Member Info for getafgrip

With Parkmead, be careful what you wish for:

https://finance.yahoo.com/news/parkmead-group-plcs-lon-pmg-050156381.html

Also Parkmead has a Market Capitalisation of only £18m compared to Deltic at £30m.

I have to admit I am a bit worried about the overall economic backdrop over the next few months: interest rate rises will definitely cause the slowdown/recession that they are intended to. US inflation was announced as up slightly today. Italy going for a punitive Windfall Tax on banks and then backtracking. China announcing a serious drop in factory output, much more serious if it continues, maybe even the spectre of stagflation manifesting itself.

The crisis in the US Regional Banks is still there, but masked by the mighty Fed acting as wicket-keeper. It doesn't change the fact that many, many banks worldwide waded into US Treasuries with a very low return, and now interest rate rises have left these Bonds high and dry, compared to the returns on the latest Bond issues that are available.

On the 25th July courtesy of Reuters - "Bank of England forecasts 150 billion pound loss from QE gilt programme" - The Money Tree just seems to get bigger and bigger!

https://www.reuters.com/markets/rates-bonds/bank-england-forecasts-150-billion-pound-loss-qe-gilt-programme-2023-07-25/

I certainly see a slowing of the World economy it's just a question of how strongly this impacts the oil market, commercial property does not look healthy, the Bond market is skating on very thin ice. But a nice cold Winter on the East Coast of the US and things might look a shade more optimistic.

As of this morning I am not currently a Shell shareholder, but I am sure I will be back if only to check out Boyos buyback analysis.

It is absolutely right that you have to understand exactly what the buybacks return. No surprise that your thoughts on buybacks are so sensible. And I think that essentially broadly logical forecasts are all that can really be achieved with any degree of accuracy, due to the vast number of interlinking economic vagaries and variables at play.

The issues for me are still the major, often impossible to calculate variables. Such as what if the share price rockets or what if it collapses. What if Shell is the subject of massive movements in the FTSE outside of oil & gas economics, as with COVID dynamics say. What if the capital expended on buybacks was shifted in to working capital, with compounded but indecipherable/incalculable benefits for years to come. What of the compounded benefits of no longer being obligated to pay any further dividend on the shares bought back, projected into the future. What are the tightening effects of the reducing number of shares on the capital structure they effectively change. If the share price is pushed higher will this change the perceived liquidity of the shares - will institutional investment grow at the expense of the numbers of PIs. Also, if buybacks do not work why are so many companies embracing them - there is a lot of grey matter backing their popularity.

I think a hugely complex mathematical model would have to be developed to even begin to exactify the benefits of buybacks & accuracy would be an ephemeral dream. The major investment banks and financial institutions have wrestled with this one for years - maybe AI will save the day at some point.

Kok,

If Boris, Kamikwazi, or Albatruss have any further impact on British politics, my only concern will not be the level of WFT, or who introduced it, but the imperative of finding oars for one of the free plastic boats down in Dover & rowing off to the nearest African dictatorship I can find where politics is more consistent and reliable than the UK! Rwanda springs to mind - I insist on being captain if anyone wants to join me and row!

Do we have to be subjected to a party-political load of Kok!!!

Oops! Worth a look at the cost of cuts to Saudi Arabia in terms of overall debt to pay for production cuts and infrastructure products). And as you say Autumn arrived in July this year! Will the West be let off the hook again with a mild Winter. My distorted view of Probability Theory is that although it is a 50:50 chance that we will have another mild Winter as opposed to a harsh cold winter, for me the odds of this are skewed by the fact that we have just had a very mild Winter!

A well thought through analysis of Shell dividend policy:

https://simplywall.st/stocks/gb/energy/lse-shel/shell-shares/news/shell-plc-lonshel-looks-interesting-and-its-about-to-pay-a-d

Strange how any analysis that backs your own views, you classify as good or even great analysis. Nomad, I agree the SPR has to be refuelled at some point - and probably with higher priced oil from a tightening market supply side. Saudi & OPEC + cuts (

The NSTA regulate the licensing of exploration and development of the UK's offshore and onshore (England only) oil and gas resources, gas storage and unloading activities in accordance with the Strategy. The NSTA response to a complete change of the strategy on North Sea Oil & Gas exploration & extraction has been slow and wooden, but although distanced it is part of the Civil Service, so what can we expect.

It would be no surprise if a wake-up call does not work, that the NSTA might be replaced altogether. But this does not mean that the UK and many other countries are not racing to achieve as much energy security as possible before the onset of the Western Winter. Check out what countries including Germany, France, Poland etc etc have been doing with regard to energy security, since the invasion of Ukraine.

Check out the numerous countries that Putin has turned off the gas to altogether. Better still read books such as Putin's People by Catherine Belton, or Killer in the Kremlin by John Sweeney, if you have doubts over the issues surrounding security let alone energy security!

"Tax relief on new oil and gas investment:

At the same time, the Government announced increased tax relief for investment in oil and gas production. Companies can be exempt from the Energy Profits Levy through a new Investment Allowance, and a First Year Capital Allowance. Altogether, this doubles tax relief on investments made in new oil and gas fields from 46.25p on every pound to 91.25p in every pound. A significant share of the increase can be claimed back instantly."

Source E3G is consistent with alternative media statements on Oil & Gas Subsidisation by the Government.

It is not particularly rational to consider that the current Government or even a future Socialist administration will back-track on North Sea licencing commitments, or commitments to exploitation of North Sea resources generally. This is for a number of reasons:

1. As a country we are racing to try and achieve energy security, of supply & deployment as quickly as possible.

2. We cannot afford to be held to ransom by dictators in either Russia or the Middle-East.

3. Oil & Gas forms part of stop-gap measures until say the green revolution reaches some kind of viable critical mass,

4. For industry & the economy consistency of supply and price are essential.

5.As an example "nuclear energy" is only ever likely to be say 20% of the solution & it is a medium to long-term scenario. Wind turbines do not work when the wind is not available, and they are switched off when the wind is too strong - they are not 100% consistent in their supply to the National Grid! Stop-gaps are used in these circumstances - even including coal-fired power stations!

A few activists climbing on the PM's roof when he is absent is highly unlikely to significantly influence the dynamics of national energy security to any significant extent.

Wndfall Tax in perspective - courtesy of the BBC 1 day ago:

"Prime Minister Rishi Sunak introduced the 25% Energy Profits Levy in May 2022 when he was chancellor.

In the 2022 Autumn Statement, the current Chancellor, Jeremy Hunt, said the levy would increase to 35% from January 2023, and run until March 2028. It was previously due to finish in 2025.

Mr Hunt said the tax would raise £40bn over six years.

On 9 June 2023 the government announced a change to the policy that would mean that the windfall tax will end if oil and gas prices fall below a certain level for six months.

For the tax to be halted, average oil prices must fall to, or below, $71.40 per barrel, and £0.54 per therm for gas, for two consecutive quarters."

Realistically, once a licence is issued and then finally approved, a North Sea Oil & Gas company will enter a lengthy heavily capital intensive exploration phase, generally measured in years. If viable commercially exploitable quantities of oil and gas are discovered the company can then move to the production phase, also with a period measured in years before break-even is prospectively achieved. It is only when a profit is actually made that that the Windfall Tax can be applied and paid. Behind the scenes there will be significant agreements between major Oil & Gas producers, surrounding amongst other areas the balance between subsidies given & eventual impacts of the Windfall Tax. Otherwise why would a world energy giant like Shell choose to domicile in the UK from January 2022!

In the meantime considerable Government subsidies are attracted, making exploration and production feasible, in many cases:

"The UK government has given £20bn more in support to fossil fuel producers than those of renewables since 2015, the Guardian can reveal. The research, commissioned by the Liberal Democrats, found that while renewable energy was given £60bn in support over that time, fossil fuel companies were given close to £80bn.9 Mar 2023"

Source Guardian - 9th March 2023:

https://www.theguardian.com/environment/2023/mar/09/fossil-fuels-more-support-uk-than-renewables-since-2015#:~:text=The%20UK%20government%20has%20given,given%20close%20to%20%C2%A380bn.

Orcadian Energy PLC - North Sea-focused oil and gas development company - Notes a significant rise in the company's share price, but says that it is "not aware of any specific reason" for the increase.

Orcadian Energy says it is aware of the positive support given by the UK government on July 31 to the future of the oil and gas industry, and that it intends to proceed with awards of licences in the 33rd round. Orcadian Energy applied for three licenses in the 33rd round on January 19. The company needs to raise new finance in the short term for working capital and to repay its estimated GBP1.0 million loan facility with Shell PLC that is due for repayment at the end of August. Its net cash at the end of July was GBP97,000.

"The government's clear support for further development of oil and gas in the UK is very welcome, and provides a supportive background to the company's discussion with potential partners," says Orcadian Energy.

Current stock price: 5.58 pence, more than doubled from 2.75p at the London equities close on Tuesday

12-month change: down 83%

By Will Neill, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

If a buyback programme in Shell's case involves the purchase of shares for cancellation that might be measured in the millions on any given trading day, and will be sustained for months or years at a time, you appear to be saying that you do not consider that this might support Shell's share price, let alone increase it!

My hypothetical scenario of the Shell share price impact in a 1000 years time is something that can be termed deliberate exaggeration to stimulate thought about the impact of buybacks and direction of travel of the Shell share price over time.

In a similar vein I was simply being sarcastic stating that the Shell share price might have gone up a "tad" in 1000 years time if the company still existed. If say the Shell share price went up only a modest 5% - 8% for every one of those 1000 years, even factoring in a number of barren years, the compounding effect over time would provide a significant accelerant to any forecast of a future Shell share price.

Your desire to argue a point seems to be undermined by both your lack of intellect and analytical capability.

Oops! It was the system messing around this time. If the company buys a share and then cancels it, there are less shares around etc etc. I think there is a lag-effect before the benefits manifest themselves, but also buybacks are a great prop for the share price, streamline the balance sheet, improve some key ratios, make life complex for shorters etc.

Realistically though as shareholders we only see one side of the equation. That is we know the share price at close following a buyback. We have no idea what the share-price would have been without the buyback though & because there are a hundred factors in play on the share price that may vary from day to day, even complex treasury models will be unable to calculate this accurately.

But looking at this in the long-term, say we are all frozen cryogenically for a 1000 years - in say the year 3022 as we come around: Shell might still exist as a company, we might have kept our shares, and for each share bought back in 2023 & cancelled the company would have saved 4000 Quarterly dividend payments - which would be a hefty sum! The shares might also have gone up a tad, and this would mean it was very astute to buy back shares at a relatively low price in 2023!

With dividend policy I think people can rest more easily. I accept that Shell was not going to reinstate its dividend policy very quickly after the COVID halving. But, looking on the bright side the company increased the dividend by 4% in the first Quarter of 2022, by 15% in the 4th Quarter of 2022, and by 15% in the 2nd Interim payable in September 2023. On a simple basis an increase of 34%, but compounded an increase of 37.54% - so for me the direction and intentions look good for a steady catch-up to the good old days.

With progressive dividend and buyback policies the company also enables individuals to balance capital gains and income tax, unless of course the shares are held in a tax shelter.

It looks like Boyobach is not Welsh for Buyback.

I don't think either side, for or against are easily going to win this one.

Yes, some bad news on gas trading tomorrow, but not unexpected with the boom-time returns behind us for now, everyone looking at& trying to forecast the recessionary impacts of interest-rate rises slowing some of the major economies etc. Speculation on the property market dragging on the Chinese economy. Some big write-offs to bite the bullet and clear the decks. Once write downs and gas trading losses are actually defined the share price should bounce in my view.

We are looking at a rapidly approaching Winter - the last one was warm enough to let the West of the hook economically. Putin is already trying to push up the price of grain again. Suddenly all of the economic frighteners are queuing up to manifest themselves again.

I can't wait for the 2nd Quarter results tomorrow. I think there will be some really interesting strategic dynamics starting to manifest themselves. To me Wael Sawan has come in with an approach very similar to an activist investor. Reviewing every non-core business & with no concern at off-loading underperforming areas like Home Energy. Evaluating renewables, selling off what does not fit with his high profitability criteria, or I would guess even floating some companies giving them an avenue to growth with greater access to capital. Nothing is going to be sacrosanct.

I think we are heading for really exciting times. Wael Sawan has removed the Director of Strategy - it is now him working closely with the Finance Director that will set both strategy and assiduously targeted profitability. Focussing more on fossil fuels to chase down the gap in share valuations with US competitors. As Sir John Harvey Jones said "business is about slaying your favourite children" and it looks like Sawan has already started and really hit the ground running.

Read: The Rare Metals War: the dark side of clean energy and digital technologies by Guillaume Pitron. Rather than being cluelessly patronising you may develop something called an informed opinion!

LordGerbil - Maybe the 350,000 cobalt miners, using pick axes and shovels & including many children, in the Democratic Republic of Congo are part of the "green" & carbon eliminated future you seem to envisage for the wealthy Western Nations. Whether you can understand it or not a very complex transition will need to take place & there will be a place in that for the continued use of fossil fuels, even though overall usage will reduce, ideally on a strategically well managed basis.

The 8-billionth human being to inhabit the planet was born a few months ago! Maybe Shell has decided it could not produce enough lithium, so it will stick to oil!

NKOTB - you are definitely right that it should be an "a." These graphs typically go up and down in rapid succession and then collapse altogether!

Thanks to Gold in Sacks boost & yesterday's Jefferies reiteration with a target of £170!