In 1900 William Knox D’Arcy founded BP after a prospecting trip to Iran. BP became
very profitable, even after Iran nationalized its oil wells, because they had expanded into over 70
different countries. By the 1980’s BP was acquiring many smaller drilling and service
6. ExxonMobil. Web. 8 Oct. 2010
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companies. In 1998 BP and Amoco made the world’s largest industrial merger when BP took
over the company.
In the summer of 2010, BP suffered a large explosion on one of its drilling rigs in the
Gulf of Mexico. In that explosion 11 of BP employees lost their lives. That explosion also caused
the well to break and spill millions of gallons of oil into the Gulf, which is now the largest
environmental disaster in the US. Since then, there has been a restructuring of BP’s executives
and a huge cleanup effort in the Gulf7.
BP’s recent statistics are far below industry averages because of the recent catastrophe.
Their PE ratio for the last quarter and year is negative. The Price per Cash Flow ratio for the
quarter is -1.9, but for the last 12 months it is 10.35, which is far above their competitors. They
were showing very good growth and profit until their accident. They have a good amount of debt
but far above average operating profits. This stock is a risk because of the debt they hold, but it is
a good investment because it has the ability to make huge gains at a low starting price.