Oil And Gas Industry in UK Assignment
Added on 2019-12-28
11 Pages2574 Words161 ViewsType: 161
Environmental Science
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Oil and Gas management
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................82
Illustration IndexIllustration 1: Deficit spending of big oil.........................................................................................5Illustration 2: Low carbon emission in big oil.................................................................................73
INTRODUCTIONOil and gas industry of UK plays significant role in term of economic development. Thebig oil sector consists of well-known organisations like BP plc, Royal Dutch Shell plc andChervon Corporation. Along with that several organizations are also included in Big oil. It isgenerally associated with the fossil fuels lobby and also has direct linkage with economic powerand politics of nation due to variation in its prices and demand. The current essay is based onimportant themes such as cash crunch, abandonment of production-maximization policies. Inaddition to this, planning of oil companies to plan for low carbon world has also been explained. Theme 1: Cash crunch of sub-$50/bbl oil on projects and dividendsA cash crunch is particular issue that take place with organizations suffering from lowliquidity. It has direct impact on profitability and operation of firms as it require enough fund topay workforce, suppliers and purchase of equipment and machineries. Here, some of the majorcorporations like Royal Dutch Shell plc, Exxon Mobil Corp and BP plc face slump in price from16 months. However, at the time rise in oil prices supported corporation in its mega projects. Ithas direct impact shareholders of organizations. At this juncture, big oil cut down its spending bymore than $30 billion in recent months (Cash Crunch Clouds Future for Oil Firms, 2016). Also,management delayed in project so as to ensure consistent flow of production with increased rateof return (Wilson and VanBriesen, 2012). These organization face issue of continuous decreasein oil prices which has direct impact profitability. For this purpose, cash flow during first first of2015 was $20 billion. However, dividend during the same time span was not appropriate becauseof high cost of production and less rate of return. The following graphs are showing that majororganizations like Shell, Chervon and BP are facing issues in reducing their cost of productionwith availability of enough cash. According to the following graph performance of majorcorporation can be assessed easily (Gregory, Vidic and Dzombak, 2011). It is showing that BP issuffering high risk that other three oil companies. However, net cash from operation of ExxonMobil is greater which is more than 60 dollar billion.4
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