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Shell continues to be on a good run but how well is it really doing?
For much of the past decade, up until March 2020, Shell’s sp kept pace with Chevron. This changed dramatically when Shell cut its dividend. Here is a chart rebased to August 2011; the date has been chosen purely because it provides a convenient start point for a direct comparison. It shows how Chevron’s sp has now recovered to a level surpassing its average level of the past decade and that Shell would be 2580 today if it had performed as well as its US cousin. Can we realistically expect Shell to reach this level again?
https://invst.ly/x44i0
Boyo, your start point as good as any other.
They looked to be converging at Q3 2020 and again Q3 2021 BUT on both occasions RDS dropped away whilst Chevron took off. This was not due to CV or reduced dividend and price of oil affected both simultaneously - so any ideas why?
If we could work out why they diverged we might be able to understand what will bring them together again.
Is it just differing sentiments in US and UK markets perhaps - is Chevron tracking a major US index whilst RDS moves (other than oil price) are following FTSE? Is it related to dollar / pound strength weakness?
So many variables and so few functioning crystal balls.
compare BP and SHELL. BP doing good today.
Certainly many less variables comparing those two.
Hi Jim and all on this thread.
When I started it, I was simply posing the question I ask myself.
TBH Jim, if the other variables with CVX are significant now then they obviously weren’t up until March 2020. Pokerchips pointed out a long way back that the US companies are under less political pressure in respect of climate issues. I recall (but have not researched to confirm) that they may now be better placed in terms of long term O&G reserves. The dividend cut was the main significant factor IMV. So I broadly think that Shell may not catch up with CVX for a considerable time because of these factors. Which leads me to regard the CVX sp as representing something of a ceiling target for Shell for the foreseeable future.
Looking at the last five trading days, Shell has tracked Brent very tightly - so there’s been no company specific news or activity driving the price. BP has been strengthening in price - so the market has viewed BP more favourably this week, as mehmeh pointed out. Chevron has eased off during the week, which is presumably a US market influence. I think Chevron represents a gold standard in Oil Major sp performance - so not a bad reference to check how Shell is doing week by week.
https://invst.ly/x4alx
Brent increased 20% this year do you think Shell would also
Sorry fat thumbs. If Brent increased 20% this year would it be reasonable to assume Shell would follow taking us to £22 ps or are there just too many variables.
My personal view, not backed by any specific data, is that as has already been mentioned, a greater proportion of RDS and BP institutional investors are under increased pressure to go ESG. Having lived in the U.S. and with many friends scattered across the lower 48, my impression is that collectively the country is taking a much more practical view of the need to maintain a healthy o&g industry than in Europe. I agree and accordingly have increased the percentage of o&g in my portfolio while prices were depressed. However, the real 'crystal ball' requirement relates to how well the balance of o&g revenues are ulitilised both to reward shareholders, and transition to being increasingly 'green' energy companies. At the moment, I think that RDS and BP have a clearer focus on this goal than the American majors, so I feel the gap in performance will close sooner rather than later, provided the OP continues to finance the programme. Ultimately we need IIs and I have no doubt they will return with strength when both the green agenda and shareholder returns look solid.
RDS and BP are clearer on their transitional strategy and perhaps to some extend are at times penalised by some for this (harshly in my view). The Larger US integrated Oil Companies are also clear and are lagging in the transition, but more actively supported politically. Ultimately they will have to change…. It’s a bit like the US, Germany, Australia and China wrt Coal…. Self protection and driving their own proffered agenda at the moment is accepted when done by big players.
Nomad: we've seen a near 20% increase in Brent since 20th December, Shell has nearly matched it but not quite.
The market is going to keep an eye on the dividend yield isn't it? So that’s a potential limiting factor IMV.
Brent has hit $86 overnight - things will get interesting if it continues from here
Thanks Boyo yes magic Brent at $86.50 and RDS closed at over $50.
I watch many interviews with people in the business who predict $100 plus for WTI in 2022 which could be up 20% from here.
Ah - you're dealing in $ on the NY Exchange, Nomad? - OK. My comments about the ratio of sp to Brent being around 21.3 x etc etc obviously relate to the UK LSE price in pence. My numbers may not work very consistently with a further conversion back to $ - although the general principle should be equally valid ATB.
Hey Boyo, No I was just interested to see where we would end up at close of play on Friday night.
https://www.ft.com/content/740f8f3a-114f-4d58-ab74-a7221d64643f
UK urged to impose windfall tax on offshore oil and gas operators
Opposition parties say one-off levy could help alleviate energy price surge as cost of living soars
Cheers Nomad - got it!
nomad what world are u in ? shell at $50 ?
He's right.
2 shares for £50
He's correct, RDS.B closed Friday at $50.08 on the nyse. Each of these represent 2 shares in Shell.
John 42 It would appear in a world larger than yours