Financial Future Of British Petroleum Term Paper

Financial Future Of British Petroleum - Term Paper Example The U.S. completed negotiations with BP Plc to establish the $20 billion fund that will compensate victims of the Gulf of Mexico oil spill† (Blum & Snyder). 20 billion dollar is a huge amount for BP and such a huge amount given as compensation caused severe financial problems in BP and the company is currently on the verge of bankruptcy. BP forced to appoint a new CEO in their last-minute effort for survival. This paper is trying to answer the questions like; where BP stands on the market now, where it is going and where it might end up. BP plans to sell assets for up to $30 billion over the next 18 months, primarily in the upstream business and selected on the basis that they are worth more to other companies than to BP. This portfolio high grading will leave the company with a smaller but higher quality Exploration & Production business. The company said it was taking a prudent approach to manage the balance sheet and its financial liquidity, in order to ensure that BP has the flexibility to meet all of its future financial obligations. As a result, it plans to reduce its net debt level down to a range of $10-$15 billion within the next 18 months, compared to net debt of $23 billion at the end of June (BP Sets Out Gulf of Mexico Costs, Further Asset Sales and Strong Operating Performance) BP is currently doing everything possible to stay in the market. It is not in a position to utilize some of its projects effectively because of their weak financial abilities at present. BP has realized that some of these projects can be managed more effectively by others and the market value of these projects are more than what BP would be able to derive out of it.