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BP Overview

• British multinational energy company headquartered in London

• One of six oil and gas “Supermajors”• #6 in market capitalization• #5 in revenue generation• #6 in energy production

• Primary operations include:• Upstream segment: exploration and production of gas and crude oil• Downstream segment: global oil supply, trading activities, products

and service oriented activities• Business and Corporate: alternative energy business, shipping,

treasury, corporate activities including centralized function

Industry Overview

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• Oil and natural gas industry is one of the world’s largest with expected revenues of $4.6 trillion in 2014• $2.6 trillion in 2009, yielding an annualized growth rate of 11.9%

• Heightened focus on renewables but fossil fuels continue to be primary contributor of income for large oil and gas companies

• Mature stage of its life cycle

• Merger and acquisition activity is ongoing • Increasing oil and gas reserves• Building global supply chains

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• 200 million gallons of crude oil spilled into the Gulf of Mexico, April 2010• Largest spill in American history• Death of 11 men during initial blast• Wildlife loss, including endangered species• 16,000 miles of coastline impacted

• Continued Impact:• Environmental concerns• Fisheries lose business• Long-term health effects

• Financial Impact to BP

Deepwater Horizon Spill

Deepwater Horizon Spill

External Analysis

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Porter’s Five Forces

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RIVALRY: High• Saudi Arabian

Oil: $345B• National Iranian

Oil :$154B• PetroChina:

$300B• Exxon Mobil:

$467B• Gazprom: $231B• Shell: $451B• BP: $379B

BUYER POWER: Low• Gas Refining &

Marketing• Petrochem

Manufacturing• Gas Utilities• Electric

Utilities• Consumers

SUPPLIER POWER:Moderate• License to

explore• Government

regulations

ENTRY THREAT: Low• Top 4 = 45% of

revenue• Regulations• Investment in

finding resource• License : explore

& produce• Downstream:

refining /marketing

SUBSTITUTES:Moderate• Nuclear• Coal• Hydropower• Solar Energy• Wind• Biofuels

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External Analysis

Economic

• Western societies experiencing slow economic growth • Developing countries have rising economic power and increasing demand

for energy• 56% projected increase in energy usage by 2040

Political

• Fossil fuel extraction regulations differ by country, adding complexity• Partnering with stable governing bodies preferred• Lack of cooperation to align on global carbon dioxide targets• Carbon tax implementation at the local, national and global levels

Technolog

ical

• Declining cost of renewable energy sources• Advanced extraction techniques lead to greater access to fossil fuels• Carbon capture techniques

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External Analysis

Social

• Emphasis on environmental stability and awareness of climate change• Less reliance on vehicles in Western societies but increase demand for

cars in emerging markets• Residential demand for energy increases 57% by 2040

Demograp

hic

• Half of the world’s current 7.2B people reside in just 6 countries• Global population is expected to grow by 2B people by 2040, or 28% • Aging demographic• Population growth particularly high in Africa

Global

• Globalization continues to shrink the world • Multinational companies expand footprint, with emphasis on emerging

markets; M&A activity• Global unrest, rise of populism

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Projected Global Energy UseWorld Energy Consumption by Fuel Type Energy Consumption by Country Group

Internal Analysis

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Value Chain• Vertically Integrated Organization• Shipping, Air Transportation, Manufacturing, Investing

• Products• 15 Business Product Categories• 6 Consumer Product Categories• Consolidated across 8 Corporate functions

• Corporate Vision Stretches across all functions• “10 Point Plan”• Clear Priorities & Distinctive Capabilities

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Value Chain

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• Increased costs of drilling – coupled with regulation• Availability of natural resources increases cost

• Increased costs of transportation• Remote sites

Finance and Operations Issues

Marketing Issues• Continued fallout from Gulf of Mexico oil spill

• Renewable Energy Marketing Program• $500MM green campaign • Upstream profitability losses

• Ongoing litigation from Gulf of Mexico oil spill• $15B spent 2013 YTD

Legal Issues

Value Chain

SWOT

Hostile Foreign Gvt’s Increased Fuel Economy

Alternative Energy Geological Risk

Political Risk

• Emerging Markets• Energy Independence• New exploration sources• Renewable Energy• Carbon Capture

• Geographically diverse• Vertically Integrated• Engineering Expertise• Superior Oil-related technology

T

S W

Negative Public Perception Cost of environmental cleanup

Partner with unstable Gvt’s

O

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Recommendations

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Key Issues

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Political and

Regulatory Uncertainty

Climate Change

Increased Global

Demand for Energy

Negative Public

Perception of Brand

Recommendations

Helps Solve Key Issues:Increasing Demand, Political Uncertainty

Joint Ventures

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• New JVs with global energy companies

• Larger footprint in emerging markets

• Partner with government entities

• Mitigate risk

Helps Solve Key Issues:Political Uncertainty

Climate Change

• Clear CO2 targets• Carbon tax • Alternative energy

tax credits• Availability of oil

wells

Lobbying

Helps Solve Key Issues:Negative Perceptions

• Refrain from drilling in environmentally sensitive areas

• Continue to invest in safety

• Ensure emergency guidelines are clear

Safety

Recommendations

Helps Solve Key Issues:Climate Change, Increasing

Demand, Political Uncertainty, Negative Perceptions

Renewable Energy Carbon Capture

Helps Solve Key Issues:Climate Change,

Political Uncertainty, Negative Perceptions

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• Invest more heavily in alternative energy sources ; from 6% to 10%

• Expand scope beyond biofuels and wind

• Implement this technology for internal use and sell to third parties

• Consulting arm in BP’s business segment

Helps Solve Key Issues:Negative Perceptions

• Live the slogan “Beyond Petroleum”

• Highlight new alternative energy and carbon capture initiatives around the globe

Marketing Campaign

Questions?