|Term Paper Title
||Company Insights On BP
|# of Words
|# of Pages (250 words per page double spaced)
Company Insights on BP
On August 30, we all chose 5 stocks to evaluate before purchasing. At this
time I chose BP AMOCO, Microsoft, Western Digital, Toys-R-Us, and Fortune
Financial Incorporated. After a few weeks of tracking these stocks, I chose to
keep BP AMOCO, Microsoft, and Western Digital, because the stocks were
relatively stable and most of them were on the rise at this time.
As you are aware, we were given $30,000.00 to invest in our three chosen
stocks, which breaks down to $10,000.00 per stock. We also had to include a
broker’s fee of $500.00 for every $10,000.00 invested.
My first stock was BP AMOCO. On September 8, I purchased 167 shares at $57.06
per share, which totaled $9,523.00 and incurred a $476.15 broker’s fee, making
the grand total spent $9,999.15.
BP is one of Britain’s biggest companies and one of the world’s largest
oil and petrochemical groups. Its origin dates back to May 1901.
BP owes its origin to one man, William Knox D’Arcy, a wealthy Englishman,
who obtained concession from the Muz-affaru'd-Din, Shah of Persia (1896-1907) to
explore and exploit the oil resources of the country, excluding the five
northern providence’s that bordered Russia. He, shortly after the turn of the
century, invested time, money and labor in the belief that worthwhile deposits
of oil could be found in Persia, which is now known as Iran. Having been granted
the concession; D’Arcy employed an engineer, George Reynolds, to undertake the
task of exploring for oil in Persia.
For seven years, Mr. D'Arcy battled with severe weather, the absence of a
developed infrastructure, the shortage of skilled local labor, the problems of
dealing with neighboring tribes in the absence of a strong central government,
difficult terrain, and an uncertain political situation. These conditions made
Reynolds pioneering task an exceptionally difficult venture. Meanwhile, the
costs mounted stretching D’Arcy’s resources to the point where e sought
outside financial assistance. This came in 1905 from the Burmah Oil Company,
which provided new funds for his venture.
More exploration in Persia followed without success, until eventually, in May
of 1908, Reynolds and his helpers struck oil in commercial quantities at
Masjid-i-Suleiman in southwest Persia. It was the first commercial oil discovery
in the Middle East, signaling the emergence of that region as an oil producing
After the discovery had been made, the Anglo-Persian Oil Company was formed
in 1909 to develop the oilfield and work the concessions. At the top of
Anglo-Persian’s formation, Burmah Oil Company owned 97 percent of its ordinary
shares. Lord Strathcona, the company’s first chairman, owned the rest.
Although D'Arcy was appointed a director and remained on the board until his
death in 1917, he was not to play a major part in the new company's affairs. His
role as the initial risk-taking investor was past and the daunting task of
developing the oil discovery into a commercial enterprise shifted to others,
amongst whom one stands out: Charles (later Sir Charles, then Lord) Greenway.
Greenway was one of Anglo-Persian's founder-directors, becoming managing
director in 1910 and chairman, after Strathcona, in 1914.
Greenway, anxious to avoid falling under the domination of Royal Dutch-Shell,
also turned to another potential source of revenue and capital: the British
government. The basis of an agreement to mutual advantage lay in Greenway's
desire to find new capital and an outlet for Anglo-Persian's fuel oil; and, on
the government's part, in the desire by the Admiralty (then headed by Winston
Churchill as First Lord) to obtain secure supplies of fuel oil, which had
advantages over coal as a fuel, for the ships of the Royal Navy.
After lengthy negotiations, an agreement was reached in 1914 shortly before
the outbreak of World War I. Anglo-Persian contracted to supply the Admiralty
with fuel oil and the government injected $2 million of new capital into the
company, receiving in return a majority sharehol...
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