Aker BP ASA – Risk Profile
- As per Global Data’s proprietary risk methodology, Aker BP’s overall risk score is 3.52, signifying low risk
- Country and industry risk pillars boosted the overall risk profile of the company
- Liquidity ratios are lower than the peers which affected the financial risk pillar
Aker BP ASA (Aker BP) has a strong risk profile and is one of the top fifteen companies based on our proprietary risk assessment of the upstream sector in the oil and gas industry. Country and industry risk pillars strengthened the overall risk score for Aker BP. Profitability and cash flow are the major strengths of the company, whereas the liquidity position remains its weakness.
About the Company
Aker BP is an independent oil and gas exploration and production company. It mainly focuses on the Norwegian Continental Shelf (NCS). The company has a balanced portfolio of assets across the upstream value chain.
Aker BP is one of the leaders in the upstream industry with a market cap of $13.82 billion. It reported revenue of $5.66 billion in the financial year 2021 (FY2021), which increased 90.30% over that in FY2020.
Risk Pillars
Our proprietary risk assessment uses a combination of four risk pillars – Country, Industry, Operational, and Financial. The risk scores are based on a scale of 1 to 5, 1 being the lowest risk and 5 being the highest.
Aker BP’s country, operational and financial operational risk pillars fare better than the other risk pillar. Cabot Oil & Gas Corp, Black Stone Minerals LP, and EOG Resources Inc are the leaders in the sector.
Country Risk:
Aker BP has a major presence in Norway. However, dependence on a single country could affect the company’s operational and financial performance by exposing it to the economic and geopolitical risks associated with the country. The company has a country risk score of 5.00.
Industry Risk:
The company’s primary exposure is to the upstream sector. An industry risk score of 4.00 indicates high profit margins and strong growth projections for upstream sector in comparison to other sectors.
Operational Risk:
Our operational risk score is based on four pillars – business positioning, scale, operational efficiency, and profitability. The operational score of Aker BP is boosted by profitability. The geographic concentration affected the business positioning score. High EBIT margins increased profitability. The company’s total oil and gas production has positively affected the scale of operations.
Financial Risk:
Aker BP’s leverage and liquidity ratios affected the overall financial score. The high inventory days negatively affected the liquidity ratio while company’s high debt to equity ratio in comparison to that of its peers affected the leverage ratio.
About our Methodology
GlobalData risk scorecard for a sector provides the analysis of various risks a company is vulnerable to. Our risk framework comprises four pillars – country, industry, operational and financial. The country risk for an entity signifies the risk of operating in a particular country. GlobalData’s proprietary country risk assessment framework is used to calculate the risk for individual countries. Industry risk is an integral part of risk analysis, and it implies the riskiness and stability of the industries in which a company operates. The operational and financial risk profile comprises a company’s risk and return potential based on its key operational and financial metrics. Our scores are based on an average of the latest three fiscal year data.
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