Valuation of Aker BP ASA

Abstract

The valuation will determine the fair value of Aker BP’s equity as of January 1st, 2020, using a fundamental approach. In addition, relative valuation will be included as a supplement. The valuation is done as of January 1st because of the ongoing COVID-19 pandemic, which has influenced multiple aspects of the global markets, like oil prices, demands and interest rates. The first part of this thesis consists of an introduction of the company and its surrounding environment. Further follows relevant theory of valuation, and an explanation for choice of method. Next a strategic analysis of the company’s internal and external environment is conducted to reveal the company’s level of competitiveness. Further in the thesis the company’s financial statements are presented and explained, and a risk analysis is conducted to uncover potential short-term or long-term payment failure. Next, Future cashflows are estimated based on findings from the strategic analysis and presented along with a justification. Based on the future cashflows, and estimated WACC, a fundamental valuation is done to estimate the value of Aker BP ASA. Lastly, the valuation is combined with a value estimated from a comparative valuation approach, and a brief conclusion is given. The conclusion also includes some thoughts about the COVID-19 situation and how the first part of 2020 has affected the valuation. As of January 2nd, the price of Aker BP’s stocks was valued at NOK 209.6 in this master’s thesis. Compared to the market value of NOK 289 at the same day, and considering an error margin of ±10%, the findings support a sell strategy.