BP shares: Price analysis before buying or selling

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ISIN code: GB0007980591

Ticker: LON: BP

Index or market: FTSE 100

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Elements to consider before selling or buying BP shares

Analysis N°1

The results of the BP group are of course very important in the study of its share price on the stock market. These results are most often officially published on the website of this oil company, but also included in the financial news of this market. These are mainly turnover and net profit, which reflect the company's profitability.

Analysis N°2

Other financial publications are important to properly analyze the BP share price, such as the dividend payment schedule, which will provide you with information on shareholder compensation. Indeed, high-dividend stocks tend to appreciate in value and their price to increase and vice versa.

Analysis N°3

As the share price of oil companies is strongly influenced by the cost of raw materials and therefore more precisely of oil, you will have to closely monitor the evolution of barrel crude oil price as well as all the news and events likely to have an influence on it.

Analysis N°4

Data on BP's direct exploitation of oil fields and the discovery of new fields are also important for a complete fundamental analysis.

Analysis N°5

Finally, you will carry out an analysis of the competition in this sector by also monitoring the results, news and market share trends of major oil companies such as Total, Technip or Chevron.

Analysis before buying or selling BP shares

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General presentation of BP

Before you buy BP shares or attempt to trade them online, you will need to assess the company's ability to accelerate its growth in the coming years. In order to do this, you need to know a lot about the company, its activities and business segments, and how it generates its revenues. To help you do this, here is a comprehensive overview of the company, which is listed on the London Stock Exchange (LSE) and is a constituent of the FTSE100 index.

BP Plc is a British company active in the energy sector. More specifically, it is currently one of the world's leading oil companies.

In order to better understand the activities carried out by the BP Group, it is possible to divide them into different divisions according to the share of turnover they generate and in this way:

First of all, the activities related to oil refining and distribution represent the major part of the group's revenues with more than 89.8% of the turnover. Indeed, each year, the BP Group markets around 8.7 million barrels of crude oil and barrels of refined products. To achieve these figures, the group owns and operates 13 refineries, 3 of which are located in the United States, and a network of more than 18,900 service stations, of which more than 7,800 are in the United States.
Another 9.9% of BP's turnover comes from activities related to the exploration and production of hydrocarbons. This involves more than 1,288,000 barrels of oil per day and 221.5 million m3 of natural gas per day.
The remaining 0.3% of sales are from ancillary activities.

At present, more than 67.9% of BP's turnover is generated internationally.

Photo credits: ©topdeq/123RF.COM

The major competitors of BP

Total

Of course, the Total group is one of BP's biggest competitors. This oil company based in France is indeed one of the giants in this sector of activity throughout the world. It is also one of the largest market capitalisations in the CAC 40 and the euro zone in general. One of Total's assets is its recent diversification, particularly in the electricity and natural gas sectors, which allows it to no longer depend solely on oil.

Royal Dutch Shell

This other oil company is this time Dutch and is also known as Shell Oil in North America. It is a multinational company that also has various activities in the same sector as BP and also benefits from a number of strategic advantages.

Chevron

The Chevron group is also a known competitor of BP. It is the second largest company in this sector in the US and one of the world's major oil companies. Chevron is active in more than 180 countries around the world in oil and natural gas, from exploration and production to refining, transportation, chemical production and sales.

Exxon Mobil

Another US company to watch as part of your BP share price study is ExxonMobil Corporation, which is none other than the leader in oil and gas in the US and one of the most profitable companies in the world. It is also one of the world's largest market capitalization companies.

Sinopec

Finally, we must also take into account the Chinese oil company Sinopec, which ranks among the largest companies in the world in terms of turnover.

The major partners of BP

The BP Group has also implemented certain strategic partnerships with other large companies.

Solvay Group

In 2000 the Solvay Group created a partnership with the BP Group to exchange their polypropylene for the technical polymers of this company.

Alfa Access-renova

In 2009, BP announced the implementation of a new partnership with Alfa Access-Renova relating to their joint business held in equal parts in Russia in order to rapidly start production and thereby become the third largest oil and gas group in the country.

Rosneft

In 2016, BP and Rosneft also created a joint business in Russia in the oil exploration sector.

Ford Group

Finally, the Ford Group and BP are long term partners and have developed technological solutions together for individual consumers. One of the projects resulting from this partnership is the presence of the Ford BP team in the World Rally Championship at Abu Dhabi.

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The factors in favour of a rise in the BP share price:

Understanding the strengths and weaknesses of the BP Group is absolutely necessary if you plan to speculate on this company’s share price on the stock markets. In fact, to implement comprehensive analyses and make a correct prediction of this asset’s movements you must understand the strong and weak points of this company.

We shall commence this analysis with a summary of the advantages of BP shares and the strong points of this company share on the stock markets against the competition:

We would first note that the BP Group is a particularly innovative company. In fact, for a number of years now, this petroleum company has used innovation as an advantage against the competition. Each year the company invests a large part of its available cash flow in research and development to distinguish itself from its competitors and allow itself the possibilities to generate increased revenue in the future.
Another undeniably strong point of this company relates to the fact that it unceasingly seeks to diversify its activities and establish new sources of income. This enables the company to protect itself more effectively against the risk of exposure to a single sector and also to generate increased profits.
The company’s acquisition policy and regular implementation of strategic partnerships is also one of this group’s strong points. In fact, through the use of its alliances and acquisition of companies, BP continues to expand and significantly increase its growth capabilities over the medium and long term.

The factors in favour of a drop in the BP share price:

The BP Group has, as we have just noted, numerous advantages. However it also has certain weaknesses that we shall now examine through this list of the most significant weak points of this company:

Firstly it is important to underline the fact that the consumption of refined products has experienced, for a few years now, a significant decrease worldwide. Over the long term this could weigh heavily on the activities and profitability of the group.
Another weak point relates this time to the margins achieved by the refinery activities exercised by this company. These are in fact less than those of the competition. The BP Group is continuously trying to overcome this gap by searching for ways to reduce its costs as much as possible.
Of course, the competition is also a significant weak point of this company. In fact, although BP is one of the largest companies worldwide in the petroleum sector it has to face competitors that are also large and possess major financial resources that could seize parts of the market currently held by BP.
And finally, the last weak point of the BP Group that we would draw to your attention relates to the weak growth and slowdown in the world economy that we can observe at present. In fact, it is clear that a slow economy weighs heavily on certain activity sectors including that of the petroleum industry and energy in general with a decrease in demand from industry.

The advantages and disadvantages that we have mentioned relating to the BP Company are of course susceptible to change over time and this is why you should complete a comprehensive fundamental analysis before speculating on this asset using up to date information based on current events and news from this sector.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

What were the different names of the BP company?

In the course of its history, the BP Group has changed its name several times. The company was first established in 1909 as a company engaged in the exploration, extraction, refining and sale of oil under the name Anglo-Persian Oil Company or APOC. It then became Anglo-Iranian Oil Company or OIAC in 1935, then British Petroleum Company or BP in 1954. Its name will then become BPAmoco in 2001 before reverting back to BP.

Is the BP share price quoted on several financial markets?

Some international companies benefit from multiple listings, which means that their shares are listed on several markets. This is also the case for BP, which is listed on the New York Stock Exchange, the London Stock Exchange, the Frankfurt Stock Exchange under the symbol BPE and on the Tokyo Stock Exchange under the reference 5051.

What is the most important factor influencing the BP share price?

While there are several elements that can influence BP's share price, as discussed in our fundamental analysis guidance in this article, some data will be more influential than others. This is particularly the case for the price of a barrel of oil, which is probably the element that has the most direct impact on the company and should therefore be closely monitored.

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Analysis before buying or selling BP shares