Study On Financial Risk Management Of A Petroleum Company

In 2017,as the first private oil company in China,A Company successfully listed in A-share market,mainly engaged in drilling contracting,equipment manufacturing and other projects.At this time,the company is focusing on the layout of the upstream exploration and development sector after listing,which coinciding with the favorable opportunity for the country to open the oil field mining rights and allow private enterprises to participate in the mineral development of domestic oil fields.Based on this,A company focuses on the layout of upstream exploration and development after listing,and plans to acquire four oil fields successively.However,the company's profits declined sharply within three years after listing,and the project investment schedule was interrupted.Combined with the characteristics of high investment,high risk and high return in the upstream oil sector,the financial risks increased significantly.Therefore,through sorting out the company's operating status and investment projects,as well as evaluating the company's financial status and financial indicators,this paper identifies various financial risks existing in Company A,analyzes the main causes of various risks,and puts forward strategies to reduce risks.The results show that the financial risks faced by Company A will be analyzed in detail.The financial risks of Company A mainly include financing direction,investment risk and entity cash flow risk.Which,through to the company's business,the introduction of investment projects,and financial conditions,financial index of assessment,to identify A company's financing risk is mainly manifested in the risks of highly leveraged,high debt,companies with large short-term liabilities,but company surplus funds and cash balance to repay debt,makes the company into borrowing too much high risk,and management of aggressive investment strategy more heavy this risk.Investment risks are mainly reflected in the lack of due diligence on investment projects,the excessive investment consideration paid,the great uncertainty of project profitability,and the huge scale of invested projects,the total scale of which is far beyond the company's ability to bear,resulting in a great deviation between the project investment schedule and the management's expectation.Entity cash flow risk is mainly reflected in the stock of cash flow to repay debt,accounts receivable period is long and need to be considered a relatively high bad debt losses,but also exists because of cash flow may fracture risk,and the entity cash flow after fracture,the company will pay a higher litigation costs further,a vicious cycle.Company A has high financing risk,high investment risk and high cash flow risk,and the overall financial risk is obviously high,so various risks should be reduced in A targeted way.In the face of financing risks,we should control the leverage level reasonably and combine creditor's rights financing and equity financing organically.In the face of investment risks,it is necessary to understand,plan and evaluate each project in advance,and constantly evaluate the cash gap in advance through budget management,so that the financing department can make preparations in advance.Faced with the risk of cash flow of the entity,capital planning and budget management is particularly important,and the capital needs of each subsidiary company should be unified in planning and arrangement to ensure the stability of the overall cash flow of the company.