Member Info for Sekforde

Time and time again it happens. The market gets disillusioned with a basically sound and undervalued company. The forward dividend is around 5% and with the share buy backs it yields 12% or thereabouts. What caused this latest drop is anyone's guess. The interest hike was entirely expected. There may be some defaults but not many and we do essentially have full employment and a labour shortage. it is time to forget the past and look forward to good returns from a straightforward company that is doing well.

Meoryou. All correct. Just over 2 years to be debt free if prices holds up. What will happen to the $10 -$12bn a year spent on interest and debt repayments? I think the shareholders will receive it. Simple as that.

Who wants dividends? They are taxed at 40% or 45% whereas capital gains are taxed at 18% and you can time your sales to suit. But the BP forward dividend is still over 4% which beats the FTSE average and it is as safe as houses. There is nothing to prevent the old dividend being restored but it would be a bad idea. I like Lloyds Bank too for similar reasons. Good dividend and massive share buy back programme and safe as houses.

Well Chandley 500p would mean a PE of 5 so still very cheap by historic standards. Most of the shares are locked up in large funds. We are almost half way through the second quarter so we can assume some £4bn will be spent on shares buy backs in just 6 months. I do not see how BP can go into the market for 5% of share capital (at present prices) without it forcing the SP much higher. And I am not worried about a windfall tax. It can easily be absorbed and it is kind of good PR to be paying up without fighting too much.

I must say I am feeling very smug at the moment as my position with IG which is all long on BP is showing a HUGE profit. But I am not tempted to cash in. I do not believe in support levels or resistance levels or graphs that show anything meaningful. What every investor should do IMO is just ask whether the market has valued correctly a stream of likely future income. That is both income to the company and income to individual share holders. Based on the last quarter's profit BP is on a forward PE of just over 4. Yes 4. So income to the company is 25% of market cap. And including the share buy backs the income to shareholders is almost 14%. (£8bn share buy backs and 4% dividend). And as many messages on this board demonstrate, some investors do not quite accept (although they should) that a share buy back is a return to remaining shareholders. I think the market will wake up eventually and say that 25% and 14% pretty well risk free is just insane. The 1st quarter's profit was not an aberration. It represents the new norm. In fact with Brent at $110 now higher $7 higher than the average for the 1st quarter and the debt servicing costs coming down as it is paid off, the 2nd quarter could be even better. Throw in the eventual sale of Rosneft and we are off to the races. And there is another factor. These buy backs have not started yet. I think it is to do with the mandate not permitting purchases when the price is above 5% of the 5 day average. So we are going to have the company in the market on most of the remaining trading days buying up to £40m a day. And why on earth should the price of oil fall? Covid lockdown in China will not last long. The Russian oil and gas is to a large extent removed from the world supply - or will be. And there is no spare capacity to increase supply.

I am going to be checking progress on the buy back programme like a hawk. To buy 2.6% of share capital in 3 months seems to me to be bound to exert major upward pressure on price. The vast majority of shares are held by long term holders who think they are exceptionally undervalued. The number traded by nervous nellies probably represents 5% of share capital. You can make a strong case for BP being worth £160 bn with the £ at $1.25. That is not far off the level we were at in May 2018 when oil prices were around $70 per barrel. I do see I good chance of BP mimicking Harbour Energy. It was trading at around £4 when the results were announced and then advanced very rapidly to £5. So I do thing we could see £5 BP before the end of August.

Tep 1. Nothing said on this board affects the price. Where can you do better than an 11 % plus yield (if you include the share buy backs). I have never seen such an anomaly in pricing a stream of income. And look at the share purchases yesterday. A few took place around £4 and then they stopped. Something to do with not paying more than 5% above 5 day average. BUT every day BP needs to be in the market for £40m. This is going higher. Much much higher.

On Rosneft the shares are traded and the market cap. is 4.33bn roubles or about £40 bn, So in theory Bp should get around £7 bn plus any unpaid dividends. But if present earnings maintained then Bp is on a PE of 4 without Rosneft. So nothing needed from this dead Russian donkey. And I was right about my prediction number 9. We ended on £4.15 in the Us. But this is just the start. £6 before year end. Easy. Buy buy buy. Cheap as chips.

Tinker, yes because you live in a parliamentary democracy where obeying the law whether you like it or not is required to make the country function. I do not like paying taxes and think many are unfair. But I do not get to pick or choose what laws I am going to follow. Any how you watch BBC otherwise you would not be complaining about its content. And your worst offence is bragging about not paying what you owe on a board that is supposed to be about BP.

Have to mark myself on my predictions. 1 . I got this wrong . The earnings were much better. 2. I was pretty close on the net debt. 3. I said $7bn a year. But it is $2.5 bn for the next quarter. So I was too pessimistic or so it looks. 4. Dividend not increased. But will be next quarter. 5. Nothing was said about the negotiations. But the coyness revealed I think something is happening. 6. Correct. 7. Correct. 8. Correct. 9. I said £4.15 by close and not that far off so far today.

Meoryou. I know the BBC journalists try to be very fair and balanced. They have endless meetings to try to achieve this. BP was substantially to blame over the Deepwater spill and as a result pleaded guilty to all manner of criminal charges and paid these massive fines that nearly destroyed the company. But it is a changed company since those dark days.

There is no justification at all for a windfall tax. But it will probably be about a £1bn for BP and a £1 bn for Shell. It will not really make much difference. And the Government will probably offer something in return to support investment in the North Sea.

Tinker my brother in law and sister work for the BBC so I am a little biased. But It is one of the most trusted sources of news throughout the world. Not paying for you TV licence and boasting about it, is not only breaking the law but selfish and irresponsible. You have a choice of not watching TV at all if you do not want to pay for a licence. And there has been nothing wrong with its reporting of BP's results. The BBC is not calling for a windfall tax it is simply reporting that many people think there should be one.

If after being written off in the accounts, anything is obtained for Rosneft, it will come through as a profit in the accounts. The dividends will not be collected by Bp and should be paid to any buyer. But there is a strong chance that the Russian state will simply seize the shares so they probably have no real value.

I think the dividend was set for 4 quarters and they will raise it at the next quarter - possibly just by 4% in dollar terms. The debt reduction was mighty impressive although I thought they would do even better on that. But the underlying earnings are just astonishingly good.

So many surprises. Did not expect the entire Rosneft investment to be written off -sensible from a tax point of view. No buyer in sight obviously. Underlying earnings per share through the roof. £2bn being spent on buy backs on about 50 trading days is about £40 M a day. That is huge. Big debt reduction.

It think you must include buy backs in any yield projection. If the market cap remains constant and 5% of shares are eliminated by buybacks then by definition the price of each individual share must rise by 5%. It is a pure return to share holders and has the advantage of dividend payments in that the gain is not taxed until disposal -and then only at the much lower cgt rate. I would rather scrap the dividend and have all the money used to buy back shares.

Well I remain confident of the first 8 of my 9 predictions. The closing sp may fall short. But with a yield (including buybacks) of 11 % the sp is just insane. Gilts yield less than 2% (still!) despite all the inflation fears. Property in London (with high transaction costs and loads of hassle) yields around 4.5% gross. And if your tenant does not pay you have no rapid recourse to the courts. They are just not functioning properly at the moment. I see 11% for this year and each year to 2026 as pretty much nailed on. And by that year we will have a debt free company with substantially higher profits and a better reputation. It just requires patience. A lot of it. Who would buy property or gilts when this golden duck will soon start to deliver? The buyback quota was completed last Thursday but the company will be in the market tomorrow buying steadily throughout the day. Looking forward to the results and the presentation.

For fun if any one is interested I am going to predict the following will come to pass on 3rd May:
1. Profit for quarter $4.6Bn. (ignoring Rosneft write down) 2. Net debt $26.5 bn. 3. Share buy backs expected for 2022 $7bn. 4. Dividend raised by 6% (only). 5. Rosneft ("in negotiations") 6. No mention of "cash machine". 7. Increase in investment in North Sea. 8. Increase investment in renewables and higher returns expected. 9. Price at close on 3rd May 415p.

The first quarter's results will be much better than the fourth quarter's of 2021 - at least £3bn before allowing for the Rosneft write down.