Member Info for Barrieprov

CleverThoughts agree I’d like some good news on debt reduction which might prompt RDS to raise dividend on account of their strategy to allocate a percentage of free cashflow once their debt reduction target is achieved
Not sure about buybacks as though it’d be a good price to do them this is normally done when there is no better alternative use of capital and RDS have a transition plan and gearing position to tackle. Eventually impairments might reverse which would automatically improve gearing

https://uk.advfn.com/stock-market/london/bp-BP./share-news/BPs-1Q-Earnings-Came-60-Above-Expectations-Ear/84921066

Even so shares hardly moved
RDSB results had better be good I’m thinking as the dividend income disparity is a major arbitrage factor at least in the short term? Be good to know if RDSB conservative dividend policy might enable them to hit their debt reduction target by Q2 as it might start to give some impetus to SP

Yes Boyobach it’s interesting that recently RDS just seems to have carried on down while the other oil majors have followed OP almost in lockstep

It might however mean a stronger bounce on RDS once it hits its debt target of $65billion so I’m thinking that’s going to be a key metric in the quarterly reporting to watch for as a function of free cash flow coming off the back of operating profits before depreciation and tax adjusted for capex and working capital movements
Oil Trading profitability maybe harder to sustain though due to multiple factors you pointed out in your recent post

Probably nothing but 3 blocks of 50,000 shares bought after little activity for a while
Will keep an eye out to see if a one off or start of a trend as with a £10m market cap £19,500 worth of shares isn’t a nothing purchase

Very few shares traded

I feel I’m holding vigil at the tomb of the unknown share

Will take a look Boyobach

I came across the following more conventional analysis probably superseded now

https://www.ii.co.uk/analysis-commentary/shell-and-bp-shares-what-city-really-thinks-ii515837

Just dropped below $66 and RDSB just below 1300
Am poised to buy more as though in the short term it’ll get bumpy RDSB will be profitable and cash generative at these levels so it’s only a matter of time until it’s debt reduction target is met like BP’s and it can compete for investor attention on dividend yield and the price gets re rated. Naturally IMHO DYOR GLA

Yes but I rather wished I wasn’t
Selling at 1518 in hindsight looked good :-(

Yes Boyobach it’s been increasingly obvious that RDSB has lead weights attached to its feet and this morning I sighed when I saw Brent up over 1% and no action on RDSB
Don’t know what’s causing it but as you say not OP

Hi Boyobach

That’s interesting as I’m “overweight” at 2,500 shares currently and trade 250 share lots either buying or selling so I’m hoping the shares will rally as they’ve slipped despite the OP being robust. Maybe though some trepidation ahead of 29th announcement or tepidity over the transition strategy?
I’d definitely sell off my excess 500 shares if the price hit £15 but I’m thinking by the time that happens the fundamentals may have improved sufficiently for the shares to carry on up.
It’s a fascinating share, I’m just hoping the Indian variant doesn’t end up screwing us all up. GLA

I’m overweight too Bouovach and am realising this share is being held back by the reality of uncertainty but could pop at any time so GLA

RDSB SP has fallen off on back of pullback in Brent while BP is still almost level

Aside from BP hitting its debt reduction target I’m wondering if there’s nervousness over RDSB transition strategy that I confess I have yet to read but will do do and the fact it’s being formally put for shareholder ratification? Clearly a disagreement over strategy isn’t what is wanted but given RDSB profits will largely rest on conventional fossil fuel revenues, a consistent OP in the $65-70 range should as has been calculated elsewhere on this BB create some positive trading results over the next few quarters

Agreed Neversellshell22
OP up 7% this week and though volatile in short term if this rise is sustained RDSB will start generating cash very rapidly and that will start to get the attention of fund managers once it’s clear their dividend payout will rise off back of company guidance of 30% of free cashflow once debt reduction target is achieved but as you say Covid is the wild card

Boyobach

I think that what happens to SP from here though obviously having some relationship to OP will depend on RDSB paying down its debt, getting buy in to its transition strategy but most of all being in a position to implement a progressive rise in dividend to a point where yield will start to attract the arbitrageurs and underpin a move out of the current range. Clearly given the significant rise in Brent, the weakness in response of the SP does seem to make the prospect of short term uptick look unlikely as other than some comfort might be taken from the US data much will be made of the potential for optimism to be of short duration should any number negative factors occur. In other words I don’t have a bloody clue where the share price will be in the short term and what effect the Q1 Freeport will have on it! GLA :-)

Pokerchips

Can’t wait for next two quarterly updates

Dow going to be up 200 at open as US retail sales jumped 10% in March - just need to see optimism feed through into RDSB

Hi Neversellshell22

In the final quarter of 2020 net debt rose so in reality the dividend wasn’t covered by free cashflow

https://www.shell.com/investors/results-and-reporting/quarterly-results/2020/q4-2020/_jcr_content/par/toptasks_1119141760_.stream/1612367462808/f6e86f369c7083244d6999144f17fae917d82093/q4-2020-qra-document.pdf

You maybe right about Q1 2021 however and like you I’ll be sifting through the announcement on 29 April

The SP is struggling a bit given the OP but I see the opportunity to buy on any dip albeit I’m getting quite overweight on this stock I’m still like you positive about the near and medium term

RDSB net assets $158 billion at 31 Dec 20 so $65 billion is 41% of that figure but at end of 2020 it stood at $75 billion so there’s $10 billion to go and that only happens from net cash generation from profits after tax, depreciation and working capital adjustments, dividends and capital expenditure
Share buybacks improve return on capital but the logic is usually no better alternative use of capital which given the transitional nature of RDSB business is a complex and moving picture. As for cash generation I think we need at least 2 quarters to see it stabilise as currently I doubt they even covered their dividend?

I guess it matters if these have a carrying value in the accounts but I suspect the recent write downs might’ve taken that into account as otherwise it’d impact SP not least because the credibility of financial reporting would be questionable

https://www.rigzone.com/news/wire/oil_up_after_iea_brightens_outlook-14-apr-2021-165153-article/

Hmmm last half hour Brent contract has pushed through $66 to $66.26 and even RDSB has managed to rise over 30p from a low base. Dow is crashing through records and I think just maybe there’s a feeling demand for oil may now start to underpin and supersede OPEC+ production controls

Time will tell but SP will only recover to anywhere near historic levels as RDSB regains the ability to raise its dividend yield while balancing g other considerations such as debt repayment and capital expenditure in transition markets IMHO DYOR GLA