Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
In my opinion the buybacks (both here and at BATS) have been a mistake. In a declining industry the focus should be on paying off debt in order to protect the dividend for as long as possible. The result has been a big increase in the cost of debt (as rates have gone up) which will impact future financing.
IMB could have the net debt down to 0 in less than a decade based on current cash flows, along with consistent increases in the dividend as interest costs reduce, and once the debt is gone all the excess cash could be paid out to shareholders.
"Freeport LNG Restart: BP-chartered tanker Kmarin Diamond has become the first tanker to dock at the export plant since the June 8th fire that shut it down"
https://twitter.com/SergioChapa/status/1624127114243981313
In 6 months it'll probably be close to that, if oil prices stay high.
Feels like a different class of assets than usual. Normal acquisitions are lots of old, low production wells with low decline rates, these seem a lot newer.
I look forward to the resumption of proper buybacks, hopefully tomorrow.
I don't think the dividend policy has changed, it's still supposedly sustainable at $40 oil, it's just the buybacks and debt reduction have allowed the dividend to increase.
Weren't expectations $5bn profit and $3bn buybacks? Seems slightly adverse.
Something to do with EU sanctions on Russia being less restrictive than expected I think.
Presumably they mean compared to Exxon rather than Shell.
Ace, I agree with you about the gas pricing on that slide, it's very optimistic.
Decline rates are a bvit trickier, obviously current decline rates are higher than that, but it's worth noting that the rate of decline declines over time, newer wells have a higher decline rate and older wells have a lower decline rate. So as the portfolio of wells gets older the decline rate will reduce.
I prefer a broker that sticks their necks out rather than just setting a price target around the current price or current price + a small % which seems to be common. Not saying they're right or wrong mind just I have a bit more respect for it.
If BP can consistently produce quarterly profits around $5bn (which I think is expected for Q4) then would a p/e ratio of 8 be unreasonable?
Why do you stick with them then?
They use the futures curve when they do their calculations rather than try to estimate prices themselves, and the futures curve for 2023 has dropped a lot since the announcement. Gas is a volatile commodity so nobody ever knows for sure what prices will do. Last month prices were around $6 CAD, current daily prices are around $3.5 CAD, next month prices will be..... ? Futures curve says $4 CAD but things can change quickly.
They will review their capital spend half way through the year and amend the capital budget as they feel is necessary.
Dividend payment was $1.14 billion last quarter, x4 = $4.56 billion, x11% is $502m not $40m. If you can't do basic mathematics don't post. And this is an ongoing annual saving not a 1-off.
zac0_4, you are missing the impact on each shareholder's share of future cash flows. If BP buy back 10% of their shares the % of the company you own goes up by 11% and BP can increase the dividend per share by 11% without spending any more money,
Henry Hub futures continue to fall, most of 2023 now trading below $4 which probably explains the drop here. A lot of production is hedged but not quite all of it.
I'm with you Stas20, value should be based on the company's assets and cash flows not recent price action. I don't think 35p really represents fair value here, but obviously dependent on the price of oil and gas.
I don't see any advantages of a main market listing, nor do I care about attracting bigger funds. As long as the dividends keep coming in and increasing in line with production investors will get their rewards through the performance of the company. I don't want a lot of promotion from the CEO either. Just let the results do the talking.
Great update today, I love monthly dividends and I love it when dividends get increased significantly.
Yes, of course, which is great as long as trading continues to be strong. And maybe trading is fine and TheBigMan21's comment isn't reflective of the company as a whole.
But if trading collapses then the company will need to hold onto cash, which means they should stop the buyback. In 2008 all the UK house builders were happily buying back stock and then the market collapsed and they had to issue equity to survive, effectively buying high and selling low. The last thing we want is for that to happen again.