Research of Conocophillips Business Environment
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Research of ConocoPhillips Business Environment
ConocoPhillips, a company involved in the production of oil, natural gas, and petrochemicals, conducts business with the safety of its workers, production costs, and the global consumption of the product. The safety of employees create an environment in which the company pays out less for insurance, pays less for medical leaves, and ensures there is no shortage in applications for employment. The company also along with safety, stresses training for it employees, which helps keep them safe.
The oil and gas field is very competitive. Therefore, the company must develop new technologies, make efficient use of the open technology methods used by other companies, and produce products that remain cost competitive with other companies in the area of endeavor. ConocoPhillips designed the business operations to accommodate expected climate conditions, which as with exploring in the Arctic Circle protect both the equipment and the workers in the area (ConocoPhillips, n. d.). At the other extreme the design, also protects from extreme heat when exploring in desert areas.
ConocoPhillips supports enactment of a comprehensive U. S. energy policy, and a mandatory national framework to reduce carbon emissions. The company funds research for both the conservation and recycling of water, an important element used in drilling. Finding a use for the recycled water includes agricultural and other industrial operations continues to provide an important part of plans within the company (Techconnect, 2008).
ConocoPhillips Financial Health
The competitive business environment around petroleum and related products means that each company needs to lease or buy resources (land) where these products are likely to be found. Much of this acreage belongs to the government, thus requiring permits issued by this entity. Research shows that ConocoPhillips knew at the onset of the corporation that these would be necessary, developing an excellent relationship with the government became a high priority with company, and following the regulations set forth for environmental policies, employee safety, and conservation methods for drilling. When a company proves safety, and the environment is just as important to them as it is to the government, the officials consider compliance when granting new permits.
According to Understanding Business (Nickels, McHugh, & McHugh, 2010), the financial statements issued by companies indicate a firms basic health and stability and are the key factors in management decisions. The three key statements of a business are
The balance sheet, which reports the firms condition on a specific date
The income statement, giving a summary of revenues, cost of goods and expenses for a specific period. Shows profit or loss for that time for the firm.
The cash flow statement provides a summary of money coming into and going out of the firm.
For investment purposes, the most important of these three is the balance sheet because the investor compares several years of balances for the company, to understand how well the company has performed for a given number of years.
ConocoPhillips balance sheet shows a 1.076 ratio of current assets compared to current liabilities. Because of this figure, ConocoPhillips appears a first-rate investment opportunity. Two other big names in the petroleum industry, Vivo Energy Mauritius Ltd. (Shell) and ExxonMobil, neither show as superior a ratio. The balance sheet for Shell (Vivo Energy Mauritius, Ltd, 2012) shows a .89 relationship between assets and liabilities, and the ExxonMobil balance sheet shows a .94 relationship. Mutual fund managers expect a company to have at least a plus one, a plus one point three show better management, but any time the company has access to more instant currency than the monies owed, proves exceptional management within the company. When a company can boast liquid assets, easily sold to create currency, more than current debts any financial firm judges the stability of the company to be on firm footing. The balance sheet of ExxonMobil shows the footing of the company nearly reaching the plus point but not quite. The financial status of this company proves management believes in a reasonable expectation of profits from future business endeavors but currently is not over the ratio to provide profitable investment opportunity. The comparison with Shells balance sheet indicates even less probability of secure investment opportunity. The comparison of the three petroleum companies illustrates ConocoPhillips financial health is the best of the three.
Management uses the financial statements internally as a barometer, showing which divisions are profitable, where improvements can be made, and where cuts or additions are necessary. Managers understand if investment in the company from mutual funds or private investors is to remain on par, the financial statements need to provide positive information. Often financial statements used internally contain more detailed information than those released to stakeholders, not because the company wishes to hide data, but because the information contributes only to the internal management of the company. Also because details useful to management bore the investors and make them lose interest in what they are reading.
Technological Advantages
According to the ConocoPhillips website, the company has long been a leader in the uses of technology for exploring for bitumen, heavy oil, natural gas, carbon sequestration, and water sustainability. A technology that the company uses in several facilities, called steam assisted gravity drainage (SAGD). The central processing facilities generate steam, treat water for reuse, treat and blend bitumen for transport to refineries. The company, working with engineering partners, to advance industry-leading designs for implementation of techniques to lower significantly production costs, reduces the surface footprint by more than 50 %, and a plan to compact new facilities to enhance thermal efficiency, reduce the natural gas requirements and the greenhouse gas emissions. The use of these technologies creates benefits for the environment.
The technologies long used by ConocoPhillips for producing heavy oil, are aiding in the evaluation of the feasibility of producing shale oil in the U. S. Rocky Mountains. The company uses a similar approach to analyze the producibility of natural gas hydrates – methane trapped in ice in arctic regions and beneath the seabeds. The company also continues development of innovations and improvements for core explorations and production.