Member Info for hjkl

$43 billion sure is a big number but it has to be taken in context.

For a smaller company with a market cap of say $50 billion and other corresponding figures for cash flow, profit etc that would be worryingly large

For Shell $43 b is very manageable. The key ratio is gearing rather than the absolute amount which is currently around 18.8%. Anything under 20%-30% is comfortable and indeed some investors might complain that it's too conservative.

Have a look at gearing levels for some other companies / sectors. For example utilities will be MUCH higher but remember they have different income profiles, regulated asset bases etc.

This is now on the radar. Not particularly convinced by strategy or trading but it's the brand value that is tempting.

Reply to Thronegames

SPV stands for special purpose vehicle. What that actually means in practice is more imprecise. I usually associate it as a separate legal entity set up by a company to (primarily) reorganise its balance sheet ie moving around some assets and liabilities etc.

I have not looked into any detail but the news flow here is entertaining. US listing, political enquiry and now this SPV job

If I was on this political investigation committee my antennae would be up. With 80% interest of the asset assigned to the SPV I would assume that this also means that 80% of the decommissioning liabilities rests with the SPV BUT this is only an assumption. If I was a regulator or whatever I would want to 100% ensure that in the event of the SPV failing to meet its share of the bill that the next port of call was DEC - no idea whether the small print in the deal already makes this clear.

Agree with the comments here. You could not pay me to install a heat pump.

Retro fit will be expensive and unlikely to work. Only feasible for new builds with excellent insulation.

If someone did have one installed I would recommend having it installed at the coldest time of year - only half joking. The effectiveness drops off markedly in cold weather - no point having one put in in October with warm rooms, decent hot water only to find yourself shivering in January. And even if it does work then the elec bill will be high to make up for the energy deficit.

Agree also about gas boilers. If they are banned in 2035 what will be the market for new ones in 2034 plus a very long tail for maintenance / spare parts beyond that. What is a new gas boiler and what is a "repaired" gas boiler etc ?

The only way to do a changeover to something else is a well co-ordinated government mass public operation such as the covid jabs programme in 2020 or the switchover from town gas to North Sea gas ages ago. As others have said you can't leave people in limbo.

The production tail / reserves can be determined with a low error bar for any assumed gas price as there are so many wells and there is so much decline curve/cost data out there. It's all probabilities.

No idea whatsoever how to estimate the decommissioning liabilities - so many variables with a huge range of outcomes.

The latest enquiry is just one uncertainty : probably a bigger worry is that as there are so many 000s of wells onshore US with marginal economics that isn't almost inevitable that some capped wells will develop leaks eg into the water table.

Whether it is determined these problems are either through sloppy practice or an insufficiently rigorous regulatory regime spells trouble either way. You can expect the costs to spiral. You can also expect much greater $$$ security provision to be required - a vicious circle as it only ramps up the financial squeeze.

Watching this with interest

You'll need specialist knowledge for this sort of thing but a guess might be

100% take up of tender offer - perhaps too generously priced

0% take up - perhaps too meanly priced

More factors go into it than that though eg the buyer may price debt differently to the seller

Buy / sell recommendations are only for entertainment value in particular target prices.

Always laugh when someone posts a target price of 587 p or whatever. How ridiculous the precision of the numbers. Plus you very rarely get a timescale so about as useful as a chocolate teapot.

Do you like LGEN as well ? Thought Nigel Wilson was very good so hope succession was well planned

I have always liked this company - the strategy, the quality of its management and the straight talking in results / news announcements

This announcement is a prime example. Earnings, EPS, profits, underlying this or that ho hum but tell me what's happening in the real world please. Cash.

Anyway 3 year cash generation £4.5 bn, market cap £5bn. Looks just a tad undervalued to me.

Its long term investments may turn out to be good calls but in the meantime you have to hope that cash flows will be sufficient without any further action such as asset sales at just the wrong time.

This the challenge with leveraging especially with smallish companies in a volatile sector.

Some people will be happy with the new higher risk approach others would have preferred the old steady as she goes debt free Anglo Pacific. Ref previous comment on 30th March.

Nearly all GSK news has been very positive lately and nearly all the items in these results are excellent

Will the market pull a rabbit out of the hat again ie a case of the glass being 1% empty ?

Theoretically it makes no difference to the share price / total value for the various method of returns - be it dividends, buybacks or just adding the cash to the balance sheet.

However in practice I'd prefer a (higher) dividend to a buyback. The former

a) sends the signal that you are confident in future returns

b) if the company doesn't invest surplus cash in new projects then I'd like the money to invest elsewhere thank you and

c) there is the long held suspicion that buybacks are a neat way of increasing EPS and triggering share options.

Continues to underwhelm. They say they are basing forecasts on $60 / bbl which will support annual increase in the div of 4%

So what would $80-$90 support ? It's a bit of a mystery to me why they haven't updated / increased the payout.

You could speculate that BP is in stay as you are mode until a permanent CEO is found but they've been like this for some time now anyway.

To be clear this is a risky stock but that's the competitive nature of the marketplace and the need to be at the very top of the technology tree. If the products are no good then everything folds.

You cannot transfer the same financial metrics you would use for evaluating established FTSE stocks to this one. Or if you like you could but then this summarises the UK's traditional problem in investing in risky start up tech businesses - you don't invest so they raise capital in the US instead.

This is a growing company. You need to have the same mind set as countless US tech and biotechs which are built up on debt / equity and the promise of a happy tomorrow.

This or that item in the financial results is neither here nor there

This company sinks or swims on the quality of its products. End of.

Never convinced by the renewables strategy such as it was and the careless comments such as having more cash than knowing what to do with

Shell has thought more deeply about the challenge : you have to be pragmatic and consistent. Trying to

play to the public gallery never works long term.

Shell has invested in renewables but it decided long ago that this is a multi decade transition and that the best option is to weight less on oil and more on gas. Hence the huge investments in natural gas projects, LNG infrastructure and the acquisition of BG.

Nothing wrong with the results

The market is all upset because of the wage inflation data and the thought that interest rates might be higher for longer

The "large bonus accrual" is in fact a decrease.

Without it the cash flow would have been an extra £54.4 million to the good.

When totting up the numbers ignore the wording to the left (sometimes they might read as a double negative) and

just look at whether they're like eg 54.4 or (54.4). The ( ) always means a negative.

Another good set of results

When you consider the company also has healthy net cash the earnings multiple is low indeed.