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January 15, 2007

Comments

dsquared

Chris - did you allow for the fact that BP is like about 7% of the Allshare? This is going to bias your coefficient toward zero, isn't it?

chris

I didn't, but the bias is small. Using Datastream ex-resources index instead of the All-share gives us a Jensen's alpha of 0.59 (t=1.26), and an alpha of 0.218 (t=0.53) including the oil price along with the "market" index.

james C

For reasons best known to yourself, you seem to confuse BP's performance with that of its shares.

Maynard Handley

It *could* be argued that he is a great businessman because he had the guts to move BP from global climate change/peak oil denial to admitting the obvious and trying to do something about it.
Since I know nothing about BP and its political environment, I've no idea whether this
(a) accurately represents reality rather than BP PR
(b) was in fact a difficult risky gutsy move.

Obviously we have Exxon as a counter example; but, in the middle, we have Shell which, while not quite as insane as Exxon, certainly to my mind brings up associations of exploding pipelines and toxic emitting refineries in Nigeria, rather than any sort of attempt to deal usefully with the 20 to 50 yr energy future.

King

Maybe Browne's 'inline' performance was actually a good performance given the oil industry's challenges (rising costs, access to resources etc). Would be interesting to see the same analysis for Shell over the same period. And given the long lead time for oil projects, it is hard to fully appreciate Browne's contribution at this point in time.

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