Member Info for Boyobach

From Reuters:
Three weeks after the storm, about 40% of Shell's production from the offshore region is still offline. Shell is the largest U.S. Gulf producer with eight facilities pumping about 476,000 bpd, according to researcher Rystad Energy. Overall, the U.S. Gulf produces 1.8 million bpd, or about 16% of U.S. oil output.
https://www.reuters.com/business/energy/shells-gulf-mexico-offshore-facility-be-offline-repairs-until-year-end-2021-09-20/

Longterminvestor: You are entirely correct - but increased percentage of ownership is just half of the equation. One also needs to know by how much the value of the company (and I don't mean the market cap) has changed. Does anyone here know with certainty that RDS is making a profit on the Permian deal and what that profit is? If RDS are selling Permian for less than its book value then the 'distribution' is a negative number.

NSS : I don't many Buybacks ? If that should have been 'I don't want Buybacks.' plus the others in the list , then I'm with you 100%

My thanks to all who responded in this thread.
Apart from the specific circumstances when the market price is very significantly and demonstrably below the true value of the stock so that buybacks clearly represent exceptional value to the company and the remaining shareholders, I’m generally with JakeK and those who think that buybacks show a lack of management direction and that surplus cash arising from the sale of an asset (like the Permian) should then be distributed to shareholders for them to decide whether or not to re-invest. Although I now recognise the technical definition, In my view it’s a bit of a stretch to call buybacks a ‘distribution’ unless that distribution can be measured and reported. GLA

Yes a good advance by the sp. I decided to top-slice today so I'm now 'equal weight' in RDS - ie at my average long term level with an average of £11.30 per share.
I had intended to hold through to the Q3 results but the likelihood of buybacks being the main product of the Permian Deal is frankly disappointing to me, especially now I've had time to focus on the fact that buybacks reduce the bottom line (strip out cash to buy shares that are cancelled) leaving fewer shares that each represent a bigger portion of a lower value company (because of the cash that has been removed). In other words, they are only good if a company is significantly undervalued by the market and the shares are acquired at a genuinely bargain price that is well below their true value. Arguably, that could be the case with RDS but buybacks are much less inspiring to me than a project to firm up the company's green transition and they also seem less beneficial to the company and its shareholders than cutting debt. To be honest, I see buybacks as the 'go-to' policy for a management that is lacking direction - a sign that they could be a bit clueless about strategy and policy. I would say how many shares I have retained but I don't want to upset Casapinos (just being facetious mate).

Sorry - my reply did not include Casapinos response: I don't agree with that because, as has been established, there was no explicit mention of a 'special divi' in the RNS and the term 'distribution' can refer to buybacks.

Cheers guys - much as I thought.
Just to clarify, Getagrip, by 'shrinking' I was referring to the sale of the Permian interest effectively making the company's operations value smaller. The cash balance would obviously increase to compensate - so the next step (how they use that cash) will determine whether RDS is smaller after the entire process. By using the cash to buy shares that are then cancelled they will increase the share in the business held by each remaining investor but the company will be of lower value than it previously was because the cash will have left the building. In essence, I think the shareholders won't be that much better off - certainly not to the tune of $9billion distributed as cash - maybe a few tens of pence per share?

As Happyinvestor pointed out to me, the word ‘distribution’ can, in this context, be applied to sharebuybacks as well as to direct cash distributions. There has also been one apparent quote from an executive, posted here, that indicates that buybacks are a distinct possibility.

If the proceeds from RDS’ disposal of the Permian Asset are largely used to buyback shares rather than re-invest in the business or distribute directly to shareholders, then what will have been the net benefit to shareholders?

By selling off the Permian interest and using $7 billion of the proceeds to buyback and cancel shares the company would be shrinking but without directly giving shareholders their share of the cash released. It would no doubt be argued that the main benefit will be the $2.5 billion used to strengthen the balance sheet plus, possibly, a notional gain (or loss) if the shares cancelled cost proportionally less (or more) than the actual book value of the reduction incurred.

Does this summary seem correct to you?

Casapinos: Lets be fair to getaf...
Well you could start by not misquoting or misinterpreting what he said!
I don't believe he mentioned trading - just an additional two purchases. There's been a massive amount of nonsense posted in this thread which reveals an awful lot of ignorance about ISAs - which is worrying within a group that probably think they are smart with their money.

An investment ISA can contain many years worth of accumulated funds which you can trade as you wish, so acquiring £52k of RDS in a single year is perfectly possible.

The effective date of the transaction is July 1, 2021 with closing expected in Q4 2021.
(closing would be subject to legal, due diligence and regulatory matters)
The cash proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions after closing,
(buybacks are not a distribution)

I’m not letting this morning’s initial rise - which is modest given all the circumstances - cause me too much excitement. We are, after all, only marginally above last week’s sp and Brent was up $1 overnight - which alone is worth 20p on the sp.
Day Traders will have limited today’s rise - 4% overnight is not to be sneezed at.
RDS is patently undervalued - there should be better to come when Q3 results are announced..
https://invst.ly/w321u

Oh - and there's the RNS!!!

The cash proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions after closing, with the remainder used for further strengthening of the balance sheet. These distributions will be in addition to our shareholder distributions in the range of 20-30% of cash flow from operations. The effective date of the transaction is July 1, 2021 with closing expected in Q4 2021......

Drinks all round then!

I’m going to stick my neck out here Char and say that I feel today was actually a positive indicator for RDS. You know I’m not too obsessed with £15, although my eyes are on £16 in the not too distant. The ‘bottom’ is more important for me and today RDS got tested along with the market and the support AND trend at 1418 held firm:
https://invst.ly/w2xhc
I think that’s a big deal - and better than I’d have anticipated under the circumstances. If the baseline has moved up to 1418, or even 1400 - it’s a significant step on the upward ladder as far as I’m concerned.

On second thoughts - - if the small fry go bust maybe it'll enable RDS to expand to match the Big 6 ?

I think this was flagged up in June? https://www.offshore-technology.com/news/shell-sale-permian-basin-assets/

The Permian doesn't fit a genuine 'green' agenda - assuming that is actually what RDS is striving for - so it's probably good news and raises cash to reduce debt, pay a special divi or invest.... in a genuine green agenda without this blue hydrogen malarky. By which, I essentially mean blue is not green - or even remotely close, apparently.

Ha! -yes Getagrip - it's an old chestnut and I had to bite,
Thing is , I could hardly point to BP to justify my argument could I? Fortunately for me CVX and XOM covered that angle. I'm not sure why BP kept so firm today given the general market.
My main worry is RDS' UK Energy business: that can't be doing well if the other suppliers are anything to go by.

I think the dip in the entire market was probably the main factor: https://invst.ly/w2r1r (RDSb v FTSE100)

Hi Bridgedogg - I was referring to the RSA that Genel has with the KRG, which ends on 31st July 2022 and which, according to my records, generated $8.8m or 26% of total income ($33.7m) of the last monthly payment for June's production (please check the relevant RNS to verify for yourself). I believe $8.8 was the highest attained so far this year but I think the payments should average at least $8m at current levels of OP. By my reckoning, these 'override payments' together with the more recent receivables from last year, accounted for $13.4m of the last payment whilst actual production accounted for $20.3m. Sarta and QD are obviously essential to replace any natural decline at the current fields and hopefully the eventual loss of RSA and receivables.

I wonder how Shell Energy - the UK energy and broadband biz - is coping at the moment? The high price of NG and low renewables supply can't be good news for that division of RDS.