BAE Business Report on Santos
Name: Chun-Ting, Chen (Ting)
Class: BAE 5
Table of Contents
Executive summary 1
1. Introduction 2
2. Evaluation of ethical performance 3
2.1 Environmental issues 3
3. Evaluation of financial performance of Santos 5
3.1 Share price history 5
4. Recommendation 7
Evaluating companies for their ethical and financial performance are important processes before deciding whether these firms could be invested in.
The report aims at analyzing the energy company of Santos and to assist the client who is interesting in making ethical investment. This report focuses on environmental concern with pollution and the financial performance. The results indicate Santos did not perform ethically. The way of fracking could cause water pollution as well as fracking would endanger the health of human beings. In terms of financial performance, analyzing of financial performance of share price history over five past years indicated decrease.
Overall, the graph shows that the share price fall dramatically in these years. It is recommended that not to invest in Santos, due to the ethical issue of fracking would pollute environment and damage health of people and the decline of the share price over five years.
This report was prepared for a client to advice whether Santos is an appropriate company to invest in. The definition of ethical investment can be defined as decisions of investment which investors made depend on whether behaviors of the company are ethical (Hudson 2005, p. 641).
The one of largest mining companies, Santos was founded in 1954 and it has been operating over than 50 years in the energy business. It supplies and provides oil, gas and liquids to customers domestically and internationally. There are approximate 2,800 employees spread in Australia and Asia (Santos 2012).
The report will be divided into three parts. The first part is evaluating the environmental performance of Santos. Then evaluation of the share price history. And finally it will provide a recommendation.
2. Evaluation of ethical performance
2.1 Environmental issues
According to the official website of Santos (2012) it claimed that Santos always avoids and decreases potential risk and damage to the environment, using the techniques to minimum the risks. However, fracking which involves pumping sand, water and chemicals to crack coal seams and bring the mixture of gas and salt water to the surface. In fact, not all coal seams need fracking to make gas flow out (The Economist, 2012).
Warburg (2012, p. 223) explained that fracking is also called hydraulic fracturing which drains of numerous local water. There are three phases in fracking procedure were presented by Linscott (2012, p. 124). The use of drilling horizontally is the first phase. Secondly, using of fracking fluids contains a combination of water, sand, and toxic chemicals, such as slick-water. Third phase the fluids are injected into the ground and deep into ground under high pressure in order to obtain the natural gas. Hence, horizontal drilling, slick-water, and extremely high pressure are all relative with the new fracking techniques, and make fracking significantly different from previous methods, fracking is more advanced and efficient (Graham, 2012, p. 7). Also Rapier (2012, p. 58) said that fracking can increase gas and oil numerously that obtains from a land.
However, the process of fracking causes environmental pollutions. The main problem is that water which injected into underground is polluted with the fracking chemicals. Furthermore, there are a number of volatile organic compounds that are emitted from the contaminated water (Rom, 2012, p. 189). Moreover, fracking poses many significant risks and problems to human. The medical website (preventcancernow, 2011) reported that a number of health risks come from contamination of drilling.
There are 11 wells