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well I will accept you greater knowledge on the subject. I still think though a clear strategy to mitigate the dependence and clear reduction in need for oil is a good one. Doesn't mean for decades to come bp will sell a lot of oil. But they need to diversify and with clear government aims, bp should take the lead. Imo
British Coal was a nationalised industry as you know.When it came into being in 1947 (NCB) there was already in plan the rundown of the industry.There was no way ever that they would have been allowed to diversify to anything. The miners union tried to run the country and were mangled for it. The miners were always gonny get it in the neck, Arthur Scargill just speeded it up. FYI I was 20 years underground as an electrical engineer.
You are missing my point. When it was obvious that coal was being used less and less what did British coal do? Very little. They tried to make their mines more profitable so they could sell less. They should have diversified and retrained staff or used their wealth to make aqusissions
''For me this is a good strategy. One that the likes of British Coal didn't do.'' British Coal was a labour intensive industry formed only to mine coal.Where were you gonna put 300,000 ex miners on wind farms?
Mantra . "So we're going to be funnelling capital into low margin, low carbon projects just at the point oil is rising from the trough of the cycle."
We will still have our stakes in Rosfnet and high margin projects lalalalala our cost per barrel will be super competitive
lalalalal we will make more money with efficient ops lalalalala we are not tree hugging lunatics lalalal renewables business is to offset the carbon footprint lalalala while still making profits laalalal
"Rather than invest capital into renewables why doesn't BP increase returns to shareholders and let them decide what to do with the money? "
Brilliant idea !! No seriously
Happy, don't you think BP. will just buy out a renewable or low carbon company and acquire its expertise? They are not likely to build from scratch. Bp. are big enough to do that. Google started off a search engine and bought yourtube to become a content provider. They did this to push adverts across both platforms. Bp could very easily invest in alternative energy and use exiting infrastructure to support and grow that aspect as it phases out its dependence on oil. For me this is a good strategy. One that the likes of British Coal didn't do.
Excellent post TMT. I agree with everything you have said.
The fact is that renewables - even if things go well - won't have the same returns as oil and gas. That's not discounting the execution risk of moving into a sector in which we have limited experience and no competitive advantage.
BP management accepts this (please refer to the transcript of the earnings call and the Q&A session). And this is from the Reuters article I posted earlier:
"Large oil firms generally target a return on oil investments of about 15%. BP said it expects returns of 8% to 10% from its low-carbon electricity investments, with the traditional oil and gas units pushing overall returns to 12% to 14% by 2030."
Many analysts think even targeting 8-10% on low carbon is optimistic based upon actual data and experience. So we're going to be funnelling capital into low margin, low carbon projects just at the point oil is rising from the trough of the cycle.
Rather than invest capital into renewables why doesn't BP increase returns to shareholders and let them decide what to do with the money? If I want to buy shares in Greta's tree-hugging company, I can do that myself without Looney's help.
BP has offloaded some loss making assets to maintain more liquidity. The lower sale price may well be offset by losses that would have been incurred if they had kept these assets longer.
When is the last time bp issued shares? I'd much rather them sell assets now rather than do a share raise.
Good post TMT.
I also have share bought way back before CV19. And I understand your frustration however the underlying cracks of the industry were already there for everyone to see . Are you not worried that the Oil prices are litterally decided and manipulated by few countries in a rigged game? The narrative here is not that we are turning into a fancy renewable company but rather an oil company that has super efficient and profitable extraction operations the "Ferrari" of the oil supermajors. We haven't sold our stakes in Rosfnet, or our deep water ops ;) The money saved on unprofitable cash sucking projects ( Canada etc.) re invested to achieve net carbon zero. Once again please see how this work because I have a feeling that some of the fellow BP posters think that in order to achive that we have to stop pulling oil from the ground.
Lastly and in regards of been off guard on Looney's sudden steering, the vision and mission have always been there ( past decade and over) what has changed now is that finally a BP CEO decided to be true to the values. Ever wonder why the logo? We no longer make bold claims to please the public, we win people over with actions. As long as BP is in business I will buy BP only and I am sure many millions feel the same
TmT, I agree with almost all you have said.
We all invested here thinking oil was here for the long term. And whilst Looney has done a Gordon Brown as in the UK's sold gold, one can only hope that Looney is better informed. Surely one 'man' even if the CEO can not just do as 'he' sees fit if such goes against years of knowledge and experience of others?
The perplexing question to me, is has CV caused the massive loss in oil share value, OR has CV been 'used' by large holders to unload their holdings as they would have better info should oil demand be on a more rapid decline with our without CV?
Look how coal usage in the UK ended so rapidly, how natural gas ended the use of coal gas. I find it hard to imagine oil becoming defunct, yet perhaps car ownership will become more scarce and driverless EV's will replace the car to a massive degree as we have gridlock now, and with more arriving daily in the UK, things cannot carry on as they were.
So, IF electric driverless taxis replace private car ownership for the masses, then it will free up parking, congestion, pollution, and make travel much safer as now women and children are vulnerable on public transport as the UK has imported so vile people making such unsafe. Yet in the confines of a private driverless EV safety can be assured.
Also you car, my car sits idle taking up a space for much of its day. Not so with driverless EV's.
Again the problem or 'challenge' of millions of charging points IF masse private car ownership is gone, then these driverless EV's can take themselves to out of town multi story parking bays especially constructed to charge multiple cars at a time without digging up the entire road and pavements of the UK.
Thus oil could decline faster than we expect should this be the near future.
We now have the tech to achieve such, and with the Gov aiding and abetting the young into violent hatred of 'old fuels' it has the up and coming mindset to do such.
HMG never do anything for OUR sakes, and likely just a way of killing of costly traffic issues, whilst they and the well to do will have empty roads, easy parking.
Revenue will be recouped by charging for the EV driverless cab and people will order it on phones and pre book it for the return journey.
I too am stuck like you in a share in a massive transition period which will cost us, but may, and I say 'may' benefit those a decade or more down the line, whilst 'we' take the risks with our investment on a green gamble, and there is ONLY one 'green' square on the roulette wheel.
Interesting IF I were not invested, worrying as I am
The problem is that some of us invested in oil because we believe oil has a future (spare me the "times have changed, a bunch of old people" rhetoric, times haven't changed that much and the replacements are all very speculative). The market temporarily destroyed the value of oil (because of COVID) and thus the value of our oil investment took a massive hit.
While we were down, Looney accelerated the move away from oil, so we aren't going to fully benefit from oil's recovery. We're now invested in a company that is going to be devoting major resources to renewables. Sorry, but I didn't want to have increasing exposure to renewables, they are speculative, I had enough exposure to that already. The balance of my portfolio has been tweaked and become more speculative without me doing anything or having any say.
So, I could sell my BP, but I'll take a loss because of the timing of when this was done. Well, I will be reducing my holdings, but now timing is difficult. Do I ride the recovery here in the hope of recouping my losses and in the hope that the Greta Glimmer that BP has gained overrides the diminished benefit from oil's recovery? Or, do I bail now, accept the losses, and get into Exxon? I don't want to go into a speculative small oiler, this part of my portfolio was supposed to be safe and produce a reliable income for the next ten years.
So although times change and Looney may have done what is best for BP in the long term, his timing and speed is satisfying to those who have decided "green is moral" and "the faster the more moral", but it's certainly detrimental in the medium term for some of his shareholders and I am not impressed.
The first rule of investing is don't buy high and sell low. With oil, he's sold low. The depths of a Covid crisis is not the time to announce that you are disposing of substantive underpriced assets. If he'd waited until things recovered to make the move then there'd be a better argument.
..And I will always defend your right to do so.
Equally I will express my opinions on your polarised way of thinking. We haven't stop drilling oil yet you make it look like we are some fancy renewable energy company ( you are clearly confused on the net zero carbon emission concept), we are selling assetts that will not hold value for us in the foreseeable future yet you make it look like we are selling the silverware ( once again! BP it's not the Saudis Kingdom we don't have crude sitting underneath our HQ).
Go with Chevron or Exxon this company no longer share your vision.
I take your point and, of course, it is true, I alone or retail investors generally make little difference to overall strategy . However, it doesn't mean we should stop trying, does it?
If I used your implied logic, I would never vote in a general election. But that's not how it works. I will have my say and, I may not have much of a voice, but I will feel satisfied and, perhaps, I will convince enough people that I am right to make a difference one day...
I may be a bit daft, but since when do small shareholders determine a company's strategy?
Even the largest of the top 100 owns less than 1%.. source: https://money.cnn.com/quote/shareholders/shareholders.html?symb=BP&subView=institutional
I have as much right as the next shareholder to keep voicing my opinions, and I will.
As for selling and moving on, why should I sell? I bought an oil and gas company and I want it to grow its oil and gas portfolio. Why don't those IIs sell that want BP to transform into something completely different? Why don't they sell their shares and invest in a renewables company if that is what they prefer?
As for whether I own "diddly squat". I don't. However, that is completely irrelevant. It's not as if fund managers hold the shares for themselves. Their wrong decisions will affect pensioners and small shareholders, while they will keep drawing their inflated bonuses.
So, I'll keep posting...
Whitbread was a brewer and publican. It stopped brewing and built Costa Coffee and Premier Inn. I, and other shareholders, did very well.
If you do nor agree with Mr Looney, SELL or do NOT buy. I suspect most on here like chatting as though they have some great foresight, or have built their own massive portfolio from nothing; more likely they have didly squat!