Oil and Gas Industry

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Table of Contents

Analysis of the industry
Company Profiles
List of References

Analysis of the industry

Oil and gas are the major products in any financial system since they are depended upon in moving the economy forward. The countrys GDP relies heavily on the industry with many studies showing that a quarter of the countrys revenue come from oil and gas, which is close to twenty-five percent of the total income.

The United Kingdom funds its projects from the proceeds generated through the exportation of oil and gas meaning the industry is critical in boosting the balance of payments (Warf & Stutz 2007, p. 56). The supply chain in the industry is highly coordinated with the government taking a considerable share given the sensitivity of the products.

For instance, the companies operating in Scotland alone are over two-thousand with many of these corporations offering services to the offshore industry globally. In terms of production, Scotland is depended upon since it accounts for over ninety-six percent of the UK continental shelf (UKCS). In 2011, the country produced over seventy-eight percent of hydrocarbon.

The Northern Se, which is found in Scotland, has profitable oil production sites and the UK government relies on the site, as the taxes generated are high. The UK is the leading producer of hydrocarbons in the entire continent because sixty-four of oil produced in Europe comes of the country and the gas production is thirty-six percent.

A close analysis of the industry reveals that the future is bright for the country, as studies suggest that unexploited oil and gas deposits are concentrated in the northern sea. In fact, two leading companies, Dana and Statoil, announced that they would be engaging in exploration in the east of Shetland.

Again, TAQA discovered new oil deposits at the Darwin oil fields in the northern area, as well as the North Sea proving that the industry has a brighter future. Regarding the oil and gas prices, various auditing firms have varying predictions with OBR suggesting that the prices will fall gradually in the next few years to an estimated $92 by the year 2018 (Jackson, Hitt & DeNisi 2003, p. 112).

The US based energy information administration company has a different prediction since it notes that the prices will fall in 2014 before picking up once more in the subsequent years.

Unfortunately, the governmental agency for energy and climate change is optimistic of rise in oil and gas prices. The government is investing heavily on the North Sea project and the trend is expected to continue meaning oil production is likely to go up. The continued support of the production process would likely increase taxation given the fact the prices are projected to go up.

Company Profiles

Exxon Mobil

The company is the global market leader operating in various countries with its headquarters in the United States. It operates under the brand name Esso in the United Kingdom. The company was originally established as an Anglo-American oil company back in 1888 being the first multinational company to ever exist in the British market.

The parent company back in the US was the Standard Oil Trust, but the Esso suffered a setback when the Supreme Court ordered for the closure of the parent company. Esso is the largest supplier of oil and gas products in the country and its international image plays a critical role in boosting its sales.

Regarding the external environment, the organization has the likely of doing well since it has a stable customer base given the quality of goods and services it offers. It has a strong workforce that is known for formulating the best strategy to outdo competition. The UK economy is favorable in the sense that it provides equal opportunities for all market players.

However, the company faces to major challenges as regards the external environment, one of them being government regulation through issuance of licenses and the other is a negative public opinion (Jaffe & Nebenzahl 2006, p. 54).

Many people view the company as foreign in the sense that Americans mainly hold its shares. However, the company has a well-established public relations department that has always tried its best to boost the image.

The financial indicators of Esso suggest that it has the likelihood of doing better because its total business revenue is always high each year. Again, the total sales have been good meaning the company is meeting its targets.

Revenues from domestic sales are not strong because companies with local support are doing extremely well. The strength of the company lies with the revenues from the foreign sales since it is a multinational corporation (Lau 2002, p. 127).

Dana Petroleum

The company was formed in early 1990s with the sole purpose of exploring oil and gas in the North Sea, Africa, and parts of the Middle East region. The company is doing well in the sense that it recently acquired Ener Petroleum and Devon Energy. In 2010, it entered into an agreement with Petro Canada Netherlands with an aim of acquiring it from a poorly performing company, Suncor Energy.

An analysis of the external environment reveals that the company is expected to perform better since it has a promising customer base mainly in the Asia and the United Kingdom. Again, it enjoys public support because it has the backing of the government meaning it would be able to manage competition.

It does not suffer from the challenges that government regulations present. Regarding the financial indicators, the company has several assets having acquired them from the collapsing companies (McGrath 2013, p. 78). Currently, the company employs many locals than any other multinational.

Shell

Shell was one of the best performing oil and gas companies globally before it was involved in a scandal that saw it charged for violating health standards. In the last six years, the company has been sued several times and the government has been forced to censor its activities twenty-five times.

The company is often accused of failing to maintain the pipelines leading to damages to the ecosystem, something that taints its global image (Trought 2012, p. 16). The financial indicators suggest the company is still the strongest while the external environment is also healthy, but the company is at risk of losing out as the market leader in the oil and gas industry.

Analysts accuse the company for being a serial offender since it had previously been charged by the US court, but failed to take corrective measures to ensure such issues do not arise in the future.

The public opinion towards the company is negative globally, which has a likelihood of affecting its competitive advantage. Customers are slowly shying away since they do not want to be associated with the company that is insensitive to the environment.

List of References

Jackson, SE, Hitt, MA & DeNisi, AS 2003, Managing Knowledge for Sustained Competitive Advantage: Designing Strategies for Effective Human Resource Management, Jossey-Bass, San Francisco.

Jaffe, ED & Nebenzahl, ID 2006, National image & competitive advantage: The theory and practice of place branding, Copenhagen Business School Press, Herndon.

Lau, RS 2002, Competitive factors and their relative importance in the US electronics and computer industries, International Journal of Operations & Production Management, Vol. 22, no. 1, pp 125135.

McGrath, RG 2013, The end of competitive advantage: How to keep your strategy moving as fast as your business, Harvard Business Review Press Boston.

Trought, F 2012, Brilliant employability skills: How to stand out from the crowd in the graduate job market, Pearson Harlow.

Warf, FP & Stutz, B. 2007, The world economy: resources, location, trade and development, Pearson, Upper Saddle River.

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