MBA 502 Accounting Survey Class Project

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MBA 502 - Accounting SurveyClass Project

• Presented by
• Lisa Actor
• Tyler Anderson
• Brent Booher
• Tim Jones
• J.J. Nielsen

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Drilling for dollarsIts where the BIG
is!An analysis of three midsized oil companies

• Presented by
• Lisa Actor
• Tyler Anderson
• Brent Booher
• Tim Jones
• J.J. Nielsen

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Presentation Outline

• Why invest in oil?
• Company Histories
• Tesoro, Sunoco, Valero
• Analysis
• Three year trends
• Three year ratios
• Conclusion

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Welcome to the Ahl Bidness the business of the
20th century, and probably the 21st

• Upstream - discoverers, refiners, transporters,
  sellers
• Midstream - Transporters-pipelines and tankers
  and trucks
• Downstream - Refiners and retailers

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Why the oil business at all?

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Why the oil business at all?

• 1.4 billion a day
• Thats why!!!

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How to pick an oil company

• What part of the industry are they in?
• What are they trying to do in their part of the
  business?
• How long have they been doing it in their current
  form?
• Any significant developments?
• Where do they do what they do?

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This is an average oil company

• One year price change up 33.6
• Market capitalization 1.41 Billion
• PE 12.2
• ROE 26
• Debt to Equity 0.2

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Company History - Tesoro

• 1964 Founded by Robert West
• 1980s Fought take-over attempts and threatened
  bankruptcy
• 1990s Expanded natural gas operations and
  returned to profitability
• 1999 Sold exploration and production operations
• 2000 Contracted with WalMart to build and
  operate retail facilities
• 2001 Bought refineries and gas stations and
  contracted to supply fuel to BP

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Company History - Sunoco

• 1876 Founded by Joseph Newton Pew
• 1916 Company moved into shipbuilding
• 1920 Company moved into gasoline stations
• 1957 First major foreign oil discovery
• 1982 Sold its shipbuilding division
• 1988 Sold its exploration and production assets
  gained more than 1,000 service stations
• 2001 Increased its retail operations, acquiring
  more than 230 outlets

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Company History - Valero

• 1979 Created in response to demands of Texas
  Railroad Commission
• 1981 Built a refinery in Corpus Christi, Texas
• 1984 Sold 50 of its pipeline assets
• 1992 Expanded its refinery production capacity
• 2000 Bought a refinery from Exxon Mobil plus 340
  retail outlets
• 2002 Sold a refinery and 70 retail service
  stations in Northern California to Tesoro

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Analysis
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Gross Revenue
14
Gross Margin
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Expenses
16
Net Income
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Stock Price
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Current Ratio
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Debt to Equity
20
Earnings per Share
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Inventory Turnover
22
Net Income / Net Sales
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Price Earnings Ratio
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ROA
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ROE
26
Asset Turnover
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So Where is the ?
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So Where is the ?

• 2002 was a down year following 9/11
• Tesoro is the takeover play
• Sunoco is a good second choice
• Valero is the most stable a good pick!

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Thank you!