Hello and welcome to Company Focus. My name is Aamer Nawid, analyst at Fat Prophets. Happy New Year.

It's the first company focus in 2011 and we're going to kick things off by having a look at oil giant, BP, a company who still manages to gravitate towards the media spotlight.

As I said pre-Christmas, if there's one company I know that's going to look forward to seeing the back of 2010, it's going to be BP.

Right on cue, no sooner had 2011 got underway, BP shareholders were given a bit of jolt with the news that the Trans-Alaska oil pipeline, operated by a joint venture in which BP is the majority stakeholder, was closed, due to - you guessed it - an oil leak. Now, 'oil leak' and 'BP' are words you don't want to see in the same sentence. However, the actual spill was far less dramatic than the headlines, but that wasn't enough to prevent a small sort of drop in the share price you can see here earlier this week.

Now a bit of perspective, taking a step back, having a look at how BP's performed in the run up to 2011, it's quite clear that December was a stellar month. That's despite Barack Obama and the White House basically saying in mid December, stating their intentions to actually sue BP relating to the Gulf of Mexico spill. Shareholders, though, were concentrating more on the fact that the underlying business is doing well, asset disposals are going ahead at a recent rate and also the fact that the White House isn't just targeting BP.

Earlier this week, a report by the National Commission on the spill actually pointed the finger at Transocean, Halliburton and regulators as well as BP.

Now, this basically reduces the likelihood of BP facing a costly gross negligence charge, which I think is a boost to shareholders. And as you can see it wasn't soon before the slight selloff was actually reversed and BP shares pushed on again.

The National Commission report was actually scathing also about the environmental and safety regulation which is currently prevalent in the US offshore drilling scene, basically suggesting a huge overhaul.

Now this has large repercussions for the price of crude oil. As you can see from the chart here, crude oil has been underpinned by the strong demand coming out of Asia, the recovering situation in the US as well as the supply side dynamics.

More regulation in the States will mean it will basically cost more to get the stuff out of the ground. I reckon crude will probably touch $115 per barrel by the end of the year and I think BP will be one of the companies able to translate that into a higher earnings per share.

By the end of the weekend, the Trans-Alaska pipeline situation will be resolved, normal services resumed and that will be consigned to history.

Gulf of Mexico, the oil spill there, however will shape things in the year ahead and probably even longer. It turns out that the spill was almost a catalyst for Royal Dutch Shell willing to a takeover approach for BP.

Shell was put off by the liabilities, however, like many shareholders were. However, it does bring to light the interesting situation whether BP in its current form is actually a takeover target. This is unlikely. However, you can understand why speculation is persisting given there's much more clarity with regards to the Gulf of Mexico spill liability situation.

Gross negligence also is less likely and the actual $20bn that's been put aside in the Oil Spill Trust to deal with economic loss and claims of economic losses reportedly is going to be much more than is actually required.

As you can see from this graphic here, BP is trading in a price earnings multiple of around about 6.5 times while Shell understandably is slightly higher at 9 times. You still see that there is a bit of earnings uncertainty hovering above BP shares and therefore there is an argument I suppose for a bit of vulnerability there.

The key consideration is whether politicians would let this happen. A mega merger of two giants like BP and Shell would inevitably result in a spate of cost saving job cuts. And with the high levels of unemployment which are currently haunting Western economies I don't think politicians are going to look upon that too favourably.

As I said to you before Christmas, BP is one company that I think betters should keep their eyes on and I think the company will continue to recover and thrive in its current form.

New projects are being developed all the time. In fact the development of the Super field in Iraq, the Rumaila field has gone better than expected and BP are currently recovering investment costs there.

Fourth quarter results are on their way in a couple of weeks, so I expect them to follow on from what was a robust third quarter set of numbers. And there's no doubt that as the fallout from the Gulf of Mexico continues, investor sentiments all of the shares are going to be pulled one way, then the other. But with crude oil prices rising and a potential return of the dividend on the horizon, I think the natural, the overall drift for BP shares, will be a positive one.

Thanks for watching. Make sure you tune in again next week.