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Hi Markgo,
what they pay their staff (Bonus, incentive schemes etc… in cash) is not relevant to how many shares are in circulation. It is the same as saying “the share buy backs are largely offset by office depreciation costs”.

What is relevant is that the number of shares is coming down by the amount of the buybacks.

As at the 1st of April BP’s shares (Excluding held in treasury) were 20,347,938,910 shares. As at the 1st September it was 20,128,764,976 shares. During the period they bought back 234,196,252 shares, leaving a net difference of 15M shares (Probably issued)
This means in the 6 months period they issued 0.073% of the total shares to staff. Hardly the 1.5% mentioned in a previous article. That means a 4-5% BB p.a. will at some point make a difference.

and gas at $4 +

Oil at $70 - $80 will do the job.

If you double the risk, you have to double the return.

So if you are setting up a drilling operation, and you have to recover the investment in 5 years then the cost of capital has doubled and a lot of potential oil has been taken off the market.

If you think about this as an investment at £3 vs an investment at £5, you draw different conclusions.

Because governments in their infinite wisdom have ‘called’ the lifespan of the oil industry, a capital-intensive industry is being starved of financing which will compensate through price. This benefits larger companies as they are not as reliant on financing.
And it might be that governments are not so infinite in their wisdom.

Higher interest rates are good for the energy sector as money should move from growth to value

the incremental gas price vs Q2 should improve profit and cash by about $800m Q3 vs Q2 from gas alone.

Good luck to you Zac,

Oil is at good prices Natural Gas seems quite good ATM.

Bye

Between 2020Q2 and 2021Q1 there was an increase of 80 000 000 shares. I know this might have been an exceptional period, but it is unlikely that the number was 350 000 000 in perviouse years.

these are the top 4, now I know this goes throughout the company, but am more likely to believe $500M then $1.5B

From their 2020 report and accounts
2018-20 performance share plan outcomes (audited)

Shares awarded Shares vesting including dividendsValue of vested shares, Feb/Mar 2021Impact of share pricechangea

Bernard Looney 158,690b 126,134 £350,652 -£228,991
Murray Auchinclossc 77,958b 62,124 $275,934 -$111,497
Bob Dudleyc 1,395,600 410,922 $1,566,298 -$962,923
Brian Gilvary 696,705 227,337 £618,357 -£430,217

Hi Markgo,

I assumed that what was being said in the article is that share based incentive schemes in BP are at $1.5B ish pr annum. I don’t have time to go through the annual accounts but that would be surprisingly high. I assume that BP are paying their staff(Overall package) market rates for the industry. Is his/her point that BP are paying their staff to much? This is inconsistent with them making redundancies. I might be proved wrong, but I think the person is talking claptrap.

I thought the staff got around $500m in options this year. That is 0.57%, not the 1.5% being quoted. Does this mean that the rest of the article is also inacurate ?

Its quite strange the buybacks dont seem to be targeted at buying when the price goes down ?

BP are suggesting that they will have a volume increase in 2022 due to fresh projects(oil/gas). I thought I might have heard or read somewhere that this is around 220 000 Boe per day. Thats about $5B ish revenue p.a. and $2B cash. On top of that they are suggesting a cash cost savings of $2.5B p.a. (That might be why they reduced the breakeven point from $45 in Q2 to $40 in Q3 ??). If this is true maybe this can be to reduce their debt.

Good point Bananaman2,

I would add that it does look like it is going to be BP's most profitable year ever.
Better than 2018.

Hi MarkGo,

I tend to agree with what you said. I am hoping that at some point the markets will wake up to the high valuations of some equities and rotate into value. And BP should be down to a trailing PE of around 7 by Q3 results.

High growth/High valuation sectors tend to do better with lower rates so therefore for a share like BP announcing tapering might be a good thing (after a short shock) as it might increase the 10-year yield.

But because something is logical, it doesn’t mean it will happen.

As I understand things based on what they have said about oil price at:

$60 - they pay divi+ increase divi by 4% pa + reduce debt + $1b share BB per quarter
$50 - They pay divi + reduce debt, no increase in divi, no share BB
$40 – they pay divi , they break even
$30 – they pay divi, they increase debt

I think they are around 7% of daily volume across the three exchanges, so they have plenty of scope to buy more.