Cue Energy Resources Limited - the Position of the Company in Energy Industry - Case Study Example

Cue Energy Resources Limited Table of Contents Business of the Company 2 Summary of the company 2 Vision and mission statement 2 Company Strategy 3 Analysis of the company 3 Current strategies and Challenges 3 Objectives 4 Stakeholders 4 External Environment: Five Porter Analysis 5 Internal Environment: SWOT Analysis 6 Conclusion 7 References 8 Business of the Company The aim of this report is to analysis and review the position of Cue Energy Resources Limited that deals in energy industry. The report presents a summary of the company, its strategies, challenges, internal and external environment resulting in formulation of appropriate recommendations that will lead them company into obtaining its objectives. Summary of the company Cue Energy Resources Limited deals with hydrocarbon based energy. The company explores and produces gas, and focuses its production on Australasia and SE Asia. Moreover, the company has assets in Indonesia, New Guinea, Australia and New Zealand (Cue Energy Resources Limited, 2011). The head office address is Level 21, 114 William Street in Melbourne (Cue Energy Resources Limited, 2011). Moreover, the company has numerous offices in locations that they have assets and also United States of America. The company was established in 1981, and since then the company has continued increasing its presence in the hydrocarbon industry. Vision and mission statement Cue Energy Resources Limited has no clearly defined vision and mission statement but through the objectives and company analysis, a broad view can be given (Cue Energy Resources Limited, 2011). Apart from providing quality and profitable financial statement and products to the stakeholders, the company aims at increasing its presences within the hydrocarbon industry through increase in resources, and portfolio. Company Strategy Analysis of the company The company deals with exploration and processing the raw materials obtained. Some of the products that the company produces include oil and gas (Cue Energy Resources Limited, 2011). Cue Energy Resources Limited understands the need for increase in oil production because numerous economies rely on hydrocarbon form of energy to achieve their objectives. Thus, the consumers of Cue Energy Resources Limited range from local consumers (fuel for cars, cooking) to governments. Current strategies and Challenges Cue Energy Resources Limited has a clean balance sheet meaning that they can easy access additional funding to ensure they become more competitive. Moreover, Cue Energy Resources Limited has balanced portfolio of assets, has numerous ongoing exploration program, and it is exploration led approach towards building the stakeholder and shareholder base within the energy industry. These are the values and aims that the company has championed by currently, the company has developed a 3-5 year vision that aims at ensuring that the market capitalization exceeds $1 billion in terms of market capitalization and ensuring a robust balance sheet (Cue Energy Resources Limited, 2011). Cue Energy Resources Limited also aims to maximize on cash flow through creating greater diversity and also funding drilling and thus maintaining focus on quality. Moreover, the future strategies include production and profit driven, monetizing future explorations, and operator in oil and gas assets. Nevertheless, the company faces numerous challenges. These challenges include its small oil exploration compared to larger companies that have huge backing of resources. Moreover, the company faces numerous difficulties to obtain prospects, funds, making new discoveries and developing them, and licences (Cue Energy Resources Limited, 2011). Other challenges that are faced by Cue Energy Resources Limited include exchange rates, fluctuation on oil gas prices, country risks, construction risk, geology and capital (Cue Energy Resources Limited, 2011). Objectives Objectives are important to ensure that a company achieves what is expected within a defined timeframe and with utilisation of available resources. The objectives of Cue Energy Resources Limited include: Maximisation of value of assets Acquiring new assets, and increasing the assets considerably Improving on organisation capacity Pursuing acquisitions and mergers To develop a balance portfolio of development, exploration and production capabilities Stakeholders Stakeholders are people, organisation or entities that can be affected or affect the operations of an organisation. In the case of Cue Energy Resources Limited, three major stakeholders are the government, shareholders, Non-Governmental Organisations (NGO). These three stakeholders are further elaborated below: Government – usually, the government provides conducive environment to operate the business and ensures that security and other factors required for a business to be viable are in place. In addition, the government, through appropriate legal entities, provides appropriate documentations including licences, ensuring that there is level ground for the numerous businesses. Shareholders – are the individuals, institution, or legal entity that owns shares within a company. Shareholders usually determine the direction of a company and thus have a huge influence in determining the future of a business. Profitability of the company means that the shareholders are satisfied provided all factors are kept constant e.g. no unethical behaviour while losses means that appropriate strategies should be introduced or loopholes sealed into ensuring the success of the organisation. Non-Governmental Organisations – NGOs sometimes determines the success of an organisation. NGOs can come in different forms that may include championing conservancy, contribution of the organisation to the society and economy, and monitoring on how the organisation operates based on set conditions. Climate change and contribution of hydrocarbons towards the environment has forced many NGOs to monitor how companies operate and their contribution towards climate change/societal change. External Environment: Five Porter Analysis External environment are the external factors that may affect how organisation operates. For the case of Cue Energy Resources Limited, the appropriate tool is the Five Forces Analysis that incorporates threat of new competition, bargaining power of suppliers, bargaining power of the customers, competitive rivalry and threat of substitute products. Threat of entry – the oil and gas industry requires large capital outlay meaning that any new entrant must build a refinery, create appropriate distribution channels and thus will be required to accumulate many resources. Thus, there is no threat of new entrants. Bargaining power of suppliers - Cue Energy Resources Limited suppliers are those who provide the equipments and the Earth, which provides the oil. The Earth is not a threat but a threat may come in terms of equipments/services. Bargaining power of customers –the major customers are the gas/petrol stations and end consumers. Numerous large companies enjoy economies of scale and thus consumers can change between the supplies. Consumers mostly determine the success of oil/gas companies because the product is usually similar. Threat of substitute products – In real case, there is no substitute for oil; however, introduction of electric cars may become a threat. Nevertheless, absorption of electric cars is still means that the threat of substitute is nil. Competitive rivalry – competitors are other companies such as BP, and Shell. These companies have been in the oil industry for long time meaning that they have the capacity to introduce unethical behaviour or subsidized products. However, laws are in place to prevent such issues. Internal Environment: SWOT Analysis Internal environment is what is within the organisation, and the company has capacity of controlling or manipulating them. In the case of Cue Energy Resources Limited, the appropriate internal environment tool is the SWOT analysis. SWOT analysis incorporates strengths, weaknesses, opportunities, and threats. Strengths – The Company participates in the Stock Exchange, strong balance sheet and portfolio, new oil and gas reserves, and dedicated team players. Weaknesses – lack of enough resources to increase assets base Opportunities – expansion of oil and gas exploration in the Asian region, planned diversification, and increase in demand for oil and gases because of economy Threats - environmental regulations, stability of some oil regions, increase in crude oil prices per barrel, and competition. Conclusion Cue Energy Resources Limited started its operations in 1981. The company, which has its headquarters in Australia, Melbourne, has its shares at the Stock Exchange. The company has invested in numerous countries that has since its business portfolio to grow and increase in the number of assets. The company aims at increasing its asset base, venture in acquisitions and mergers, and increase in business portfolio. Some of its stakeholders include the government, shareholders and NGOs. In the case of internal and external environment, Cue Energy Resources Limited is on a better position to succeed in its operations. Recommendations According to the above analysis, Cue Energy Resources Limited should change some strategies to ensure that the business is viable. Some of the recommendations include: The company should embrace vertical integration to improve its presence They should diversify and introduce renewable energy and other forms of energy to increase its market share and reduce the risks associated with hydrocarbons Should different their products and introduce partners who supports the vision and mission of the company References Cue Energy Resources Limited. 2011. Home. Available at http://www.cuenrg.com/index.php?option=com_content&task=view&id=13&Itemid=28 Read More