mr. Summer's as TNK-BP's permanent CEO.<ref>[http://www.ft.com/cms/s/0/a4f8c0e0-4a1e-11de-8e7e-00144feabdc0.html Financial Times: BP and Russians put nominees forward, May 2009]</ref> For CEO, BP has nominated Pavel Skitovich, and the Russian investors have nominated Maxim Barsky. Because the venture is split 50:50 between the two parties, the position of CEO is capable of deciding who has control over TNK-BP.<ref>[http://www.ft.com/cms/s/0/a4f8c0e0-4a1e-11de-8e7e-00144feabdc0.html Financial Times: BP and Russians put nominees forward, May 2009]</ref>
-In January 2010, BP announced that the tension between the company and its Russian partners has eased. Both parties agreed to appoint Maxim Barsk as CEO, but he will not assume the position until 2011.<ref>[http://online.wsj.com/article/SB10001424052748704509704575019183401401918.html?mod=wsjcrmain WSJ: BP Dispute With Russian Partners Eases, January 2010]</ref> With this behind them, both BP and Russian investors plan to increased capital expenditures in 2010 by 33% in order to improve production capacity.<ref>[http://online.wsj.com/article/SB10001424052748704509704575019183401401918.html?mod=wsjcrmain WSJ: BP Dispute With Russian Partners Eases, January 2010]</ref> The productions expansions are likely to occur in areas where BP-TNK has a technological advantage, like Iraq and Venezuela.<ref>[http://online.wsj.com/article/SB10001424052748704509704575019183401401918.html?mod=wsjcrmain WSJ: BP Dispute With Russian Partners Eases, January 2010]</ref>
 ===BP is Vulnerable to Natural Disasters, like the [[Hurricane Season]]===
-The Gulf of Mexico, where 21% of BP's 2008 production occured<ref>http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 21]</ref>, is prone to violent [[hurricanes]] during the last few months of summer. These storms can damage drilling rigs and refineries, and injure workers. Like most oil companies in the region, BP reduces production during hurricane months. Still, some storms can do real harm. In 2008, Hurricane Ike and Gustav resulted in a significant amount of rig shut downs.<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 23]</ref> The  impact of both hurricanes was a reduction equivalent to approximately 24mboe per day for 2008.<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 23]</ref>  BP's Thunder Horse operations, completed in 2009, are also susceptible to hurricane destruction.
+The Gulf of Mexico, where 21% of BP's 2008 production occured<ref>http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 21]</ref>, is prone to violent [[hurricanes]] during the last few months of summer. These storms can damage drilling rigs and refineries, and injure workers. Like most oil companies in the region, BP reduces production during hurricane months. Still, some storms can do real harm. In 2008, Hurricane Ike and Gustav resulted in a significant amount of rig shut downs. The  impact of both hurricanes was a reduction equivalent to approximately 24mboe per day for 2008.<ref>[http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021605&contentId=7040949 2008 Annual Report, page 23]</ref>  BP's Thunder Horse operations, completed in 2009, are also susceptible to hurricane destruction.
+iioooo
 == Competition ==
-BP competes with global players [[Exxon Mobil (XOM)]], [[Chevron]], [[Royal Dutch Shell (RDS'A)]], [[Sunoco (SUN)]], [[Valero Energy (VLO)]], [[Petrobras (PBR)]], [[LUKOIL]], and [[ConocoPhillips (COP)]]. The table provided below compares the Royal Dutch Shell Company with its competitors for the year 2008.
+BP competes with global players [[Exxon Mobil (XOM)]], [[Chevron]], [[Royal Dutch Shell (RDS'A)]] , [[Sunoco (SUN)]], [[Valero Energy (VLO)]], [[Petrobras (PBR)]], [[LUKOIL]], and [[ConocoPhillips (COP)]].
-{| class="toccolours" border="1" cellpadding="3" style="border-collapse:collapse"
-|+ '''Comparison to Competitors - 2008'''
-|- bgcolor= lightblue
-!
-![[CONOCOPHILLIPS]]
-![[ROYAL DUTCH SHELL]]
-![[EXXONMOBIL]]
-![[CHEVRON]]
-![[BP]]
-![[LUKOIL]](1)
-![[Eni S.p.A]](1)
-![[Total S.A.]]
-|-
-|'''Reserves'''
-|
-|
-|
-|
-|
-|
-|
-|
-|-
-|Oil and Gas Liquids<br>(Millions of barrels)
-|5,817<ref name=COPoil>[[stock:ConocoPhillips_%28COP%29/Filing/10-K/2009/F1233097#308 COP 2008 10-K, Item 8,Page 149]]</ref><ref name=COPliquid>[[stock:ConocoPhillips_%28COP%29/Filing/10-K/2009/F1233097#308 | COP 2008 10-K, Item 8,Page 152]]</ref>
-|3775<ref name=RDSAoil>[http://www.annualreportandform20f.shell.com/2008/supplementaryinformation/oilandgasunaudited/crudeoilandnaturalgasliquids.php RDS’A 2008 20-F, Supplementary Information, Crude oil and natural gas liquids]</ref>
-|7,576'''(2)'''<ref name=XOMreserves>[[stock:Exxon_Mobil_(XOM)/Filing/10-K/2009/F1937090#INDEX#tx91974_07 | XOM 2008 10-K, Item 1, Page6]]</ref>
-|7,350<ref name=CVXreserves>[[stock:Chevron_Corporation_%28CVX%29/Filing/10-K/2010/F46734190 | CVX 10-K 2009, Item 1, Page 7]]</ref>
-|10,353<ref name=BPreserves>[http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/20-F_2008_Form.pdf BP 2008 20-F, Item 1, Page 16]</ref>
-|15,715<ref>[http://www.lukoil.com/materials/doc/DataBook/DBP/2008/FactBook/facts2008eng.pdf Lukoil Investor Relations – Fact Book 2008, Page 11]</ref>
-|3,219<ref name=ENIreserves>[http://www.eni.it/en_IT/attachments/publications/reports/reports-2007/Fact-Book-2007-eng.pdf ENI S.p.A. – Fact Book 2007, Page 11]</ref>
-|5,695<ref name=TOTreserves>[[stock:Total_S.A._(TOT)/Filing/20-F/2009/F5542811#rom81164_13 | TOT 2008 20-F, Item 4, Page 10]]</ref>
-|-
-|Natural Gas<br>(Billions of cubic feet)
-|24,948<ref name=COPgas>[[stock:CONOCOPHILLIPS_%28COP%29/Filing#308 | COP 2008 10-K, Item 8, Page 151]]</ref>
-|40,895<ref name=RDSAgas>[http://www.annualreportandform20f.shell.com/2008/supplementaryinformation/oilandgasunaudited/naturalgas.php RDS’A 2008 20-F, Supplementary Information, Natural gas]</ref>
-|31,402'''(2)'''<ref name=XOMreserves/>
-|23,075<ref name=CVXreserves/>
-|45,208<ref name=BPreserves/>
-|27,921<ref>[http://www.lukoil.com/materials/doc/DataBook/DBP/2008/FactBook/facts2008eng.pdf Lukoil Investor Relations – Fact Book 2008, Page 12]</ref>
-|18,090<ref name=ENIreserves/>
-|26,218<ref name=TOTreserves/>
-|-
-|'''Production'''
-|
-|
-|
-|
-|
-|
-|
-|
-|-
-|Oil and Gas Liquids<br>(Thousand b/d)
-|1,108<ref name=COPproduction>[[stock:CONOCOPHILLIPS_%28COP%29/Filing#308 | COP 2008 10-K, Item 6, Page 42]]</ref>
-|1,695<ref name=RDSAoil/>
-|2,405<ref name=XOM2008>[[stock:Exxon_Mobil_%28XOM%29/Filing#tx91974_07 | XOM, 2008 10-K, Item 6, Page 36]]</ref>
-|1,649<ref name=CVXproduction>[[stock:Exxon_Mobil_(XOM)/Filing/10-K/2009/F1937090#INDEX | CVX 2008 10-K, Item 1, Page 5]]</ref>
-|2,401<ref name=BPproduction>[http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/20-F_2008_Form.pdf BP 2008 20-F, Item 1, Page 14]</ref>
-|1,954<ref>[http://www.lukoil.com/materials/doc/DataBook/DBP/2008/FactBook/facts2008eng.pdf Lukoil Investor Relations – Fact Book 2008, Page 13]</ref>
-|1,020<ref name=ENIreserves/>
-|1,456<ref name=TOTproduction>[[stock:Total_S.A._%28TOT%29/Filing/20-F/2009/F5542811 | TOT 2008 20-F, Item 4, Page 12]]</ref>
-|-
-|Natural Gas<br>(Million cf/d)
-|4,970<ref name=COPproduction/>
-|8,595<ref name=RDSAgas/>
-|9,095<ref name=XOM2008/>
-|5,125<ref name=CVXproduction/>
-|8,334<ref name=BPproduction/>
-|1,586<ref>[http://www.lukoil.com/materials/doc/DataBook/DBP/2008/FactBook/facts2008eng.pdf Lukoil Investor Relations – Fact Book 2008, Page 14]</ref>
-|4,114<ref name=ENIreserves/>
-|4,837<ref name=TOTproduction/>
-|-
-|}
-(1) Latest data is for 2007 (2) Does not include reserves of equity affiliates
-{| class="toccolours" border="1" cellpadding="3" style="border-collapse:collapse"
-|+ '''Refining Industry 2008 Metrics'''
-|- bgcolor= lightblue
-!
-![[SUNOCO]]
-![[CHEVRON]]
-![[VALERO]]
-![[EXXON MOBIL]]
-![[Royal Dutch Shell]]
-![[SINOPEC]]
-![[WESTERN REFINING]]
-![[ConocoPhillips]]
-![[BP]]
-![[LUKOIL]](1)
-![[Eni S.p.A]](1)<ref>[http://www.eni.it/en_IT/attachments/publications/reports/reports-2007/2007-annual-report.pdf E 2007 Annual Report]</ref>
-![[Total S.A.]]
-|-
-|'''Refinery Capacity'''<br>(Million BPD)
-|0.91<ref>[[stock:Sunoco_%28SUN%29/Filing/10-K/2009/F1232078#toc67394_8 | SUN 2008 10-K, Item 7, Page 35]]</ref>
-|2.139<ref name=CVXrefinery>[[stock:Chevron_Corporation_(CVX)/Filing/10-K/2010/F46734190#117 | CVX 10-K 2009, Item 1, Page 24]]</ref>
-|2.99<ref>[[stock:Valero_Energy_%28VLO%29/Filing/10-K/2009/F1231241 | VLO 2008 10-K, Item 1, Page 3]]</ref>
-|6.2<ref name=XOMref>[[stock:Exxon_Mobil_(XOM)/Filing/10-K/2009/F1937090#INDEX#tx91974_07 XOM 2008 10-K, Item 6, Page 43]]</ref>
-|3.678<ref>[http://www.annualreportandform20f.shell.com/2008/businessreview/results/oilproducts/refiningdata/crudeoil.php  RDS’A 2008 20-F, Results, Refining Data]</ref>
-|3.376<ref>[http://english.sinopec.com/investor_center/operational_information/20090122/download/OD200901211.doc Sinopec Investor Relations, Operational Statistics for 2008]</ref>
-|0.238<ref>[[stock:Western_Refining_(WNR)/Filing/10-K/2009/F3415502#111 | WNR 2008 10-K, Item 7, Page 34]]</ref>
-|1.986<ref name=COPref>[[stock:ConocoPhillips_%28COP%29/Filing/10-K/2009/F1233079#308 | COP 2008 10-K, Item 1, Page 16]]</ref>
-|2.678<ref name=BPref>[http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/20-F_2008_Form.pdf BP 2008 20-F, Item 1, Page 29]</ref>
-|1.135<ref>[http://www.lukoil.com/materials/doc/DataBook/DBP/2008/FactBook/facts2008eng.pdf Lukoil Investor Relations – Fact Book 2008, Page 15]</ref><ref>Conversion factor is 1 BPD = 50 tonnes per year</ref>
-|0.544
-|2.604<ref name=TOTref/>
-|-
-|'''Number of Refineries (including partial interests)'''
-|5<ref>[[stock:Sunoco_(SUN)/General | SUN 2008 10-K, Item 1, Page 1]]</ref>
-|18<ref name=CVXrefinery/>
-|16<ref name=VLOref/>
-|37<ref name=XOMref/>
-|40<ref>[http://www.annualreportandform20f.shell.com/2008/businessreview/results/oilproducts/businessandproperty/manufacturing.php RDS’A 2008 20-F, Results, Manufacturing]</ref>
-|17<ref>[http://english.sinopec.com/en-business/948.shtml Sinopec Refining Overview]</ref>
-|4<ref>[[stock:Western_Refining_(WNR)/Severe%20Weather%20Including%20Hurricanes%20Interrupt%20Supply%20Some%20Feedstocks | WNR 2008 10-K, Item 1, Page 19]]</ref>
-|12<ref name=COPref/>
-|17<ref name=BPref/>
-|9<ref>[http://www.lukoil.com/materials/doc/DataBook/DBP/2008/FactBook/facts2008eng.pdf Lukoil Investor Relations – Fact Book 2008, Page 16]</ref>
-|N/A
-|25<ref name=TOTref/>
-|-
-|'''Number of Retail Gas Stations'''
-|7,785<ref>[[stock:Sunoco_%28SUN%29/Filing/10-K/2009/F1232078#toc67394_1#toc67394_8 | SUN 2008 10-K, Item 1, Page7]]</ref>
-|25,000<ref>[[stock:Chevron_Corporation_(CVX)/Filing/10-K/2009/F1230437#118 | CVX 10-K 2008, Item 1, Page 25]]</ref><ref>[[stock:Chevron_Corporation_(CVX)/Transportation%20Operations | CVX 10-K 2008, Item 1, Page 26]]</ref>
-|5,800<ref name=VLOref>[[stock:Valero_Energy_%28VLO%29/Filing/10-K/2009/F123124 | VLO 10-K 2008, Item 1, Page 1]]</ref>
-|10,516<ref name=XOMexit>[[stock:Exxon_Mobil_%28XOM%29/Filing/10-K/2009/F1937090#tx91974_01 | XOM 2008 10-K, Item 2, Page 25]]</ref>
-|45,000<ref>[http://www.annualreportandform20f.shell.com/2008/businessreview/results/oilproducts/businessandproperty/marketing.php  RDS’A 2008 20-F, Results, Marketing]</ref>
-|29,279<ref>[http://english.sinopec.com/download_center/reports/2008/20090330/download/AnnualReport2008.pdf Sinopec 2008 Annual Report, Business Review and Prospects, Page 20]</ref>
-|153<ref>[[stock:Western_Refining_(WNR)/Overview | WNR 2008 10-K, Item 1, Page 3]]</ref>
-|8,340<ref>[[stock:CONOCOPHILLIPS_%28COP%29/Filing#30 | COP 2008 10-K, Item 1, Page 18]]</ref>
-|22,600<ref>[http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/20-F_2008_Form.pdf BP 2008 20-F, Item 1, Page 30]</ref>
-|6,287<ref>[http://www.lukoil.com/materials/doc/DataBook/DBP/2008/FactBook/facts2008eng.pdf Lukoil Investor Relations – Fact Book 2008, Page 60]</ref>
-|6,441 (in Europe)
-|16,425<ref name=TOTref>[[stock:Total_S.A._%28TOT%29/Filing/20-F/2009/F5542811 | TOT 2008 20-F, Item 4, Page 36]]</ref>
-|-
-|}
-(1) Latest data is for 2007
-{{clr}}
 == References==