The BP & Shell UK Government Piggy Bank

27th May '22 by Alphaflight

44 comments 1645 reads

I'm a long term shareholder of both BP and Shell. That is to say, I've held both of these shares for over 20 years. I also added to my Shell position back in March 2020 at the lows thinking it was a smart move and a nice dividend stream with plenty of upside potential.

Anyway, in light of the windfall tax announced yesterday, and the fact that this will invariable be carried out in perpetuity, I'm now considering selling up and switching into US oil equivalents (as my superior dirt cheap Russian oil companies: Gazprom, Tatneft and Lukoil have all been de-facto expropriated!).

It seems to me that BP and Shell are being strong armed into allocating capital towards unproductive green related unicorn projects rather than oil/gas.

I'd be interested to hear what the stockopedia community think here?

- Alphaflight

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Roodini

27th May '22

Blue,

Any oil company talking about being “carbon free” is simply a lost cause.

Lots of O&G companies overseas I believe will deliver much better returns.

Gas plays EQT, RRC, AR (all NYSE)

A raft of dry bulk and tanker stocks, all experiencing a mass boom due to increased ton miles in shipping.

Ps - my comments are equally unprintable. Guy fawkes had the right idea.

“

Oliver Cromwell’s Speech

It is high time for me to put an end to your sitting in this place, which you have dishonored by your contempt of all virtue, and defiled by your practice of every vice; ye are a factious crew, and enemies to all good government; ye are a pack of mercenary wretches, and would like Esau sell your country for a mess of pottage, and like Judas betray your God for a few pieces of money.

Is there a single virtue now remaining amongst you? Is there one vice you do not possess? Ye have no more religion than my horse; gold is your God; which of you have not barter’d your conscience for bribes? Is there a man amongst you that has the least care for the good of the Commonwealth?

Ye sordid prostitutes have you not defil’d this sacred place, and turn’d the Lord’s temple into a den of thieves, by your immoral principles and wicked practices? Ye are grown intolerably odious to the whole nation; you were deputed here by the people to get grievances redress’d, are yourselves gone! So! Take away that shining bauble there, and lock up the doors.

In the name of God, go!”

Oliver Cromwell – April 20, 1653

bullhead

28th May '22

Think they have set a dangerous precedent that will only encourage the left to look at other taxes on capital and housing

Electricity companies are the obvious next target but think Labour will be pushing for windfall taxes on house builders land banks, taxes on landlords and to revisit the mansion tax idea people etc etc need to remember that Starmer was in Corbins cabinet at the last general election serving as shadow brexit secretary and was behind the policy of a second referendum

exactly, it was the smaller companies who are investing in the North Sea. The majors are selling and moving to, literally, deeper waters.

It was a jealousy tax by a socialist media hungry government, keen to deflect the news from their parties, where it was clear they understood how “dangerous” the scamdemic was!

Wayneskie

29th May '22

I'm sorry, 'you believed him'?

Ouch...

Did anybody ever believe anything he says?

Alphaflight

30th May '22

Yes the notion of a carbon free oil/gas company is ludacris. Then again everything about that COP26 clown show was ridiculous. Thanks for the link, yes the US don't have as much LNG as they seem to suggest, moreover gas prices are at all time highs in the US. Still, they are in a better position than most of Europe although I believe half of all EU countries now have opened a rouble account with Gazprombank (i.e. to pay for gas in roubles).

Also, from Goehring and Rozencwajg:

"The world has enjoyed a decade of cheap, abundant energy and nowhere has that been
truer than in US natural gas. We consume nearly as much energy via natural gas as we do
via crude oil, although it is usually an afterthought. The rest of the world is in the midst of
an acute gas shortage that has grabbed everyone’s attention. We believe the same is about to happen in the US -- much faster than anyone realizes."

Coal still looks undervalued. Also Petrobras (NYSE) looks very good on paper, E(dividend) yield is >16%p.a. I believe but I'm now terrified of ADRs (post Russian ADR fiasco) so won't be purchasing any of it...

COAL:

grandmA

Disgusting, just saving Boris's skin, not a well-thought-out policy, opening the door for any Labour Government to introduce all sorts of gimmicks to raise cash from prudent investors.

I do have some Petrobras and until the USA runs out of drugs and the CIA invade Brazil to restock Bill C stash I’m keeping my fingers crossed ;-) I should be OK. I liked the article describing Hubbard s curve applying to the shale reserves. If what they describe pans out and the US/Europe gas prices close then US gas stocks will rocket.....

31st May '22

Haha sounds like you are talking about the 1964 Brazilian (CIA induced) coup d'état.

Intuition alone, never mind science, suggests to me that the Hubbert Curve is correct and that peak oil is very real.

Our globalised economy, limping along at the fag end of 250 years of the industrial age (latterly the oil age), simply can't and won't function without oil or an oil substitute available at pretty much the recent (120 year) trend price (inflation-adjusted) of oil: $25, give or take a dollar. The economy is, after all, an energy construct. And the overwhelmingly significant source of energy for mankind this past century or so has been cheap oil ... which ain't cheap anymore!

BlueFrew

And Brent hits $124, with the £ in the toilet against the $.

The Government has absolutely torched investment in future supply while at the same time dropping printed cash on the population from a helicopter. Well the oil producers are telling the Government that as more £s are printed, more will need to be handed over to secure supplies of oil. At some point the Government is going to discover that you can't print oil. For their sakes they better make that discovery before an angry populace work it out also.

Precisely! Especially the bit about Milton Friedman's helecopter currency units! What could possibly go wrong I wonder...

This isn’t a UK problem it’s a collective problem for the whole of the west unfortunately for the uk and EU and most of the west the Russian invasion of Ukraine could not have come at a worse time and printing money is the only palatable option and they will all do it

The USA will get away with it because they have the reserve currency used by the rest of the world but for the UK and EU it won’t end so well

The best we can hope for is a slow decline as power shifts to Asia

What’s that old curse that seems so relevant to today

“May you live in interesting times “

Silver Moon

On an aside, the news of the EU's clamp-down on Lukoil's exports to most EU States has me wondering if Lukoil will ever pay for its purchase of BP's Russian interests.

1964 and many many others......

The whole world economy runs on GOD

Gold

Oil

Drugs

:-)

Mike Rupert in Los Angeles to CIA Director

Good quote I like it!

PLS1nve5t

4th Jun '22

I'd take issue with BP and Shell share prices being lower than March 2020 levels.

BP peak price in March 2020 was 423p, on 27/5/22 it was 431p, admtedly a small difference but on the right side.

While Shell's peak in March 2020 was1449p, and on 27/5/22 it was 2375p, this demonstrates my point I'd hope.

(figures derived from Stocko graphs and are approx to the nearest few pence :-)

Steel Monkey

14th Jun '22

I would preder holding on to Shell and BP. I have them both in my portfolio.

As many have alluded to in this thread, the WF tax will not dent BP (LON:BP.) and Shell (LON:SHEL) 's war chests. I suspect and forecast, fossil fuels will bring in significant profits, not withstanding the climate change nazis activism. What we don't realise is that there is going to be an exponential growth in demand for electricity across the globe. India is a case in point - today's demand is 1.5 in 2 households have an electric bulb, 1 in 5 have a TV, 1 in 20 have a washing machine and 1 in 50 have a dishwasher - that demand is only going to go up. Add the move to electric cars aound the globe. We are sitting on a ticking time bomb of significantly high energy prices fuelled by demand. We need loads of fossil fuels to generate this in the near term (atleast the next 15 years) - think coal, oil, shale etc etc. Wind and solar are not going to address the demand, and nuclear reactors have a long gestation period from planning to becoming operational. Hence my investment thesis for all the oilcos is heavy demand driven by windfall profits in the foreseeable future. Their microeconomics bodes well, the macro noise of political populism and short termism will have limited impact on their ability to generate cash from their businesses.

Logical David

15th Jun '22

I was also told many decades ago when the world's population was around 5 billion, that if every person on this planet wanted to own a car, tv, microwave, washing machine, microwave, oven, etc then there isn't enough iron in all the world's mines to manufacture the items.

22nd Jun '22

Well said. Nuclear the only long term solution, but oil and especially gas are entering a decade long bull market.
coal prices and shares Producing cash like there is no tomorrow.
the only down side is the idiot politicians who have driven the climate “emergency” scam and the lack of investment in energy that works - wind and solar work in small off grid situations. It is not a base load technology.

These government will try to tax them out of existence, clearly oblivious to the fact that this very tax will dissuade companies investing in it!

Cue the ex-conservative party now socialist workers party windfall tax .....

Norway oil giant Equinor cannot be bothered with the North Sea

The BP & Shell UK Government Piggy Bank

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Alphaflight

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