Member Info for Boyobach

A rubbish week ending on a rubbish day, with the Oil Co’s dropping ahead of OP and dragging or being dragged by the FTSE100. Here’s the week since last Friday:
https://invst.ly/rvxi5
GKP is top this week but Gawd knows why - did they get paid or something? I popped over to the noisy neighbours briefly but didn’t see anything enlightening. Can you buy shares in Kool Aid? IMO, RDS is now on the brink of a plunge back down below £10, what dull mug around here suggested back in March that RDS might be a lifeboat in troubled waters?
G, bless it, looks destined for a drop into the 120’s unless the laws of gravity don’t apply to sp’s that fall out of trend AND below support:
https://invst.ly/rvxin
Don’t rely on the 129 line - it may have offered resistance on the way up but it’s not been tested on the way down and 117 is the next support of any consequence. If you are in ‘buy’ mode then my advice, FWIW, would be ‘sit back, wait and watch’.

And as Friday Club ain’t much fun when G is likely going downwards, my new personal rule is not to enter unless my punt is above the current sp. So, because I’ve been confidentially assured by a reliable source that a BBSD is imminent, I’ll go for 150 if I’m asked.

Clarification: ....but the gap with the others may well narrow ....

Well it was fairly obvious that the 580s were going to offer some resistance and a potential ‘turn-back’ point and the long wick on Wednesday’s candle shows that demand dropped off sharply above 565. The main question now concerns what happens next after CWR finds support at 535 (the last resistance level) - how quickly will it get back up to around 585 and, when it does, will it continue towards the next target at 620 or simply trade in the 535-585 region for a while. Conventional thinking would be that It may have to ‘knock on the door’ a couple of times before 585 finally yields.
https://invst.ly/rvrtn

Prelude is apparently a $19billion mistake, which Shell would rather not talk about. Don't read this article if you want to stay positive about it: https://www.boilingcold.com.au/after-prelude-few-win-from-shells-floating-lng/
Nice quote in the article from Ben van Beurden, when asked about the cost of Prelude here:
"We don't disclose cost on projects, so I'm also not in a position to disclose whether it is any different to what we have previously not disclosed and I don't want an make an exception in this case,"

With RDS revisiting 1070 the only question is whether the support there will hold second time around. It could well be back to 890 if not. https://invst.ly/rvpu6

I'm saying that G has done well with respect to the others since COVID and the OP collapse plus, in the case of KRI companies, the payment issues. RDS is a slow moving giant but (as a thread there covers) is a long term prospect that may be close to bottom right now. GKP has been hit harder than G - I'm guessing the issue there is about demand and discounts for Shaikan's particular oil type - it's a 'one trick' pony, albeit with a helluva trick in terms of resource size. If I'm right about that then I reckon GKP will be slowest of the KRI focused companies to get back into its stride. G needs to get Sarta going (scheduled for Q4) and a credible plan for recovery of the recent suspended payments AND the override from the previous episode (requires OP to reach $48-$50 apparently ). It also has Bina Bawi and Qara Dagh waiting in the wings like much-hyped actors waiting for a starring role. If/When all those elements come together then G could be rockin' but Sarta is the only imminent game-changer and hopefully first production from it will support the sp as we go through the routine winter lows. I think G will stay in the top three of my comparison pack (the other two being DNO and Chevron) but the gap may well narrow , especially if OP slips back through the winter.

Ha!- like PMO maybe?
Since March 1st G is top of my watchlist, way ahead of the likes of GKP, BP, RDS. To be fair, they've got some serious catching up to do: https://invst.ly/rvhid , so I'd expect them to be ahead for a while in terms of week on week gains and that's what's been happening rather slowly for the last month or so. Maybe they'll get there before OP drops again in the autumn.

Hi Robbie.
Here's G v Brent (green line) for the last 12 months which explains more than half of it. The rest is a bit more complicated and I'll leave that to bunks and the other guys.
https://invst.ly/rvd9b

Royal Dutch Shell Plc is in talks to sell its Norwegian natural gas supplier Gasnor, according to people familiar with the matter, as the energy major continues to selectively dispose of assets.

Thanks for the points Carlosan. I think there’s a lot of general agreement here about RDS being currently undervalued by the market, although some of us (including me) have not been critical of the divi cut. By the way, the cut was 66% rather than 75% wasn’t it? Not that it makes a huge difference, I guess.

The divi cut announcement came on 30/4 and, although the sp did take a dive from around £14 at that point to £12, it recovered to £14.62 by 8/6 only to dive again with OP and the wider market on the 9/6. So, the dividend cut does not seem to be the main reason the sp is below £14 today. That seems to have started from 25/6 (when the sp closed at 1270 following a slip in OP), as this was when the sp started to drop despite a strengthening OP. Whilst it might be argued that, up until 25/6, RDS was broadly in-sync with the market and OP, RDS’ collapse from 1270 seems to have been in common with that of a group of blue chip shares - I mentioned LLOY previously - HSBC and BP were similarly affected but not Standard Chartered. So it seems very possible that RDS’ decline below 1270 to 1100 is rooted in some more general explanation than the divi cut.

As time goes on and they pay off the older higher % ones that will help our bottom line....

They tend to be the later maturity ones though - so not necessarily the first to be paid?

Cheers Pokerchips - good observations and commentary as far as I'm concerned. But then I guess we all have a tendency to approve of opinions that chime with our own. I do think that RDS has been excessively marked down because of the (justifiable and prudent) cut in dividend. I think this has 'shaken the tree' as far as income investors are concerned and it's perhaps no surprise to find that the RDS sp has moved similarly to some typical but unrelated FTSE100 stocks where divis have also been disrupted, like Lloy (purple in the chart). Your comment re movement since 9th June certainly resonates with that. https://invst.ly/ruy1k . ATB

I like your style, bunks. I'd also have to reluctantly acknowledge that BBSDs are 'a thing'! However, this time around it's cutting it fine - the long term chart, as opposed to the 'trading' 15' one I posted earlier, suggests the critical green line has already been crossed.... https://invst.ly/ruxma .
Anything that gives me a trading opportunity to relieve the boredom is a good thing as I've recently resorted to aimlessly winding folks up over at RDS. Well, not winding them up so much as pointing out how dire RDS' performance is. So the sooner we have a BBSD the better.

There's not much doubt that the sp is drifting lower. Will the drift stop at the lower green trend here or continue downwards?https://invst.ly/ruvnc

Company updates and reports give the market a sense of trend - eg: Are successive reports positive or negative and is guidance suggesting a continuation or a change?
In the absence of daily data between company updates and reports, the market will look at the broader climate - OP, macro issues, gossip etc etc and guess whether the company’s guidance is likely to be on target or not. News from RDS has been understandably negative of late and the Q2 statement on July 30th led the market to conclude that things were worse than it had supposed and that the prevailing direction should continue downward. At best the trend will flatten-off (along with the underlying commodity prices) but it isn’t likely to reverse unless/until there are obvious reasons for the market to suppose that RDS’ fundamental position is improving. Of course, as I’ve implied in my reply to Pokerchips, the sp is highly subjective and not tied directly to anything as rigorous as the balance sheet. Some people (like me) will think RDS is undervalued at £11 others will not - the result is the market price.

How ever you choose to evaluate RDS as an investment, there's no denying that the sp has been under downward pressure for the last five days and is now teetering on the verge of breaking downwards:
https://invst.ly/rusia
If this happens then another visit to £9 can't be ruled out. Bargain time for some, bail out time for others.

you can’t use such basic notions....

Of course I can - and do. What sensible investor does not evaluate share price movements in the context of perceived business influences, prospects and performance? When the market reduced RDS from £17 to £9 in early March do you suppose the movement was based upon detailed analysis of the balance sheet?

It seems, from your reply, that your studies ‘under the bonnet’ have led you to conclude that RDS is correctly priced at £11, in which case RDS is doing rather worse than I feared.

Utterly agree char333 - but, as I say, £13-£16 might have felt about right at this stage, six months after it all started, but under £12 for nearly a month?
12p divi is small beer alongside a near £1 drop since it went ex-div .
RDS opened on a low of 890 back on Mar 19 and today it is back down on the green trend line from that low, shown here: https://invst.ly/rui8b . Interestingly, that trend is parallel with the current one for Brent. So, in other words, RDS would probably be at 890 today were it not for the rise of Brent in the meantime. There's no escaping the fact that senior management do not seem to have had their eye on the ball: OP volatility is not new and whilst COVID does present a new risk scenario the fact is that RDS should have been strong enough to navigate through better than many. The sp may not be giving a fair reflection of the company's true performance, of course, but if that is the case then the company does not seem to be doing much to correct the market's perception and valuation.

Thanks for the responses everyone - good debate.
I do get the impression that COVID and OP issues have masked other, longer term, reasons for the sp fall, which seems to be nearly 50% greater than might reasonably have been expected. My logic is that if RDS was worth the market rate of £21 per share near the end of January, we have since seen a £10 fall, where up to £7 (33%) might reasonably be pandemic/OP related but as for the other £3?

I’d regard £12-£14 as excusable under the circumstances but below £12 rings alarm bells and places RDS in my investment ‘intensive care’ unit where it basically has six months to turn around, during which time I’ll bring the net cost per share down by trading to a point where, if there are no signs of improvement, I can progressively sell it off with minimum, if any, capital loss.

Yes- tend to agree with you Hasiba.
G has certainly performed well during the COVID + OP crash and that tends to indicate underlying strengths, hence my fairly optimistic view regarding the remainder of this year. I'd be delighted to see better than 180 over the period but I'm trying to reign in on my expectations - it could just remain flat around 150 , which I would find disappointing.