Sapan Gai, CCO at Sovereign Metals, discusses their superior graphite test results. Watch the video here.
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I think both Rdsb and Bp are about to commence buybacks,while I would prefer the money to be used to reduce debt but not sure when they announce that they have made their purchases.
I do rember remeber an earlier Genel buy back but cant remember the reason.So many dramas for us loya shareholders
Pokerchips: Excellent point as always! I confess that Gas is an enigma for me - there’s no obvious correlation between NG and RDS. Today seems a good example of RDS reacting to OP(green), whilst just yesterday a similar percentage increase in NG (Blue) had virtually no effect: This is a 15 minute view: https://invst.ly/uh00b
NG pricing didn’t drop around April last year, so I don’t think it explains the divergence with Chevron. Here’s a view since the beginning of 2020: https://invst.ly/uh04m
Am I missing something?
Hi Nightpusher & Barrie.
Well it's intriguing that the divergence with Chevron began almost precisely on that date whilst the divi cut was not announced for another two weeks. I also believe that Chevron did not confirm retention of their dividend until some time later. If the divi cut was indeed the reason - and I agree it's a factor - then there's good reason to suppose that the gap between Chevron and RDS should eventually close back up. This is because the cash that would otherwise have been distributed by RDS has been used within the business: so either way it represents value to shareholders. On the subject of buybacks I'm not convinced of their benefit either, especially if they are bought at relatively high price. However, as an example here’s a chart of Genel’s sp during a $10m (declared maximum) buyback process in 2019 split into two parts during the periods shown. The shares were put into treasury. The company’s intention was expressed as follows:
‘Genel believes that the current share price significantly undervalues the Company's assets, and that utilising its balance sheet to repurchase shares represents a value accretive use of its cash resources.’
https://invst.ly/ug-f5
We all know what happened when 2020 came along but, after the buybacks finished, G was to climb to an H2 high. Did the buybacks enhance the sp? I wouldn’t say so. I’m happy to look at RDS if you point me at the dates of interest.
Boyo,part of the answer to the divergence must be the fact that Chevron did not cut its dividend while Van Beurden slashed ours by 66%.I appreciate that RDSB actually gained its SP on the day that we were hit with this seismic news but overall sentiment went out the window.My reaction was to cease DIvi reinvestment and use the the money to buy other more promising shares
On another point can you utilise you superb skills with your charts to reassure me that buy backs actually boost share price as I have never been convinced.I see them as acceptable after a period of Scrip dividend payments to reduce the amount of shares in circulation after Scrip dilution but I can only see that they make the books look better at year end and of little benefit to shareholders even in long term scenario.
Boyobach is it as simple as Chevron currently has a dividend yield of 4.8% which translates into a higher ratio of SP/OP than RDSB currently nearer 3.6% - the premium on Chevron to RDSB yield is 25% or have I misread the scale on your chart?
Boyobach
i appreciate your comments.....but there is so much said about ..oil
what are your views on the gas situation and the impact of its current and ongoing "poor" performance ?
from the Shell first quarter 2021 update note last week....
Integrated gas : " Trading and optimisation results are expected to be significantly below average"
Here’s RDS against Brent and Chevron, all rebased to the start of 2018.
https://invst.ly/ugrhl
Oil is back to pre-pandemic levels and is near its best ‘average’ of the last six years - i.e. since it fell from $100. I say ‘best’ because Brent has spent much more time below $60 than above it since the end of 2014:
https://invst.ly/ugrsj
Whilst OP might spike, recent history indicates that it’s unlikely to be for long and there’ll inevitably be a sharp drop back. $60 to $65 is apparently the sweet spot and about as good as it gets, or is likely to get in the foreseeable.
So OP is not preventing the RDS sp from regaining £20 and it is interesting to note the divergence in sp between RDS and the ‘gold standard’ major Chevron. The two had performed similarly up until April 14th last year, from which point RDS plummeted sharply, with the difference today representing about £6 drop in RDS (which you can read straight off the first chart). Although that sharp divergence happened almost overnight the reasons for it had presumably been building for some time and Covid-19 simply triggered the sharp adjustment in the market assessment of RDS, which became evident shortly after the Q1 results were published. The questions for RDS investors are: What caused the divergence with Chevron, Is the change fundamental and is RDS likely to close the gap or is it now permanent?