Analysis of oil and gas industry

Abstract

The paper asesses the financial volatily of the oil & gas industry due to the business environment factors (Political, Economical, Social, Technological, Legal and Environmental) for the period 2016-2021. Geopolitical tensions in the Middle-East and Eurasia influence divestment / investment strategies of oil corporations contributing to price volatily. Additionally, Economic forecasts show low to moderate growth forecasts for most of the world in the next five years keeping commodity prices low. On the other hand, regarding technological factors, large oil companies are strongly investing in innovation programs in order to achieve greater efficiencies and alternative business models that might mitigate their oil-dependency. Financial Analysis shows that most organizations in the industry are struggling to keep healthy levels of Cash Flow due to decrease in revenues, however, larger firms keep good levels of liquidity mainly because of them keeping high levels of Current Assets. Overall, after looking at solvency ratios we see that despite the market turmoils, the main players are following strong Financial Risk Management policies which will allow them to meet their financial obligations responsibly.