The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Emerald, I partly agree with your main point. I do believe that there could be a wider market selloff in the event of an invasion (which seems more likely than ever). As to what exactly happens to BP, in the short term it could follow the market lower but as to how revenue is affected overall is a more complex picture. The OP would most certainly rise offsetting some of the loses that might be faced wrt Rosneft (although I read that sanctions on Russian O&G weren't on the table presently - probably due to the wests reliance oil it). Although I believe the income would be returned at a later date. Another thing to consider would be demand destruction due to excessive prices, however food and energy are necessities and I don't see travel being affected as a whole either.
If you want to take profits and sit this out then that's a fair call, I would say or if you want to trade this lower then you do your own risk/reward assessments and make the decision that is right for you. None of us really know how this will play out in the short term, although longer term recent broker ratings seem to suggest that this is still a buy (and I assume they would have done due diligence and considered the impact of war in Ukraine).
Also reading that sanctions on Russian O&G and access to SWIFT seem to be off the table, favouring sanctions on Russias top banks & NS2 as well as use of FDPR to prevent semiconductor exports to Russia.
Russia definitely doesn't have a weak hand and any counter sanctions imposed by Russia would be severely felt in the west. Ukraine supplies a huge amount of neon to the US semiconductor industry, Russia supplies titanium for commercial jet engine manufacturing, it also supplies a large amount of ammonium nitrate globally (around 2/3rds of global supply), which it has just placed export bans on this month, so we would expect to see food prices rises filtering through soon. Also on Oil & Gas Russia is now the 2nd largest importer to the US (after Canada), following US sanctions on Venezuela's oil, and so the list goes on.
As we start to see the ramifications for the west could be huge.
For these reasons, I don't see the west going to battle in Ukraine and imagine that Russia would occupy quickly (although it would be bloody and nobody wants that). The best outcome for all would be if an agreement is reached that satisfied Ukraine and comforted Russia on what it sees as an eastern expansion of NATO.
I personally don't think talk of £10 per share is dumbfounded, will it happen this year no, next year most likely not but ultimately who's to know. Look out towards 2030 though and I think it is possible to reach £10 at some point by then.
Several factors might make this possible;
Share buybacks
Increasing dividend
Increasing EBITDA (in line with current projections)
Decreasing debt (or even talks of a net cash position - if this happened the SP would quickly move up IMO)
Transitioning to an IEC with more reliable earning may move us away from the typical earnings multiple of the O&G giants of old.
There are reasons to be both optimistic and cautious with price targets but I think we all agree (at least most of us do), that at todays price BP is a buy.
Cong, divi was raised with 2Q results last year. The distribution to shareholders are at pre-covid levels with dividends and buybacks plus we've already had a change of strategy from a flat dividend to a progressive dividend. I expect at some point in the future that strategy will move away from buybacks towards dividend distributions, when is anyones guess.
They also said that they were going to keep the dividend flat, strategy changes and I think with the massive earnings people were right to expect that increase with these results (as with other oil majors). Personally, I like the share buybacks for now and can wait for the dividend increase in another quarter but I can see why people might be frustrated with the lack of a rise announced today.
Agree, sharefall. Nothing shiny about the report expect it may pull the share back over the coming days (hope I’m wrong), but buybacks to underpin it. Steady away indeed.
Should get the 4% increase in Q2 as we did last year.
Looks like the penny might have dropped...Oil & Gas is in it for the long haul.
https://www.telegraph.co.uk/politics/2022/02/07/six-north-sea-oil-gas-fields-fired-amid-cabinet-row-net-zero/
Six North Sea oil and gas fields are set to be given the green light this year, The Telegraph has learnt, as Cabinet figures push back against “insane” demands to go further on net zero.
Rishi Sunak has asked Kwasi Kwarteng, the Business Secretary, to fast-track the licenses amid Treasury fears over the economic impact of making the UK a net zero carbon emitter by 2050.
It is the latest sign of tensions between Number 10 and Number 11 after the Treasury held back plans for bringing down NHS backlogs and demanded better value for money.
The Telegraph understands that Mr Sunak is also preparing to resist Boris Johnson’s high-spending instincts over public sector pay, measures to limit migrant Channel crossings and the scrapping of free Covid tests.
On Monday, the Prime Minister moved to play down suggestions of a rift with Mr Sunak – seen as a future Tory leadership contender – by responding “absolutely not” when asked whether he has doubts about the Chancellor’s loyalty.
He said: “Everybody in Number 10 and the Treasury are working together in harmony to deal with the big problems that the country faces and clearing the Covid backlogs.”
The six oil and gas areas, which have already been given a preliminary licence by ministers, are expected to be given approval by Britain’s oil and gas regulator to begin construction of rigs in the North Sea.
Despite calls for all domestic fossil fuel extraction to be halted, ministers have pledged to continue to support oil and gas production while renewable energy sources are developed.
Drilling of oil and gas could begin in the Rosebank field, to the west of Shetland, and at the Jackdaw, Marigold, Brodick and Catcher sites in the central North Sea. A sixth site, Tolmount East, had been intended to be approved by the Oil and Gas Authority last year but is now expected in 2022.
The combined reserves of all six sites are thought to be enough to power the whole UK for six months, with 62 million tonnes of oil equivalent fuel in the ground.
A Whitehall source told The Telegraph: “The Business Secretary is pushing for more investment into the North Sea while we transition – not just for jobs and tax revenue, but for domestic energy security.
“Kwasi is actively resisting insane calls from Labour and the eco-lobby to turn off UK production. Doing so would trash energy security, kill off 200,000 jobs, and we would only end up importing more from foreign countries with dubious records.
“Over the long term, we need to generate more secure, affordable, low carbon power in the UK to achieve greater energy independence. The more clean power we generate in the UK, the less exposed consumers will be to gas prices set by international markets.”
Also I believe that you need to factor in that given the worst case scenario (blocked out of Russian O&G), the demand around the world (including in the US & Europe), will continue to grow through 2022 and therefore the price of oil and gas would inflate meaning whilst we would loose around 1/3rd production in the short term, this won't necessarily convert into a loss of 1/3rd in revenues. The impact would somewhat be mitigated.
I believe this to be an unlikely scenario but one to consider.
Also we would likely stop any further disposals of assets and possibly even increase E&P in other areas. So whilst this worst case scenario might affect the SP in the short term even given the worst case it isn't lights out for BP, far from it in fact.
Exactly that, maybe the analysts overpromised but a great set of results for them!
I hope that we post a similarly good set of results in a couple of weeks time. A nice dividend hike and a large buyback announcement would certainly help the medicine go down, but I understand the board might need to be a little more disciplined for now, in light of current events.
Lets wait and see
Purely out of interest, as I’m not invested in them, I just pulled up the Q4 results for Chevron. I’d hardly call it a miss if I were invested there.
A 6% dividend hike, guided first quarter 2022 buybacks to the top of their annual guidance range. I’d be pretty chuffed personally.
SP appreciation of over 15% during the last 3 months and around 47% over the last year (including recently hitting an ATH), should keep all shareholders pretty happy in my book.
Maybe a little perspective needed there.
Looking forward to our results on 8th Feb.
I agree, Mark. Hopefully being patient and standing behind the transformation will bear fruits, as I believe it will.
I was more getting at Annalisa's continual negativity. When the SP was languishing around 300p this share was going nowhere, now at 400p this share is in the mud, according to them. All whilst apparently being sat on over £180k in profits. It just seems odd to me.
Anyway, whatever floats their boat.
Back to the Russia situation...
BPinvestor thanks for the link.
Slightly confused here still as we don't usually learn about the dividend amount to be paid, or of any special dividends until results day. I've never seen an announcement of dividends before this for as long as I've held BP. So do you expect an RNS announcing the dividend amount tomorrow?