Final Analysis of British Petroleum's Annual Report

- What did you learn about your company's financial health and strategic focus from this project?

BP’s financial health is strong, but there are many caveats associated with BP’s stockpile of cash over the past few years. Due to the Deep Water Horizon Oil Spill in 2010, there are quite a few lawsuits looming large for BP over the next few years. Federal, State, local, and private lawsuits have the potential to cost BP a large portion of its stockpiled cash. In addition to that, BP has divested some of its stakes in oil projects to help fund the possible settlements. The timing was rather good for BP with the divestment of TNK-BP to Rosneft. While I was living in Russia, there were “rumors” that BP has irritated some of Putin’s buddies (and other power wielding “officials”), and there were all of a sudden Visa issues for BP’s upper management, anything to make the very public war between AAR, TNK, and BP more incendiary. Rosneft, by the way, is state run.

BP’s focus is securing new oil rights in other developing countries, streamlining its current operations, and continuing the synergies it currently has with other joint-ventures throughout the globe.

- What are the future prospects for your company?

The future prospects for BP look strong. BP is well diversified in natural gas, oil, and coal production. Their oil fields has enough in reserves, according to BP’s estimate, to supply global demand for 53.3 years. The largest additions came from Russia and Venezuela, which is rather risky/generous to include future prospects from either of those countries.

Natural gas reserves are estimated to be able to supply global demand for 55 years, with 7.1% growth all coming from US gas fields. BP has a large stake in Iran and Russia.

Coal reserves are estimated to be able to supply 113 years of global demand, which