This paper will assess my portfolio in the Oil and Gas industry. This is an industry that operates at a very challenging environment, characterized by frequent fluctuation of oil prices and stringent regulatory framework. …
Despite these challenges, analyst have continued to forecast positive trends in this industry, particularly because the demand of gas and oil is on the rise, coupled with more advanced technology, which has improved production processes and fundamentally reduced production cost. My choice of portfolio in this industry is majorly motivated by the need to strike a balanced diversification, with the aim of spreading risks across different companies with different risk profiles, as well as maximizing the returns. In particular, I have diversified the portfolio across different companies that have invested from different geographical background, including the United States, United Kingdom, China, and Russia. Although the 10 companies that my portfolio cuts across, deals with similar products, there are slight differences on the combination of products that they deal with, which boost my diversification profile. This report will also provide a brief summary of each company, and some key reasons why I intend to invest in them. Most of the reasons are motivated by the need to diversify and mitigate the risks from different companies. The report has identified various challenges that this industry is undergoing, which has led to a conclusion that it has a high risk profile, but one worth investing in because of its optimistic long-term prospects. A comprehensive analysis of movement of prices of the shares for four weeks that ended mid May has been undertaken. Evidently, there has been a decline of share prices for all companies, which has led to loss of value of my portfolio, but this has not significantly affected my goals of making capital gain in the long-term, because these are short-term fluctuations, which are not likely to last for long. Essentially, I have undertaken the valuation of my portfolio in terms of US Dollar, and hence had to convert the value of shares that are traded in other currencies such as Chinese Yuan. This has significantly affected the accuracy of valuation of the portfolio as the exchanges rates are mere estimates. Different trends are made clear by use of tables and graphs. At the end, I have carried out a percentage analysis and found that the shares have fundamentally lost value. I have also used the Dow Jones Industrial Average as a benchmark to assess the performance of my portfolio. Investment Analysis A brief overview of Oil & Gas Operations Industry The oil and gas industry is operating under a challenging and a dynamic global marketplace and a progressively more adamant group of participants. The regulatory demand is increasingly putting pressure on the operations, and the demand growth is becoming sluggish, while the existing reserves are more expensive and difficult to generate. As the demand to meet future demand builds up, worldwide alliances are becoming more significant. Over the recent years, oil price fluctuation has become the order of the day. In spite of this, the companies in this industry have a challenging task of ensuring they focus on the medium to long-term conditions if they are to make credible decisions and achieve their growth targets. Investing in people, technology and R&D are critical to ensuring a lasting competitive edge (Dybvig & Stephen, 1985). The industry has to contend with mounting uncertainty that is particularly typical of the current decade. With tighter regulations and new policies to adhere to, long term planning and strategy are very critical, given the uncertain environment. In a bid to balance the mounting demand with sustainable and sufficient energy, oil and gas companies are adopting new technologies to supply ...
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“Oil & Gas Operations Industry Research Paper Example | Topics and Well Written Essays - 3000 Words”, n.d. https://studentshare.net/finance-accounting/9751-investment-analysis.
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