What's Green about BP?

As BP's reputation and stock prices take a beating in the aftermath of the Gulf of Mexico oil leak, the energy giant co

    Remaking a brand is no easy task – you rarely win many plaudits and everyone is a critic. British Airways was the self proclaimed world’s favourite airline – something you can scoff about right now. BA’s attempt to change its image to reflect its global reach backfired spectacularly as it replaced the British flag on its tail fin – the then Prime Minister Margret Thatcher placed a handkerchief over the ethnic designs.

     

    So now spare a thought for BP, formerly known as British Petroleum. Its carefully crafted image of expanding its energy portfolio from oil and gas to solar and wind power has also been blown apart by the deadly, environmental and economic disaster in the Gulf of Mexico. The only Green you'll see is its logo.

     

    A look at its first quarter results should give you a clearer picture -- mostly red. I had to go down to page 8 of the 22 page earnings release to see how its Alternative Energy Business is doing. It would appear very little. AEB is lumped in with “Other businesses and corporate” and made a loss of $328 million in the first quarter of 2010.

     

    Survival

     

    As its stock price tumbles – blowing away $58 billion from its market value, many market watchers are questioning whether BP will be around in the years to come. At the current price it could become a tempting takeover target.

     

    Add that to the various estimates for the clear-up cost which could hit $25 billion. But include the legal costs -- civil and possibly criminal -- BP could be forking out as much as $40 billion. BP has spent almost $1 billion trying to stop the leak so far.

     

    So no one will step up just yet. But don’t rule out a potential strategic stake from China’s petroleum giants. They’d be uproar if they attempted to take over the whole of BP and get there hands on its US assets – Cnooc's bid for Unocal.

     

    BP by the numbers

     

    Another look at the balance sheet shows just how strong BP is: It’s a revenue generating juggernaut and has enough assets to pay for the clear up.

     

    Total Assets

    $240 billion

    Total Liabilities

    $135 billion

    Cash & Equivalents

    $6.8 billion

     

     

    2009 Revenue

    $239.2 billion

    Net Profit

    $13.9 billion

     

     

     

     

     

     

     

     

     

    Reputation is something else. Exxon recovered from its debacle and I have no doubt Toyota will too – and BP’s failure to plug the hole in the Gulf of Mexico must have been welcome relief for the Japanese corporation.

     

    However the real game changer could come if BP is forced to quit the United States. About 40 per cent of BP’s reserves are in the Gulf of Mexico. It would have to sell those, at possible knock down prices, and then we’ll really know if it is going Beyond Petroleum.


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