oil prices since June 2014, many drillers face stark choices: shut down rigs to conserve capital and wait out the bust, or surrender some independence to a deep-pocketed savior in exchange for a shot at a future windfall. Exxon is expanding at a time when $40-a-barrel crude is crippling more-indebted companies (Carroll, 2015)
shale oil? The global environment for oil and gas has changed significantly in just the last few years as a new set of market conditions have been created that can be defined by an increase supply in oil. These supply increases have largely come from technological developments that have allowed for new forms of oil to extract such as shale oil which has in turn reduced the dependence on the cartels and Middle Eastern oil (Doshi & Corrigan, 2015)
However, at the same time, other OPEC producers are also having their own troubles amidst the falling prices. The collapse in oil prices is especially hurting less affluent OPEC members like Algeria, Angola, Ecuador, Nigeria and Venezuela and one reporter stated that OPEC has never been more divided about what to do about strategy (Egan, 2015)
"It is having the effect that we would expect, which is a decline in investment and ultimately supply, and somewhat higher demand. We think this change is for good" Francisco Blanch, Head of Commodities Research at Bank of America Within OPEC, other producers, principally Iraq and Iran, are determined to continue raising their output even as prices slump (Kemp, 2015)
The results of the companies, and those of almost the entire oil patch this week, were disappointing but not all that surprising since the price of oil is now half what it was a year ago." (Krauss, 2015) Figure 1 - Prices/Production (The Economist, 2015) Given the tough economic conditions that Exxon is facing, there is little room for growth in the different types of environments in which they currently operate
But at the same time it has also exposed some of the financial problems within the country. Saudi Arabia's revenues have been shrunk -- by an oil price that has more than halved -- yet the kingdom has a higher pain threshold than everybody else and it will continue with its long-term plan to undermine rivals and secure its market share (Raval & Kerr, 2015)
According to the data from Baker Hughes Inc. dated 20th February, the number of rigs for drilling oil is the smallest in the United States since July 2011; the figure fell by 37 last week to 1,019 as well as 556 were withdrawn from service since 5th December (Taneja, 2015)
7 million for the third quarter of 2015 compared to $2.9 million in the third quarter of 2014 (Bnkpetroleum.com, 2015)
Analysis of BNK Petroleum SWOT analysis The analysis of the company's businesses and operations is provided by the SWOT Analysis of BNK Petroleum. This analysis is necessary assess the competitive strength of the company in the market and under the present market conditions (Fine, 2009)
In this situation many of the smaller oil companies are facing acute revenue shortage and are looking for ways and means to augment revenues and tide over the situation. In this study we will look into the case of BNK Petroleum and try and find out the possible strategic plans that the company can formulate in order to get out of the tight financial crunch position it finds itself in (Inkpen and Moffett, 2011)
The price of oil has fallen from around $120 per barrel about a year and half ago to around $50 per barrel. This has resulted in a sharp fall in revenues for all oil companies and specially the smaller companies that have a limited cash or revenue reserve to tide over the difficult period (Johnson, Scholes and Whittington, 2008)
Porter's 5 Forces Analysis To understand the competitive market that BNK Petroleum works in the application of the Porter's 5 forces for market analysis is given below. Given below is a graphical representation of the Porter's 5 Forces (McKeown, 2012)
This has directly affected the price of oil globally. However for BNK, political stability in both North America and Europe means that the company is able to conduct business quite smoothly in these regions (Rigzone.com, 2015)
Weakness Intermittent productivity is a problem for the company Given the debts to equity ratio of the company, it would face problems with debt ratings in the near future. Opportunities Shell gas is growing in demand in comparison to crude petroleum Income for the company has been increasing steadily for the last few years Threats Lowering of global oil and gas prices Simultaneous increase in oil prices Market Analysis for Oil & Gas Industry PESTLE Analysis For a complete analysis of the factors of external environment of the market that could influence the organization and entire industry, organizations use the PESTLE analysis (Warner, 2010)