PEEN4001 Petroleum Economics: Business Analysis of Petroleum Firms

This report provides a comprehensive analysis of the business operations, strategies, and financial performance of three major petroleum companies: Chevron Corporation, Woodside Petroleum Limited, and Petro China. It examines their current assets, developments, strategic direction, and advantages and disadvantages. The analysis includes financial summaries with key metrics such as revenue, net income, and total assets. The report highlights Chevron's global presence and strategic focus on both upstream and downstream operations, Woodside's leading market position in Australia and LNG production, and Petro China's dominance in the Chinese market and internationalization plans. The report also touches upon the challenges faced by each company, such as legal issues, environmental concerns, and market competition. The analysis aims to provide insights into the business dynamics of these companies within the global petroleum industry.

Running head: BUSINESS OF PETROLEUM COMPANIES
Business of petroleum companies
Name of the student
Name of the university
Author Note:

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BUSINESS OF PETROLEUM COMPANIES
Executive Summary
The following report has been prepared to analyze the business operations and the different
business scopes of the organization. The report has included the financial summaries of all the
three different oil companies which have increased the scope of the report further. The summary
at the end of each of the report of an organization helps the readers to get a brief but compact
overview of the total topic.

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BUSINESS OF PETROLEUM COMPANIES
Table of Contents
Introduction......................................................................................................................................5
Company Portfolio...........................................................................................................................5
Chevron Corporation.......................................................................................................................5
Current Assets and Developments...................................................................................................5
Financial Summary..........................................................................................................................6
Strategic Direction...........................................................................................................................6
Advantages and Disadvantages.......................................................................................................7
Summary..........................................................................................................................................8
Woodside Petroleum Limited..........................................................................................................8
Current Assets and Developments...................................................................................................8
Financial Summary..........................................................................................................................9
Strategic Direction...........................................................................................................................9
Advantages and Disadvantages.....................................................................................................10
Summary........................................................................................................................................10
Petro China....................................................................................................................................10
Current Assets and Developments.................................................................................................11
Financial Summary........................................................................................................................11
Strategic Direction.........................................................................................................................11

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Advantages and Disadvantages.....................................................................................................12
Summary........................................................................................................................................13
References......................................................................................................................................14

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Introduction
The following study analyzes three different global petroleum companies namely
Woodside, Chevron and Petro China. The analysis has been done on the basis of the business
operations of these companies. The following companies have been strategically selected to
make sure that they come from different regions of the world. The selected companies are there
from different parts of the world namely USA, China and Australia. The selection of the
companies from the different regions of the world has been done to identify the different
strategies of the organizations in different areas. The following study will clearly sort out the
different ideas regarding the business operations, strategies and the financial considerations of
these corporations.
Company Portfolio
Chevron Corporation
Chevron Corporation is an American multinational energy corporation that has its
headquarters in California and has its operations spread in 180 different countries in the world.
The company has annual revenue of around $140 billion (chevron.com 2018). Apart from
producing and exporting petroleum the company has also alternative energy manufacturing
facilities where they produce solar power, wind power, geothermal energy, bio-fuel and many
other such similar products.

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Current Assets and Developments
The company owns a number of different assets that makes them one of the topmost
companies in the oil sector. The company owns a number of subsidiaries and has also stakes and
shares in many of the different oil companies of the world. Apart from this it owns a large
number of oil fields and has a number of strategic oil reserves.
Financial Summary
Chevron’s operations is spread over 180 different countries in the world and thus it can
be truly said to be a global company. The annual revenue of the company is slated to around
$141.722 billion. The company has a net oil production of 2.6 million barrels per day and a
reserve capacity of around 11.1 million barrels of proven reserves. The total sales revenue of the
company stands at a huge amount of $110.2 billion with its assets amounting to $260.1 billion.
A table showing the financial summary of the company is provided below;
Income Statement 2017
 Revenue US$ 141.722 billion
 Operating Income US$ 2.480 billion
 Net Income US$ 9.195 billion
 Total Assets US$ 265 billion
 Total Equities US$ 148.124 billion

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Strategic Direction
The management of Chevron Corporation has been dedicated to continue generate
different industry leading operational and financial results and advancement of important
projects to drive the future growth of the organization as well as the countries where it operates.
The rise in the energy demands of the world has driven the strategies of the mentioned oil
company of America. The compelling growth profile of the organization, combined with the fall
in the spending levels of the capital is believed to be the extreme catalyst for the creation of
strong and compact strategic values for the companies ahead (Forsgren 2017). The upstream
portfolio of the mentioned organization leads the following industry in quality and breadth. The
management of the company has formulated the particular strategy to plan a disciplined
investment approach and have been constantly involved in management of the portfolio to
increase the value of the shareholders of the company. Thus the company strategies have been
formulated in the perfect way to achieve the best results in the industry. The mentioned company
has also formulated a downstream policy where the production is dedicated for residential
purpose, supplying to the companies, petrochemicals supply and also supply to small or large
business concerns. Both the upstream as well as downstream policy are important for the
effective strategy of the business.
Advantages and Disadvantages
Advantages Disadvantages
 The company ranks 63rd in annual
brand finance report and is the 5th
largest oil company of the world
 A number of legal issues are being
faced by the company in different
countries
 Integration of producing, refining and  Poor financial projections for the

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then selling products coming years.
 Massive geographic presence across
180 countries of the world
 The rise in debts has been another
major disadvantage for the company.
The debt of the company has reached
around $ 40 billion from $ 28 billion in
a span of just one year.
 11.2 million barrels of oil reserves
which is one of the largest. It has 48485
productive wells
 The implementation of new
technologies by other companies have
been a disadvantage for Chevron
Summary
The management of Chevron Corporation has been a driving force for the oil economy of
USA. The presence of the company in almost every part of the world is an added advantage for
them as they export their products in these countries and earn a huge amount of revenue which in
turn is utilized for their productive growth. The management however needs to overcome some
of the main disadvantages to attain the topmost position in the oil sector.
Woodside Petroleum Limited
The mentioned company is Australia’s largest oil and gas company. It is not only the only
dedicated oil and gas producing company in the island continent but also its largest operator.
The company is listed in the Australian Securities Exchange and has its headquarters in Perth,
Western Australia (woodside.com 2018).

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Current Assets and Developments
The main assets of the company include the number of facilities in Australia as well as in
other parts of the world. This includes Development projects in USA, Canada, Myanmar and
many more such areas. Other assets include exploration facilities in Peru, Morocco, Senegal,
Canada and many more as such.
Financial Summary
The Australian oil company produced huge amount of oil in the year 2016 and created a
new record surpassing the earlier one by producing a huge amount of LNG and also by achieving
healthy amount of sales of the following product. According to the financial reports of the
company the annual revenue of the company in the year 2017 stood at $4075 million and net
income figured out at more than $850 million (Dissanayake, Nayana, Bo and Peng 2015). The
shareholders of the organization earned an amount of more than 100 cents from each of the share
of the company.
Strategic Direction
The main strategies of the company include the increase in the production level and also
to speed up the different developmental projects of the world. Among the most important
strategy which is believed to be the topmost priority of the organization is the operational
clearance for the Wheatstone LNG facility and also to concentrate on the key focus areas to be
the best company of the world (Jin et al. 2016). Its exports or the upstream strategy is mainly to a
number of Asian and African countries along with supplies to New Zealand. The company is the
largest supplier of domestic fuel in the island continent and has largescale operations that have
its wings spread across the length and breadth of the mentioned country.

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Advantages and Disadvantages
Advantages Disadvantages
 Leading market position in Australia
helps to secure a sustainable and
competitive position
 Legal problem regarding land
acquisition
 Largest producer of LNG in Australia  Increase in the production from shale
plays is a disadvantage for the
organization
 High quality strategic assets in different
areas of the world
 Huge operating risks associated with
exploration and production of oil and
gas in Australia
Summary
The management of Woodside Corporation has plans to implement the best strategies to
keep up with the upward growth and demand of oil and other petroleum products like Shale and
Natural Gas. The optimization of the existing assets of the company along with the proper
commercialization of the products is important for the growth of the business.
Petro China
Petro China Limited is one of the largest oil companies of the world and the largest
among the various oil producing companies in China (petrochina.com 2018). The company is
listed in Hong Kong stock exchange, Shanghai stock Exchange as well as New York stock
exchange. The company has its headquarters in Beijing China and produces a number of

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different oil and petroleum products apart from producing oil. The other products include
Lubricants, Natural Gas, Shale, LNG and many other such different items (Caineng et al. 2016).
Current Assets and Developments
The assets of the company include the large number of oil mines and factories another
development centers in China and Asia as well as in different areas of the world (petrochina.com
2018).
Financial Summary
The financial summary of the mentioned company is quite impressive in nature which
can be seen in the table below;
Characteristics 2016
 Revenue  1.616 trillion Chinese Yuan
 Net Income  7.8 billion Chinese Yuan
 Operating Income  60.6 billion Chinese Yuan
 Total Assets  2.396 trillion Chinese Yuan
 Total Equity  1.372 trillion Chinese Yuan
Strategic Direction
The mentioned Chinese company has based its strategy on the maximization,
diversification and proper replacement of different hydrocarbon resources that adheres to the
principles of attachment of equal importance to oil and gas that helps to increase the exploration

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of the domestic resources as well as the increase in the investment to acquire facilities outside
China (Subhankulova et al. 2015). The management of the company also has a proper
internationalization plan in the offing which will surely make them one of the best in the
business (Jin et al. 2016). The company supplies refined oil and fuels to facilitate transportation
in China. It is believed to be the driving force of the nation. The company has extensive
operations involving exploration, mining, digging for oil in various countries of the world. The
company exports oil as well as is the largest supplier of different kinds of fuels for use in the
households as well as for commercial purpose. The aim of the company is to manufacture the
secondary fuels from oil and then market it for use in the future (Forsgren 2017).
Advantages and Disadvantages
Advantages Disadvantages
 Controlled by the China National
Petroleum Company
 Cost of different hazards to the
environment and cost of taking
precautionary risk is a huge challenge
for the Management of the organization
 Huge scope of Operations as it is the
biggest producer in China
 Decline in the operations of China
 Presence of Huge number of employees
which is over 500,000 is a big form of
advantage for the organization
 The biggest disadvantage lies in the
controversy surrounding the Western
gas to East Pipeline project controversy

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Summary
The following report has clearly highlighted the stature of Petro China in Asia as well as
the world. It has aims to increase its production and act as a driving force to the economy of
China. However the recent incidents related to oil spill and other major accidents has led the
company to huge losses. The management must take the appropriate actions to take care of the
following and lead towards prosperity. The three companies as mentioned in this report have
their own base of operations and a different form of project execution. Among the mentioned
three Chevron Corporation and Petro China are the largest in stature and they have the resources
to be the world’s best in terms of global oil production. However it can be seen some common
problems involving scandals, accidents and debts has crippled the management of the industries
and have acted as a barrier to their smooth growth. However the exploration, extraction and
production of substitute oil products like shale gas, LNG have paved the way for the changing
paradigm of the companies towards a more bright and innovative future.

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References
"Woodside Energy | Home." Woodside.com.au. N.p., 2018. Web. 10 Apr. 2018.
Caineng, Zou, Yang Zhi, Pan Songqi, Chen Yanyan, Lin Senhu, Huang Jinliang, Wu Songtao et
al. "Shale gas formation and occurrence in China: an overview of the current status and future
potential." Acta Geologica Sinica (English Edition) 90, no. 4 (2016): 1249-1283.
Chevron Policy, Government and Public Affairs. "Chevron Corporation - Human
Energy." chevron.com. N.p., 2018. Web. 10 Apr. 2018.
Dissanayake, Nayana, Bo Xia, and Peng Wu. "Measuring sustainability performance within the
Australian energy industry." In Proceedings of the 19th International Symposium on
Advancement of Construction Management and Real Estate, pp. 135-143. Springer, Berlin,
Heidelberg, 2015.
Forsgren, Mats. Theories of the multinational firm: A multidimensional creature in the global
economy. Edward Elgar Publishing, 2017.
Jin, Liu, Du Jianping, Peng Yunhui, Zhou Zhi, and Petrochina Zhejiang Oilfield. "Shale Gas
Drilling and Completion Technologies in Jingmen Area of Dangyang
Synclinorium." Unconventional Oil & Gas 2 (2016): 013.
Lima-de-Oliveira, Renato, and Timothy Sturgeon. "From Resource Extraction to Knowledge
Creation: Oil-Rich States, Oil Companies and the Promotion of Local R&D."
Petrochina" Petrochina.com.cn. N.p., 2018. Web. 10 Apr. 2018.

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Rincón, Luis E., Monica J. Valencia, Valentina Hernández, Luis G. Matallana, and Carlos A.
Cardona. "Optimization of the Colombian biodiesel supply chain from oil palm crop based on
techno-economical and environmental criteria." Energy Economics 47 (2015): 154-167.
Subhankulova, Rimma, Kirill Furmanov, and Natal'ya Ivanova. "Assessing Comparative
Advantages in Operating and Capital Expenditures of Oil Producing Companies." (2015): 271-
289.