|dc.description.abstract||This thesis aims to answer the research question “What is the fair share value of Aker BP ASA as of 16th of March 2022.” As of 16th March 2022 Aker, BP traded for NOK 278 per share at the Oslo Stock Exchange. The fair value was estimated by utilizing the valuation methods documented by Aswath Damodaran, combined with analytical frameworks such as, PESTEL, Porter’s Five Forces and VRIO analysis.
The valuation of Aker BP begins with an in-depth strategic analysis of Aker BP’s micro and macro environment. The results show that several risk aspects have the potential to limit long- term growth and value creation. Following the macro-environmental analysis, an in-depth analysis of the current market for oil and gas was conducted. The findings are quite significant in favor of Aker BP and thus give a bullish outlook on future demand and price. Lastly, the strategic analysis ends with a competitive analysis of Aker BP as well as an in-depth analysis of the resources and capabilities that are regarded as key drivers for the value creation at Aker BP. Our strategic analysis concludes that several factors make the oil and gas industry attractive for the short to medium time for existing companies, and that the resources Aker BP possesses will be vital for future growth.
Following on, as the next step in the valuation of Aker BP, we present a detailed analysis of past financial statements to forecast Aker BP`s future performance. The relevance of past financial statements can be presumed as somewhat limited due to recent mergers and acquisitions. Nevertheless, an analysis based on the last five years was conducted. The future performance is estimated as a result of both the industry, company strategic analysis, and historical financial performances. The cost of equity and cost of debt is estimated to equal 9,13% and 6,11% respectively for the duration of the fundamental valuation.
The fundamental market share value of Aker BP is estimated after subtracting net debt and is set to equal NOK 365 per share. The relative valuation based on comparable companies provided an estimated value per share of NOK 355. Lastly and sensitivity analysis was conducted, and the findings show that the result is heavily sensitive to key performance items such as production outlook and predicted oil and gas prices. The share price as of 16th of March 2022 was NOK 278, thus based on the fundamental value estimate of NOK 366 and favorable short to medium-term market outlook, a buy recommendation for Aker BP ASA is provided as the conclusion of this thesis.||