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Good morning all
Another interesting article
https://www.energyportal.eu/news/bank-of-america-says-europes-oil-majors-are-close-to-bottoming-out-and-names-its-top-pick-ahead-of-earnings/88363/
MarkGo
Hope you are well. Thank you for sharing.
I agree with BOFA's analysis that oil major are the bottom of SP cycle
I think the oil market will continue to tighten into this winter and Brent will head back towards $90, which will support improved cash generation for the majors. The drag is refined products and margins because end-markets especially China are still treading water. But I think India will become an increasing driver for growth while China will take longer to recover because of deep structural issues (over-indebtedness, exposure to bad property loans etc.). Overall, I see SE Asia as being a major growth driver for refined products through 2024 especially as aviation starts to grow more quickly (note very strong results from US airlines over the last couple of weeks).
I do think Shell are the pick because of exposure to integrated gas, but BP not far behind in my books. I think BP would be better if Looney wasn't so hell bent on green spending, which I do not find coherent or good value. Still, BP has a fantastic pipeline of O&G projects and unlike Shell, we still have our fantastic Permian business, BPX.
All IMHO DYOR
Happy
Currently considering rotating out of bp into Shell ahead of results (and any confirmation of divi hike) - think the market likes the new CEO's direction and there's no smoke without fire when news hits of trying to sell biz units
Morning Happy
I hope all's well with you.
Excellent post from you as always. Thank you.
I do have some concerns regarding investment into the transition. Mainly my concerns are due to the lack of clarity on progress of the master plan of integration. I hope the presentation next week will flesh out the bones on this.
The article below ( March '23 ) does give some insight into the integration of the whole strategy and makes some sense on what seems to be low return on investment such as offshore wind.
Anja-Isabel Dotzenrath is BP's leading renewable energy executive and heads BPs gas & low carbon energy business as the executive vice president. She was poached from RWE Renewables and has an excellent reputation and respected throughout the energy sector.
When she took up her position she reviewed and 'scrapped' BP's previous complete pipeline of 50GW of renewable investment opportunities as low value. She has been at the forefront of the current integration strategy.
I like her and I am willing to withhold judgement on, what still seems as low roi investment ( offshore wind / solar ) until we are updated.
https://www.reuters.com/business/sustainable-business/inside-bps-plan-reset-renewables-oil-gas-boom-2023-03-07/
Afternoon Mark
Another couple of excellent posts.
Think we may be no longer becalmed,and starting to get a tail of wind.
Inflation,Interest Rates, and a recession are the issues going forward, and they seem less scary than even a month ago.
Oil fundamentals look very strong.
I’m expecting the BPX business to do really well this set of results, as they were increasing take off capacity’s, and had 1 of 3 new systems in place at last results with 2 more to follow closely.Product( oil and gas) was already ready to take advantage of this extra take off capacity.
Onwards and Upwards
Hi meoryou
Thanks, great post from you too and fully agree.
"Inflation,Interest Rates, and a recession are the issues going forward, and they seem less scary than even a month ago "
Agreed. Although there will be a time lag on interest rates feeding through to the economy and there is a fear or of possible overshoot on rises, to control inflation crashing the economy as we move into year end - early 2024 but If this was to happen, I di believe that demand for oil and supply issues will remain similar to now. Previous recessions have only seen a mild reduction in demand so I wouldn't be too concerned by a recession if it happened.
If your interested, here's a link to a webcast on oil demand and recessions.
Have a great day
https://event.on24.com/eventRegistration/console/EventConsoleApollo.jsp?=&eventid=4186065&sessionid=1&username=&partnerref=&format=fhvideo1&mobile=&flashsupportedmobiledevice=&helpcenter=&key=2BC5C72672000F949EBB4A17F61E6729&newConsole=true&nxChe=true&newTabCon=true&consoleEarEventConsole=false&text_language_id=en&playerwidth=748&playerheight=526&eventuserid=625155317&contenttype=A&mediametricsessionid=535491315&mediametricid=5900725&usercd=625155317&mode=launch&s=03