Market cap

* For banks, enterprise value is substituted with market cap. Source: Bloomberg Finance L.P.

Performance of the brand

BP is one of the world’s leading oil and gas companies, providing its customers with fuel for transportation, energy, retail services and petrochemicals products for everyday items. Today, BP operates in more than 80 countries, counting a total of 22,100 retail sites, 16 refineries and over 79,000 employees worldwide. As a global group, BP’s activities are basically covered in two business segments: Exploration and Production, and Refining and Marketing. Besides the BP brand itself, other core brands consist of Castrol, Arco, Aral, ampm, as well as Wild Bean Cafe.

On 20 April 2010, BP saw both its brand and enterprise value heavily affected by the tragic accident on the Deepwater Horizon rig in the Gulf of Mexico and the resulting oil spill and environmental damage. It created a corporate crisis which threatened the existence of the company, had deep consequences for jobs, businesses, communities, the environment, and the entire refining industry. Although BP managed to stop the flow of oil in July 2010 and provide financial support to those affected, BP’s reputation became damaged all over the globe. In an effort to restore its corporate reputation, BP set up a $20 billion fund to show its willingness to pay all legitimate claims for compensation, and further invested a total of $500 million into a 10-year research programme assessing the environmental impact of the oil spilled and dispersants used. Consequently, BP’s 2011 fourth-quarter replacement cost profit amounted to $4,614 million, compared with $3,447 million in 2010. For the full year of 2010, the replacement cost loss was $4,914 million compared with a profit of $13,955 million in 2010. However, looking at the total number of oil spills at BP rigs, the number steadily declined each year from 300 spills in 2006, to 142 in 2010, emphasising the company’s ongoing safety and security improvements in this area of operation.

As a result of the high-impact accident, the company had to face a 28% decrease in brand value (down to $8,754 million), as well as a striking 79% (down to $152,872 million) decrease in enterprise value in 2011. In addition, BP’s brand rating went down from AA+ in 2010 to BB in 2011, characterising the company’s damaged international corporate reputation.

For the upcoming years, BP aims to deliver value growth by investing in the Exploration and Production business, ensuring safe, reliable and compliant operations worldwide. Moreover, in January 2011, BP and Rosneft Oil Company announced that they had agreed a strategic global alliance in order to explore and, if successful, develop three licence blocks on the Russian Arctic continental shelf. After this, BP will receive around 9.5% of Rosneft’s shares in exchange for BP issuing new ordinary shares to Rosneft.

Although BP has tried hard to emerge from the shadow of the Gulf of Mexico incident as a safer and more risk-aware business, it will be a long-winded process to regain consumers’ and shareholders’ trust in the corporation. Depending on its continuous engagement and investments in the Gulf of Mexico restoration and related claims, BP might be able to slowly restore its corporate reputation and consequently increase its brand value in 2012.

League tables

BP appears in the following brand league tables:

Rank 82 in the Global 500 2012.
Rank 104 in the Global 500 2011.
Rank 11 in the UK Top 50 2011.
Rank 104 in the Global 500 2011.
Rank 54 in the Global 500 2010.
Rank 7 in the UK Top 50 2010.
Rank 38 in the Global 500 2009.
Rank 58 in the Global 500 2008.
Rank 46 in the Global 250 2007.