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Strategically, companies will often go for an early offloading of areas that the competition regulators might raise issues over, partly to smooth the passing of a takeover, and partly because they get a better price when the sale is not forced. If, as looks likely the Judicial and Regulatory frameworks tighten, a merger can possibly halve a company’s future defensive costs. The reality is that for some Board members the pandemic has been a nightmare, for the hawks though it can be seen as the strategic opportunity of a corporate lifetime as economies recover from the pandemic & Shell has the huge revenue resources & window of opportunity to make something big happen.

Regarding the Permian Basin shale sale. speculation. This is yet further indication of Shell baling out of high-cost oil/gas production – trimming and re-directing its balance sheet. It has a very chequered history as regards US shale production, which although politically stable is comparatively very expensive in terms of extraction costs. Unless the capital realised from asset sales is deployed in better revenue-return areas it will effectively depress one of the key accounting ratios, namely Return on Capital Employed (ROCE). Alternately Shell could hike up the dividend using these funds to bolster any payment from retained earnings. But, this seems unlikely, as they would just be giving away the silver. Once a dividend is paid, it is gone as far as the company’s balance sheet is concerned. Unless it is a one-off situation Shell will most likely pay dividends from retained earnings.
Regarding comparisons with BP. There is no doubt that $500 million in BP buybacks, will support/increase the BP share price, depending on when they take place. Something that is not often mentioned is that buybacks can be use defensively, in that they take loosely held shares away from a potential predators’ grasp.
However, comparisons between the RDS and BP share prices need to be looked at in a deeper/wider perspective, as opposed to a day-to-day guesswork basis.
BP is just starting to emerge from the worst impacts of the COVID pandemic, in common with the other super-majors. But additionally, they are really only just starting to fully emerge from the near catastrophe of the Deepwater Horizon debacle, which came close to destroying the company. At the time of the Deepwater Horizon accident around a decade ago BP was capitalised at $180 billion. The cost to BP has exceeded $71 billion. Divestments are reliably indicated as being somewhere north of $40 billion. Effectively it is now $71 billion smaller than it would have been, without counting the lost return on capital employed on these huge payments!
Arguably BP has sold off many of its underperforming assets (as Shell looks like doing), but this was initially a fire-sale where anything could go. The FT described the divestments by BP as unprecedented. Now there are at least 2 x ways of looking at this: BP shares are outperforming from a more optimal base than Shell, or without doubt it is now vulnerable to becoming an acquisition or merger target until it builds critical mass again to perhaps deter this.
Former BP boss Lord Brown's book revealed that informal merger talks with Shell took place as early as 2004. He claimed a mega-merger could have been worth $9bn a year. There will most likely be merger and acquisition activity amongst the super-majors. Shell is rapidly restoring the strength of its balance sheet. It will doubtless make not just divestments, but also acquisitions and target developing fossil and green strategic partnerships.
Strategically, companies will often go for TO BE CONTINUED!

A wonderfully, obsessively, one-dimensional, one trick circus pony, one theory fits all perspective, of what you will clearly never grasp in terms of holistic financial analysis!

My understanding was that all changes following the review would take place after the close of play on Friday the 18th June, so that they took effect prior to the commencement of trading on Monday the 21st June 2021. So not long to go. Yihaaa!!!

Shell was measured by 2020 revenues, as the fifth-largest company in the world, the largest based in Europe, and the largest not based in either China or the United States. In the 2020 Forbes Global 2000, Shell was ranked as the 21st-largest public company in the world.

There is uncertainty following the court ruling, but it is broadly predictable uncertainty. Shell will appeal the ruling & ultimately it is likely that a "negotiated" watered-down version will ultimately manifest itself, containing probably what seem to be aggressive targets, more or less acceptable to both sides. It is highly unlikely that the Netherlands Government are intent on destroying their biggest company or that Europe will let it do so.

Major multi-nationals can move their centre of activities, HQ, where they are registered, more or less choose where they pay taxes at anytime. Shell is well placed to do this. If it say transferred the control of its operations to the US, or the Cayman Islands, what jurisdiction would a court ruling in the Netherlands have?

Unless there is a significant fall in current oil prices, I think it is highly unlikely that the RDSB share price will not be well north of £15 by the time of the Q2 Ex-dividend date on the 12th August 2021. As a number of people have pointed out though, there are a number of difficult to fathom dynamics at work dragging it back.

Shell has committed to a reasonable systematic upward progression of its dividend payments. But it has not articulated exactly what it intends once the magic net debt figure is reached, and it is" free" to choose when this happens. Shell is already geared up to improve its capital & shareholder equity ratios: selling off often underperforming assets that no longer fit with its strategy, embarking on distributing a greater proportion of retained earnings through dividends, improves the return on capital employed (ROCE), whilst any return to share buy-backs & cancellation of shares, will increase the return on equity (ROE). There is still a widely held view that companies paying out large, ever-increasing dividends, simply cannot think of anything better to do with the money.

There are still a lot of distressed oil assets out there, accompanied by doomsday publicity, & let's not forget that oil companies are only just starting to show significant recovery from "US oil price below zero for first time in history" the FT headline on the 21st April 2020. The timing would be almost perfect for a major strategic takeover or merger.

It will probably have slipped your notice, but teaching generally involves educating the uneducated! Otherwise we would all be illiterate!

Peat is a fossil fuel used in the bronze age.

Generally it is just organisations or individual investors "spoofing" or generally trying to deceive the markets for a variety of reasons.

This sounds good for Deliveroo's various supermarket partnerships, from the M & S full year accounts:

Exceptional Ocado Retail contribution to results

Ocado Retail delivered 43.7% revenue growth over the 52 weeks ended 28 February 2021 and contributed a share of net income of £78.4m.

This has been an exceptional period for grocery online and Ocado Retail performed strongly. Higher than normal basket size and a smoothed trading pro?le across the week together with reduced marketing costs delivered a strong improvement in profitability. The overall result included the Group’s share of insurance receipts related to business interruption at the Andover customer ful?lment centre (CFC).

The well-planned switchover to M&S supply from Waitrose in September 2020 went smoothly with a positive customer response and the M&S share of basket has exceeded the Waitrose level prior to switchover.

Cheer up!
A few hours ago - so more or less missing the markets in Europe. "EU agrees to open doors to vaccinated foreigners!"

https://www.reuters.com/world/europe/eu-countries-agree-ease-travel-restictions-non-eu-visitors-2021-05-19/

Once the EU release lists of countries & restrictions, including vaccine passports, this should be big news for Shell and BP. If this does not drive the OP and SP up nothing will.

Without doubt there will be some jostling amongst the leadership contestants, and the invaders of state security, notorious hackers etc will probably always see cyber security systems as being imperfect & having exploitable weaknesses and gaps. For me, in investment terms Dark appears to have attained a pre-eminent position in the marketplace through its innovative use of AI & ML.

This is evidenced by the fact that Dark seems to be a persistent serial collector of prestigious trophies and awards in the sector, which speak volumes for the market perception of the company and its products. You are probably familiar with the following links to the Dark site, otherwise they are worth a look;

https://www.darktrace.com/en/awards/

https://www.darktrace.com/en/press/

Dark seems to be incredibly well placed to "lead" this sector in terms of technology, innovation & design, but I don't think it will ever be given the opportunity to reach the critical mass necessary to fend off the mega players.

TB - a really thought provoking post to discuss and analyse. JC - many thanks. A timely reminder for me to do more/some research.

TB. Really interesting comments.

Surely, log file management & Network Behaviour analysis are on a convergent path. Dark already claims that it has 4,700 company customers & 44 world offices, so surely this is indicative of a burgeoning world market for their products. All we seem to hear these days is of data breaches, major hacks, ransomware etc. The market is here to stay, but is it really that small, surely everyone with a computer or smartphone aspires to having this level of protection?

Surely there is in future a potentially massive market for a differentiated derivative of their products addressing the private user market, obviously at a significantly lower price. I agree that predators will be targeting Dark for their IP & potentially to exploit & expand their market "leadership." Is "leadership" the right word?

Dead right and there are a lot of supporting factors for the OP at this level and potentially higher. The US is heading for a 40% fully vaccinated population & will be a major powerhouse of pandemic recovery. Who knows, even Europe is starting to get its act together!

https://ig.ft.com/coronavirus-vaccine-tracker/?areas=gbr&areas=isr&areas=usa&areas=eue&cumulative=1&populationAdjusted=1

Disappointingly, there is also nothing like a good conflict to boost the oil price. The so far localised West Bank & Gaza fighting has many dynamics, including barrages of Iranian (technology and manufacturing expertise) rockets fired at Israel, deadly & prolific Iranian designed IED's, the fact that Israel cannot allow the development of Iranian nuclear weapons, the fact that Israel will stop the activities of Hamas etc in the occupied territories even if it means doing so again by invasion. Biden might turn this situation on to "simmer" overnight, but it will not go away!

Also, with the Saudi-Yemen situation, will another rocket attack on Saudi refineries never happen again? To think so would involve groundless optimism. The Middle-East still supplies around 55% of World oil & it is as always a powder-keg.

LTI - as I stated:
"The W8-Ben form definitely repatriates dividend levies to me from Canadian companies & enables me to buy and sell US companies shares,"
The W8-Ben form was definitely the standard form to complete for repatriation of dividends from wholly Canadian companies such as Entertainment One, until it was taken over by Hasbro in 2019.

Hi!

The following link on the Shell Global website refers to the treatment of the RDSA & RDSB shares dividend:

https://www.shell.com/investors/information-for-shareholders/share-information.html#vanity-aHR0cHM6Ly93d3cuc2hlbGwuY29tL2ludmVzdG9ycy9yZXRhaWwtc2hhcmVob2xkZXItaW5mb3JtYXRpb24vaW5mb3JtYXRpb24tb24tc2hhcmVzLmh0bWw

The following statements are extracted from this:

Based on a policy statement issued by the Dutch Ministry of Finance on April 29, 2016 (which will be formalized in law), and depending on their particular circumstances, non-Dutch resident shareholders may be entitled to a full or partial refund of Dutch dividend withholding tax.

"UK resident holders

When Dutch withholding tax applies, a UK-resident holder will generally be subject to Dutch withholding tax at a rate of 15%.

A UK resident holder who is entitled to the benefits of the tax convention between the UK and the Netherlands will be entitled to claim a refund of 5% from the Dutch Revenue. Furthermore, UK resident shareholders may be entitled to a full or partial refund of Dutch dividend withholding tax following the policy statement issued by the Dutch Ministry of Finance on April 29, 2016 as referred to above."

It looks like writing to the Dutch revenue directly to obtain the 5% refund on their 15% withholding tax. And then contacting the Inland Revenue in the UK, but I guess they will tell you to declare the RDSA dividend on your self-assessment form, and then apply for a credit of the amount deducted. A lot of hassle really, but at least the RDSA shares command a premium over the RDSB shares, and have sufficient control over Shell to pay out the RDSA shareholders before the RDSB shareholders in the event of bankruptcy of the company.. The W8-Ben form for the States is not much fun, but I was just checking and it lasts for 3-years. Good luck though.

The W8-Ben form definitely repatriates dividend levies to me from Canadian companies & enables me to buy and sell US companies shares & there must be an equivalent form for countries that we have reciprocal tax treaties with.

There is a double taxation treaty between the Netherlands and the UK that covers all the individuals who are residents of one of both countries. The Convention applies to taxes on income and on capital gains imposed by one of the states included in the treaty, irrespective of the manner in which they are levied. There must be a form that you can complete that prevents double taxation of your RDSA dividend income i.e. 15% in the Netherlands & then a further assessment as dividend income in the UK.

I complete a W8-Ben form once a year to prevent dividend withholding tax payments for several countries, (particularly Canada & Germany) that we have treaties with. If you receive certain types of income, you must provide completed Form W-8BEN: for Foreign source interest, dividends, rents, or royalties. If you do not provide this form, the withholding agent may have to withhold at up to a 30% rate. see organization articles of the treaties with Canada, Mexico, Germany, and the Netherlands. You should find this solves your issue with RDSA shares having the 15% dividend withholding tax applied in the Netherlands as a Dutch company.

Apologies. For absolute clarity on the differences between RDSA and RDSB shares my first paragraph should be substituted with the following lifted straight from the Shell Global site:

Difference between A and B shares
Class A ordinary shares and Class B ordinary shares have identical rights, except related to the dividend access mechanism, which applies only to the Class B ordinary shares.

Dividends paid on Class A ordinary shares have a Dutch source for tax purposes and are subject to Dutch withholding tax (see note 1 - Taxation). It is the expectation and the intention, although there can be no certainty, that holders of Class B ordinary shares will receive dividends via the dividend access mechanism (see note 2 - Dividend Access Mechanism).

Any dividends paid via the dividend access mechanism will have a UK source for Dutch and UK tax purposes; there will be no UK or Dutch withholding tax on such dividends.


Note 1 – Taxation
Royal Dutch Shell is incorporated in England and Wales and tax-resident in the Netherlands. As a tax resident of the Netherlands, it is generally required by Dutch law to withhold tax at a rate of 15% on dividends on its ordinary shares and ADSs, subject to the provisions of any applicable tax convention or domestic law.

Based on a policy statement issued by the Dutch Ministry of Finance on April 29, 2016 (which will be formalized in law), and depending on their particular circumstances, non-Dutch resident shareholders may be entitled to a full or partial refund of Dutch dividend withholding tax.

Furthermore, In April 2016, there were changes to the UK taxation of dividends. The dividend tax credit has been abolished, and a new tax free dividend allowance of £5,000 introduced. Dividend income in excess of the allowance will be taxable at the following rates: 7.5% within the basic rate band; 32.5% within the higher rate band; and 38.1% on dividend income taxable at the additional rate.

If you are uncertain as to the tax treatment of any dividends you should consult your own tax advisor.

The following sets forth the operation of the provisions on dividends on Royal Dutch Shell’s various ordinary shares and ADSs to US and UK holders, as well as certain other tax rules pertinent to holders. Each holder should consult their tax advisor.

Dividends paid on the Dividend Access Share
There is no Dutch withholding tax on dividends paid on Royal Dutch Shell Class B ordinary shares or Class B ADSs provided that such dividends are paid on the Dividend Access Share pursuant to the Dividend Access Mechanism.

Dividends paid on the Dividend Access Share are treated as UK-source for tax purposes and there is also no UK withholding tax on them.

All dividends with respect to Class B ordinary shares and Class B ADSs have to date been paid on the Dividend Access Share pursuant to the Dividend Access Mechanism.

The RDSA shares were for a long time subjected to a 15% Dutch dividend withholding tax of 15%, but the Dutch Government changed this a couple of years ago, after first announcing the intention to abolish the Dutch dividend withholding tax in October 2017. This was seen as levelling the playing field in order to attract increased international investment.

There is now little difference between holding the RDSA and RDSB shares, although the difference in share prices due to volatility provides arbitrage opportunities.

The RDSA shares do however have control of 57 per cent of the company and can therefore prioritise the assets distribution to RDSA shareholders, before the other shareholders of RDSB in the case of company bankruptcy.

I think you will find that this is the reason for the RDSA share price, in recent times, commanding a premium over the RDSB share price. Historical price differentials, for reasons that no longer exist, have no particular relevance.