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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Bp Plc BP. London Ordinary Share GB0007980591 $0.25
  Price Change Price Change % Stock Price Last Trade
0.00 0.0% 318.65 00:00:00
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sarkasm: S and P GLOBAL Platts Eight energy majors agree energy transition principles, action on emissions Author Stuart Elliott Editor Norazlina Jumaat Commodity Coal , Energy Transition, Natural Gas Topic Energy Transition, Environment and Sustainability Highlights Seven European majors plus Occidental sign up Focus on reducing emissions, transparency Carbon intensity metrics to be developed London — Seven European energy majors and the US' Occidental Petroleum have jointly developed and agreed on six principles as part of a "collaborative platform" to support the energy transition, according to a statement Dec. 17. BP, Shell, Eni, Equinor, Galp, Repsol, Shell, Total, and Occidental have agreed to apply six energy transition principles as part of efforts to combat climate change. "Meeting the challenge of tackling climate change requires unprecedented collaboration between energy companies, governments, investors and other stakeholders," the CEOs of the participating companies jointly said. "The principles will act as a framework for actions leading energy companies are taking together, as well as a platform for collaborating with wider stakeholders," they said. The principles support "collective industry acceleration" to contribute to the Paris Agreement objectives with a focus on reducing greenhouse gas emissions, developing carbon sinks, and transparency. The six principles are: To publicly support the goals of the Paris Agreement, including international cooperation as a vehicle to ensure these goals can be achieved at the lowest overall cost to the economy. In line with each company's individual strategy, ambitions and aims, to work to reduce emissions from their own operations and strive to reduce emissions from use of energy, together with customers and society. Companies may measure their contributions using carbon intensity and/or absolute metrics at different points in the value chain as determined by their approach. To collaborate with interested stakeholders, including energy users, investors and governments, to develop and promote approaches to reduce emissions from use of energy, in support of countries delivering their Nationally Determined Contributions (NDCs) towards achieving the goals of the Paris Agreement. To continue to support and promote development of emissions sinks such as carbon capture, utilization and storage technology (CCUS) and natural sinks. to provide disclosure related to climate change risks and opportunities consistent with the aims of the recommendations of the taskforce on Climate-related Financial Disclosures (TCFD). To report information about their memberships of main industry and trade associations and their alignment with the companies' key climate advocacy and policy positions. A major issue raised by many stakeholders in the energy transition is the methodology used by the industry in reporting their emissions, with increasing calls for more consistency and transparency in the metrics used to report on climate-related performance. While each company has its own strategy, aims and ambitions regarding the energy transition, many of the companies are collaborating on two further strands of technical work. The first is on increasing transparency and consistency of the definitions and scopes used for data reporting, and acknowledging where differences remain "due to the diversity of the companies' businesses and approaches." The second is to work to develop a consistent methodological framework to measure and report the net carbon intensity of their energy products and emissions reduction activities. "This is an important foundational commitment," Adam Matthews, Chair of the Climate Action 100+ European Investor Working Group on a Net Zero Standard, said. "It represents a significant consolidation of the progress that has been made in Europe whilst also seeing the first US oil and gas company joining with their European peers," Matthews said. "It is extremely helpful to have a position from these companies that unifies around core principles including on Scope 3 emissions and corporate lobbying."
waldron: A decade ago, NextEra, Iberdrola and Enel were sleepy regional utilities with little name recognition. Now they are fast-growing giants with market values rivaling the likes of oil majors Exxon Mobil Corp. and BP PLC, thanks to their early all-in bets on wind and solar farms. And still, many people have never heard of them. Their early lead in the global transition away from oil has put these companies on track to become the major energy companies of the coming decades -- the "green energy majors." But they now face the threat of increased competition as some of the oil titans that have traditionally dominated the energy industry diversify into wind and solar power. If the green majors are nervous about a coming clash, they aren't showing it. NextEra Energy Inc. Chief Executive James Robo dismissed the idea that oil majors in the U.S. and Europe posed a competitive threat at an investor conference this fall, saying that the companies' green projects were among the worst he had seen. "I don't worry about the oil majors at all," he told the audience. "If I have 100 things I worry about at night, it's not even on the top 100." Mr. Robo declined to be interviewed. For now, NextEra, Enel SpA and Iberdrola SA are Wall Street darlings, after Spain's Iberdrola and Italy's Enel became global builders of green energy projects, while NextEra became America's largest generator of wind and solar power. Each of the companies has seen its share price soar in recent months as investors bet on their ability to lead the transition to a lower-carbon future with massive investments in renewable energy, battery storage and improvements to the electric grid. That transition is expected to accelerate in the U.S. under President-elect Joe Biden, who has promised to focus on climate change, and within the European Union and China, where ambitious carbon-reduction efforts are under way. Enel and Iberdrola have outlined plans to substantially expand their portfolios of renewable-energy projects over the next decade with about $170 billion in collective investments. NextEra, which hasn't disclosed a long-term spending plan, expects to have invested $60 billion in renewable energy projects between 2019 and 2022. Still, analysts caution that increased competition within the renewables industry could reduce profit margins for the most established players. "Oil companies entering the renewables market will need to accept lower returns on projects initially to gain market share, and this is going to result in a reduction in margins across the board," said Fernando Garcia of RBC Capital Markets. Already, Denmark's Ørsted A/S, a company formerly known as DONG Energy that focused on oil and gas, has transitioned into a leading player in offshore wind projects. BP is planning a big shift too: It says it will increase its clean-energy investments in coming years as it dramatically scales back oil and gas production. However, the coronavirus pandemic has decimated demand for fossil fuels this year, briefly turning U.S. crude prices negative and forcing the oil industry to lay off thousands of workers and slash spending. That has sapped the oil giants of much of their financial strength, making it harder for them to quickly transition into renewables projects, which require large upfront investment in order to reap steady returns over a longer period. While big oil companies once reported double-digit returns on invested capital -- in the heady days prior to 2014, when crude oil prices last topped $100 a barrel, some topped 20% annually, according to FactSet -- the big renewables players have been winning the race of late with slow and steady single-digit returns. "There is no better example than 2020 to show how extremely different the risk profiles are," said Bernstein analyst Meike Becker. Iberdrola, Enel and NextEra have taken different paths to morph from humdrum utilities into green growth companies. Originally an Italian utility, Enel was actually later than some others to home in on wind and solar. Two years after forming its renewable development arm, Enel Green Power, the company sold about a third of it in 2010 to pay down corporate debt. Enel then focused on trying to build nuclear plants in Italy before citizens there rejected that plan. But Enel's current chief executive, Francesco Starace, then the head of that green unit, said he recognized that wind and solar power had the potential to become competitive in the broader energy market as costs fell. The unit focused on developing projects in regions without large subsidies or incentives to show investors that they could stand on their own. "At the time, this sounded like blasphemy or idiocy," Mr. Starace said in an interview. "But we did it stubbornly, and kept doing it, and eventually this prediction of ours became true." Mr. Starace became Enel's CEO in 2014, and promptly repurchased the portion of Enel Green Power that had earlier been sold. He also reoriented Enel to pursue projects that could be completed within three years to account for the pace of technological change. That pretty much eliminated nuclear and coal plants, as well as large hydroelectric projects, leaving wind and solar farms in the mix. Enel is now the world's largest renewable energy producer outside China, with an EUR84 billion market value, equal to about $102 billion, and projects in 32 countries. The company has a large presence in the U.S. and has developed wind and solar farms in remote areas in countries including Zambia and Chile. The company plans to spend about EUR70 billion, equivalent to $85 billion, to nearly triple its generation capacity in the coming decade, which it expects will give it around 4% of the global market. Iberdrola, initially a domestic Spanish utility, was an early pioneer of renewables. It started in 2001, when the company unveiled a plan to expand internationally and invest in clean energy sources to help meet growing global demand for power. It tapped Ignacio Galán to spearhead the strategy as CEO at a time when wind and solar power were still hugely expensive relative to other electricity sources. The company had historically focused on building hydroelectric and nuclear plants, as well as some coal- and gas-fired ones. Iberdrola has expanded into renewables in part by aggressively buying up smaller players with attractive growth prospects. In October, it agreed to pay $4.3 billion for New Mexico-based electricity company PNM Resources Inc. -- its eighth deal this year. It plans to invest heavily in the U.S., where the company is third in renewables generation capacity behind NextEra and Berkshire Hathaway Energy, a unit of Warren Buffett's Berkshire Hathaway Inc. Mr. Galán said in an interview that Iberdrola at first faced skepticism about its decision to focus on renewables, but now the tide has turned: The company's value has multiplied by six on his watch to around EUR71 billion, or $86 billion, far exceeding his initial ambition to double its size. "All we have been fighting for for 20 years, every person recognizes that was the right decision," he said. Iberdrola is now the world's second largest renewable energy generator outside of China, with projects in 30 countries, including an offshore wind farm in the Baltic Sea and a wind and solar farm in Australia. It plans to spend EUR75 billion, equivalent to $91 billion, over the next five years to double its renewable power capacity. Florida-based NextEra grew into America's largest renewable energy producer by keeping debt levels low, capitalizing on federal tax subsidies available to help finance wind and solar projects around the country and reinvesting its profits to expand further. Over time, it developed the size and scale needed to consistently underbid other companies in auctions to develop projects. It operates two Florida utilities and sells renewable energy output to others. It also operates electric transmission lines in the U.S. and Canada, as well as natural gas pipelines. Despite its rapid growth, NextEra has largely flown under the radar. Some lawmakers in Washington and elsewhere didn't know much about it until recently. The company several years ago launched a targeted effort to introduce itself so that its representatives wouldn't have to start meetings with tedious explanations, according to a person familiar with the company's strategy. NextEra declined to comment. The company's executives still rarely speak to the press. Investors, however, have been eyeing NextEra for years. Its share price has roughly tripled over the past five years to reach a market value of $146 billion, and for the first time it briefly topped Exxon's value this year in a watershed moment for renewables producers. Its project backlog totals 15,000 megawatts -- an amount just larger than its current portfolio, built over two decades. BP Capital Fund Advisors, a Dallas-based investment adviser that has historically focused on oil and gas, bought shares in NextEra in March as part of an effort to diversify with investments in renewables. The firm was founded by the late T. Boone Pickens, the oil industry magnate who took an interest in wind and solar power late in his career. He died last year. "NextEra stands alone in terms of what it offers in exposure to the renewable theme," said portfolio manager Ben Cook. "If you're investing in energy now...that has to be part of the equation." Write to Katherine Blunt at Katherine.Blunt@wsj.com and Sarah McFarlane at sarah.mcfarlane@wsj.com (END) Dow Jones Newswires December 11, 2020 11:14 ET (16:14 GMT)
sarkasm: LONDON MARKET EARLY CALL: Lower Call As Brexit Deadline Draws Near Tue, 8th Dec 2020 06:58 Alliance News (Alliance News) - Stock prices in London are seen opening lower on Tuesday as investors monitor Brexit talks between the UK and European Union, which continue to show little progress as the clock ticks down to reach an agreement. IG futures indicate the FTSE 100 index is to open 15.79 points lower at 6,539.60. The blue-chip index closed up 5.16 points, or 0.1%, at 6,555.39 Monday. UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen look set to meet in person this week in a bid to break the stalemate in post-Brexit trade deal talks. Johnson and von der Leyen spoke on the telephone on Monday evening, and agreed to ask their chief negotiators to prepare an overview of the "remaining differences". The leaders will then discuss them in person in a physical meeting in Brussels "in the coming days". Their second call in a little over 48 hours came after Michel Barnier and his UK counterpart David Frost spent the day talking in Brussels. The negotiators spent the last week talking in London, but failed to break the deadlock - with issues remaining on fishing, governance and the so-called level playing field. In addition, London investors were keeping an eye on negotiations in Washington for additional US fiscal stimulus, while the US coronavirus caseload continues to rise. The resurgence of the virus has already forced governments to reimpose lockdowns or strict containment measures, putting fresh pressure on the global economy. More than three-quarters of California's population are now living under the harshest lockdowns in the US, as Covid-19 cases hit record levels in the country's most populous state. Restrictions will remain in place for at least three weeks, covering the Christmas holiday. In the US on Monday, Wall Street ended mostly lower, with the Dow Jones Industrial Average down 0.5% and S&P 500 down 0.2%. The Nasdaq Composite closed 0.5% higher. The Japanese Nikkei 225 index ended down 0.3%. In China, the Shanghai Composite is up 0.1%, while the Hang Seng index in Hong Kong is down 0.6%. "Markets in Asia have seen a fairly subdued session, as investors sit on the sidelines awaiting the next move in the latest round of US stimulus talks, an ever-increasing rise in US coronavirus cases, and the latest progress in EU/UK trade talks. This uncertainty is expected to translate into a slightly lower European open this morning," said CMC Market analyst Michael Hewson. The pound was quoted at USD1.3360 early Tuesday, up from USD1.3346 at the London equities close Monday. The euro was priced at USD1.2120, down from USD1.2137. Against the yen, the dollar was trading at JPY104.04, up from JPY103.94. Brent oil was trading at USD48.46 a barrel Tuesday morning, down from USD49.04 at the London equities close Monday. Gold was quoted at USD1,869.12 an ounce, up from USD1,865.82. In Tuesday's economic calendar, there is eurozone gross domestic product at 1000 GMT and the ZEW survey due at the same time. In the UK, there are Kantar's latest grocery market share figures at 0800 GMT. In the UK corporate calendar for Tuesday, first-quarter results are due from plumbing and heating products distributor Ferguson and half-year results from equipment rental firm Ashtead Group. By Arvind Bhunjun; arvindbhunjun@alliancenews.com
gibbs1: Https://www.fool.com/investing/2020/10/31/bp-vs-total-which-oil-company-is-better-positioned/ BP vs. Total: Which Oil Company Is Better Positioned for a Green Energy Transition? Two oil giants are making big bets about the future. Which approach is the better option for long-term investors? Reuben Gregg Brewer Reuben Gregg Brewer (TMFReubenGBrewer) Oct 31, 2020 at 10:35AM Author Bio European oil giants BP (NYSE:BP) and Total (NYSE:TOT) have both taken stands on clean energy, with each pledging its support for alternatives to oil. However, there's a notable difference in the business trajectories these integrated energy giants are taking. Here's a look at what the companies are doing, and what it could mean for investors. The quick change artist In August, BP cut its dividend in half. For dividend investors that was terrible news, but it was, to some degree, a sign of the times. The economic closures used to slow the spread of COVID-19 earlier in 2020 led to a massive drop in demand for oil and natural gas. With excess supply piling up in storage, energy prices plunged, and BP's top and bottom lines went along for the ride. However, there was more to this cut than meets the eye. Two hands holding blocks spelling out the words RISK and REWARD. Image source: Getty Images. Around the same time, BP announced it had a new business strategy. Basically, the global energy giant is shifting toward clean energy. That keeps it in line with current feelings toward carbon fuels as the world grapples with fears around climate change. However, it's a big change for an oil company to go green. For starters, BP intends to cut its oil and gas production by 40% by 2030, less than 10 years from now. Meanwhile, it wants to make a 10-fold increase in the number of electric vehicle charging points it owns, and a 20-fold increase in the amount of clean energy it produces. By 2030 40% of the company's capital spending is likely to be dedicated to low-carbon and clean-energy businesses. This is a "jump in with both feet" approach. If something goes wrong along the way, there's not much fallback room. The problem with this is that BP is one of the most heavily leveraged oil majors, with its roughly 1.1-times debt to equity ratio above those of all of its major peers. So it doesn't have much wiggle room. And it's counting on the oil business, which it will be shrinking, to fund its clean energy push. If oil's price recovery is slower than expected or there's lingering industry weakness, it could be hard for BP to generate the cash it needs to cover its debt load and its new business plan. Easy does it Total is looking to make big changes as well, but it's taking a drastically different approach as it looks to shift toward cleaner energy alternatives. It is projecting that its oil production will decline from 55% of sales in 2019 to 35% in 2030. However, natural gas production will increase from 40% to 50%. Natural gas is cleaner than oil and is viewed as a key transition fuel as the world reduces its carbon footprint. That said, Total's overall sales are projected to be higher, so oil and gas sales will actually be up slightly over that time frame -- not lower, as BP is planning. The remaining 15% of sales in 2030 will come from clean energy and electricity, up from 5% in 2019. That 5% figure is noteworthy, since Total has been more consistent in its investment in clean energy and electricity. For example, it has owned a stake in SunPower since 2011. BP, meanwhile, tried to rebrand as "Beyond Petroleum" at one point, signifying a shift toward clean energy. But it ended up dropping the idea and selling much of what it acquired in what proved to be an ill-conceived business plan. Total's capital spending plan is more nuanced as well. Between 2015 and 2019 Total spent about 10% of its capital budget on clean energy. It will up that to 15% between 2021 and 2025, and then 20% between 2025 and 2030. The goal is still to use the legacy oil business to fund a transition to clean energy, but to do it gradually and without materially shrinking what has historically been a very profitable segment. The big change in the oil business is that Total intends to refocus around its lowest-cost oil and gas operations so it can better compete in a world with low energy prices. BP Debt to Equity Ratio Chart BP Debt to Equity Ratio data by YCharts While Total also has a relatively heavy debt load, with debt to equity sitting at 0.77 times, the approach it is taking provides more wiggle room should things not pan out as expected. And it can always speed up its transition should it want or need to. It's a more balanced approach that conservative, long-term investors will likely find appealing. Which company is right? Nobody on Wall Street has a crystal ball, so it's impossible to know if BP's plan to effectively go all in or Total's slower shift will work out better. However, there is a fairly obvious risk/reward trade-off in each approach. If everything works as planned, BP will end up a big winner, and Total will look like it's moving relatively slowly. But it's worth noting that Total will still be moving in the right direction. U.S. peers ExxonMobil and Chevron are sticking with oil for now, which some might see as short-sighted. If the transition doesn't play out as BP is expecting, it could end up flat-footed and behind the pack because it is materially shrinking its oil and gas business. BP isn't exactly taking an all-or-nothing stance, but weak returns in the clean energy space could be a huge drag on the company's overall results. Total, on the other hand, will likely be able to take some setbacks in stride, since it is basically looking to maintain and upgrade its oil and gas business while still building a clean energy operation. For conservative investors, Total's approach looks more appealing. And it's worth noting that Total believes it can continue to support its hefty 10% dividend yield and fund its business transition as long as oil prices stay around $40 a barrel (though they've recently sunk below that level, so there is still dividend risk here). Still, the line in the sand aside, Total should be appealing to dividend investors looking to invest in the out-of-favor energy sector, with a bit of a clean energy hedge thrown in as a bonus.
la forge: The Guardian Investors fear there'll be no bright post-Covid dawn for oil majors Jillian Ambrose Sun, 25 October 2020, 1:05 am CEST·3-min read The oil market may have heaved itself out of the darkness of “Black April” but investors are far from convinced that major oil companies will walk away unscathed from the coronavirus pandemic. Royal Dutch Shell and BP will both face investors this week with quarterly financial results that will deliver profits well below those achieved a year ago, against a backdrop of tumbling share prices and rising Covid infections across major economies. On Tuesday, BP is expected to report an underlying loss of $120m for the last quarter, according to analysts’ estimates. This would be a major improvement on its underlying loss of $6.7bn in the second quarter, following heavy writedowns on the company’s exploration business, but would still be well below the $2.3bn third-quarter profit reported in 2019. BP’s announcement will come days after its share price fell below 200p a share for the first time since 1994, and months after the company cut its dividend for the first time since the Deepwater Horizon oil spill and set out plans to cut 10,000 jobs. In the same week, Shell is expected to reveal a modest underlying profit, of $146m, for the third quarter, according to analysts, after plunging to a loss of $18.4bn for the second quarter. This is still a fraction of the $4.76bn profit recorded in the same quarter last year, and follows the company’s decision to cut 9,000 jobs and reduce the dividend for the first time since the second world war. This trend is expected to be followed across the world’s oil companies, tracking the fragile and uncertain recovery of global oil markets amid a second wave of coronavirus infections. The price of oil reached an average of $43 a barrel in the third quarter – stronger than the average of $30 a barrel in the second quarter, when US oil prices fell below zero for the first time in April – but still well below the $62 a barrel price that prevailed in the third quarter a year ago.
florenceorbis: Does the BP share price make it the best buy in the FTSE 100? Alan Oscroft | Sunday, 18th October, 2020 |. What can you say about BP (LSE: BP)? This time last year, I’d have rated the BP share price as one of the most dependable in the FTSE 100. I know oil is politically out of favour, but I’ve always expected it to be with us for many decades yet. And the big oil companies will surely be heading moves away from fossil fuels anyway. Twelve months ago, BP shares were down over the previous year. From the highs of September 2018, the price had lost close to 15%. It was essentially following a weakening in the oil price. But we’d previously had a bull run, and BP was paying very attractive dividends. That’s all changed now. BP share price crash So far in 2020, the BP share price has lost more than half its value. And since those record 2018 levels, it’s down 65%. Today, BP shares have reached their lowest for the entire two decades of the current century. The price was even higher during the oil price crisis, when oil dropped to $25 per barrel. If someone had told you a year ago that this would happen, you’d have laughed at them, right? The oil price collapsed briefly in the 2020 stock market crash. But it’s recovered since then, and now trades at over $40. On that measure, the BP share price surely deserves to be significantly above its oil crisis levels. Well, the old BP, maybe. Dividend shock But we’ve experienced one truly momentous event in 2020, which chilled investors to the bone. BP cut its dividend. Even throughout the earlier oil slump, its CEO at the time, Bob Dudley, calmly assured us the dividend was safe. He appeared totally confident, and that confidence was contagious. Mr Dudley has retired now, replaced by Bernard Looney. And BP has slashed its dividend in half. That news came with first-half results in August, the same day the company announced its “New Strategy To Deliver Net Zero Ambition.” The BP share price wavered for a few days, and then dropped like a brick. The core of the new plan is to aim for a tenfold increase in low-carbon investment by 2030, with a rise of up to eightfold by 2025. And it includes all kinds of reductions: hydrocarbon production down 40% by 2030, emissions from operations down 30%-35%, upstream emissions down 35%-40%, no exploration in new countries… and more. Buy, sell, or what? I reckon BP was rather canny in the timing of all of this. I think it would have been a harder sell to institutional investors had it come at a time of medical and economic health. But what should we do now? BP hasn’t forgotten its investors, at least not according to the new strategy. It intends the rebased dividend to be resilient. And at today’s BP share price, the yield is up around 8%. The company also says it will return at least 60% of surplus cash through buybacks, and aims at “7-9% annual growth in EBIDA per share to 2025.” Is the new BP a good investment now? With the shares on a P/E of 11 based on 2021 forecasts, and that high rebased dividend yield, I think it could be one of the best buys on the FTSE. Investors might need nerves of steel, though. Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK
ukneonboy: Is Oil still on a slippery slope ?? Author Russ Mould (A J Bell & Co) Oil major BP’s (BP.) latest annual World Energy Outlook, released in conjunction with a three-day presentation from chief executive Bernard Looney and team outlining the oil major’s new strategy, offers three scenarios for demand for crude oil in 2050. They range from 89 million barrels a day, barely 10% below 2019’s peak of 98 million as nothing much changes politically or socially, all the way down to 24 million, as the world goes carbon neutral. The possibility that oil demand could go down by three-quarters between now and 2050 means Looney’s desire to prepare BP for a zero-carbon world is perfectly understandable. It also leaves investors with a decision to make. Those willing to select individual securities on their own must now decide whether to place their faith in Looney and the company’s ability to reinvent itself. Its plan is made all the more complicated by weak oil prices depriving BP of vital cash flow, just when it needs to invest heavily in both its new strategy and the maximisation of value from hydrocarbon assets where there are already considerable sunk costs. Those who wish to avoid the rough and tumble of stock-specific risk and prefer to use active or passive funds must still assess their potential for exposure to BP and other oil stocks. This is particularly the case in the UK, where analysts’ consensus forecasts for 2021 assume that BP and Royal Dutch Shell (RDSB) will generate between them 7% of total FTSE 100 profits and 11% of the headline index’s total dividend pay-out. WANING WEIGHTING Whether such forecasts are reliable, too optimistic or too conservative will be especially important for investors in FTSE 100 tracker funds, as they indirectly own BP and Shell whether they like it or not. For those investors who do not wish to embrace oil stocks, for financial or philosophical reasons (or both), it is worth considering the following: – From a dividend perspective, the oil majors’ combined forecast pay-out represents its lowest portion of the FTSE 100 total since 2005; – From an earnings perspective, BP and Shell’s contribution is way lower than it was in 2005, when they generated one-third of FTSE 100 profits between them. These numbers at least explain why oil shares are doing so badly. The FTSE All-Share Oil & Gas Producers sector is now worth just 7.1% of the FTSE All-Share itself, a fraction above 1992’s modern-day low of 6.3% and almost identical to 1998’s cyclical trough of 7.0%. Those dates are interesting because BP cut its dividend in 1992 (just as it has done this year), while crude oil prices dipped briefly below $10 a barrel in late 1998, just as they did this spring. CRUDE CALCULATIONS On a global basis, oil shares’ weighting in the S&P Global 1200 index and America’s S&P 500 benchmark stands at record lows of 2.9% and 2.2% respectively. The S&P 1200 Energy index’s valuation of $1.3 trillion means the industry currently carries a lower price tag than Microsoft and is worth barely four times more than Tesla, whose current car volume sales are tiny, at least for now, at around 100,000 units per quarter. Investors with exposure to individual oil firms, specialist energy funds (be they active or passive) or geographic stock indices with a hefty exposure to oil companies (which would include the FTSE 100) must now decide if this marked bout of oil stock underperformance is merely cyclical or the result of something more structural. If BP’s zero-carbon scenario holds true, even the most wilfully contrarian investor may struggle to make a case for exposure to oil stocks, at least until the earnings mix begins to truly slant away from hydrocarbons, as it is hard to divine what could be a catalyst for higher oil prices and thus higher earnings. Yet if the ‘no change’ case pans out, owing to political or social inertia, the picture could be very different. Demand could recover in a post-pandemic world and do so just as oil majors cut investment, US shale output falls and global oil rig activity is down more than 50% year-on-year.
maywillow: qz.com BP said it will cut oil production 40% and the stock market didn’t blink 42 minutes ago Michael J. Coren By Michael J. Coren Climate reporter From our Obsession Climate Consciousness Every decision counts. One of the world’s largest oil companies just announced it would cut 40% of its oil production. During an investor presentation on Aug. 4, BP announced it would roll out the dramatic cuts over the next decade, while limiting future exploration for new sources of petroleum. A few years ago, BP’s plan to pivot away from oil would been unthinkable. But it barely raised an eyebrow on Wall Street. BP’s shares closed up 1.6% on the news, scarcely different than rivals Exxon, Chevron, Total, and Shell. Their price rose 10% the following day. All this, despite news the company would slash its once untouchable dividend by 50%, even deeper than expected, and write off $6.5 billion in oil and gas assets. What BP’s CEO Bernard Looney called the “toughest quarter in the industry’s history” may mark a turning point: Oil companies, and their investors, are increasingly agreeing that a low-carbon future is not just a sustainable bet, but a profitable one. The market’s reaction was as surprising as BP’s commitment, itself unprecedented for an oil major. While falling short of ending future exploration (BP only swore off exploration in new countries) or retiring existing reserves, a production cut of 40% by 2030 makes it “unquestionably the industry leader,” says Andrew Grant at CarbonTracker, a finance and energy think tank. “It’s first of the five oil majors to be very concrete about plans to address the energy transition and the first to say we’re cutting production,” says Kathy Hipple, a financial analyst for the Institute for Energy Economics and Financial Analysis. Until now, no announcement by oil supermajors has been compatible with a world where warming is kept well below 2 degrees C. BP says it will invest as much as $5 billion annually in low-carbon technologies by 2030, a ten-fold increase over current levels. If implemented, the cuts put BP on track to bring oil production down to zero by 2043, according to energy engineering researcher Arvind Ravikumar of Harrisburg University of Science and Technology, well before the mid-century target established by the Paris climate accords. Most similar announcements from BP’s competitors have side-stepped absolute cuts in emissions, focusing instead on emission “intensityR21;—GHG pollution per unit of energy—of products or operations, says Cate Hight of the nonprofit Rocky Mountain Institute. Goals were on a distant timeline with net-zero “ambitionsR21; pushed out to 2050. Offsets were often proposed at an unproven scale. That gave investors little to act on. But the sunny response to BP’s move is suggestive of what’s to come. While America’s biggest petro-firms—ExxonMobil and Chevron—appear set on extending the life of their oil and gas reserves and protecting dividends at all costs, a number of smaller energy firms, almost all of them in Europe, have announced their intention to decarbonize in recent years. Most of them have received a warm welcome from investors. One of the first was former Danish state oil company Ørsted. In 2017, the former Danish Oil and Natural Gas company shed its name and history as one of Europe’s leading coal utilities. The state-owned firm aggressively divested from oil and gas, listed its shares publicly, and started building offshore wind farms. It doubled its share price in less than three years. In September 2019, Italy’s biggest utility ENEL said it would scale back fossil fuels, cut emissions by 70% by 2030, and eliminate them by 2050. Its stock rose on the news, climbing 25% over the following months. Similarly, last December Spanish utility Repsol announced it would ”eliminate all greenhouse-gas emissions from its own operations and customers who use its products by 2050,” sending its share price up 3%. For now, the market appears to approve of BP’s strategy, too. Investors seem to be saying the future of oil and gas companies is no longer oil and gas, says energy economist and consultant Philip Verleger. While hydrocarbons will remain BP’s primary source of revenue for years to come, it’s choosing to forgo dividends, nearly sacrosanct in the industry, to invest in a transition from an “International Oil Company to Integrated Energy Company.“ “We believe that what we are setting out today offers a compelling and attractive long-term proposition for all investors—a reset and resilient dividend with a commitment to share buybacks; profitable growth; and the opportunity to invest in the energy transition,” said Looney in a statement. It remains to be seen if that’s a good bet. But it may be the only one BP can make. “BP’s decision was recognition of the fact that its only avenue to build is to become green,” Verleger wrote by email. “It was out of options.”
sarkasm: BP slashes its dividend payout to shareholders for the first time since the 2010 Deepwater Horizon disaster as it's rocked by a plunge in oil prices BP investors will now receive just 5.25 US cents (4p) per share The oil giant reported a $6.7 billion (£5.1 billion) underlying loss Average price of oil was 57 per cent lower at $29.50 for a barrel of Brent crude By Alex Sebastian For This Is Money Published: 08:29 BST, 4 August 2020 | Updated: 08:47 BST, 4 August 2020 BP has slashed its dividend payout for the first time since the Deepwater Horizon disaster after the company was hit by sharply lower global oil prices. Investors will now receive just 5.25 US cents (4p) per share, compared with 10.25 cents (7.8p) last time around. The cut came as the oil giant swung to a $6.7 billion (£5.1 billion) underlying loss in the second quarter of the year. BP investors will now receive just 5.25 US cents (4p) per share, compared with 10.25 cents (7.8p) last time around +2 BP investors will now receive just 5.25 US cents (4p) per share, compared with 10.25 cents (7.8p) last time around This represents a sharp reversal in fortunes compared to last year when the firm booked a $2.8 billion (£2.1 billion) underlying replacement cost profit. This is still $100 million (£76 million) better than analysts had warned however. This beating of forecasts has been reflected in BP shares today, with a rise of 6 per cent to 298p. The average price of oil was 57 per cent lower at $29.50 for a barrel of Brent crude in the quarter compared with the same three months in 2019, BP said. The falling price was driven by a mix of Saudi Arabia and Russia engaging in a price war at the start of the year and the coronavirus pandemic, which pushed down demand for oil. Chief executive Bernard Looney said: 'These headline results have been driven by another very challenging quarter, but also by the deliberate steps we have taken as we continue to reimagine energy and reinvent BP.' 'In particular, our reset of long-term price assumptions and the related impairment and exploration write-off charges had a major impact. 'Beneath these, however, our performance remained resilient, with good cash flow and - most importantly - safe and reliable operations.' Chief executive Bernard Looney said the results have been driven by 'another very challenging quarter' Chief executive Bernard Looney said the results have been driven by 'another very challenging quarter' Three months ago, as the pandemic gripped the world BP held back from cutting its payout to shareholders, as rival Shell was forced to do. Looney also provided more detail to investors on the company's plans to go green. He pledged that BP will be investing around $5billion dollars (£3.8 billion) in low-carbon projects by the end of the decade, a tenfold increase from today. Over the same period it expects to slash daily oil and gas production by 40 per cent from last year's level. While the dividend will remain at 5.25 US cents until the board decides to increase it, Looney and his fellow directors promised to return money to investors by buying back their shares with at least 60 per cent of BP's surplus cash.
waldron: Big oil companies endured one of their worst second quarters ever and are positioning themselves for prolonged pain as the coronavirus pandemic continues to sap global demand for fossil fuels. Exxon Mobil Corp. posted a quarterly loss for two straight quarters for the first time this century on Friday, reporting a loss of $1.1 billion, compared with a profit of $3.1 billion a year ago. Exxon, the largest U.S. oil company, hadn't reported back-to-back losses for at least 22 years, according to Dow Jones Market Data, whose figures extend to 1998. "The global pandemic and oversupply conditions significantly impacted our second quarter financial results with lower prices, margins, and sales volumes," Exxon Chief Executive Darren Woods said in a statement. Chevron Corp. said Friday it lost $8.3 billion in the second quarter, down from $4.3 billion in profits during the same period last year, its largest loss since at least 1998. It wrote down $5.7 billion in oil and gas properties, including $2.6 billion in Venezuela, citing uncertainty in the country ruled by strongman Nicolás Maduro. Chevron also said it lowered its internal estimates for future commodity prices. Royal Dutch Shell PLC and Total SA reported significant losses in the second quarter as well earlier this week, as the impact of the pandemic and a worsening long-term outlook for commodity prices spurred them to write down the value of their assets. The dismal results are ratcheting up the problems for the oil giants, which were already struggling to attract investors even before the pandemic, as concerns over climate-change regulations and increasing competition from renewable energy and electric vehicles cloud the future for fossil fuels. Holdings of oil and gas stocks by active money managers are at a 15 year low, according to investment bank Evercore ISI. BP PLC, Shell and Total are all trading at 30-year lows relative to the overall S&P 500. Exxon is trading at its lowest level to the S&P 500 since 1977, according to the bank. Many of the big oil companies have sought to retain investors despite slowing growth and profits over the past decade by paying out hefty dividends, but those payouts are proving hard to sustain during the pandemic. Crude prices have stabilized at around $40 a barrel, providing modest relief for the industry after U.S. oil prices briefly turned negative for the first time ever in April. But none of the world's largest oil companies now foresee a rapid recovery as countries continue to struggle with containing the coronavirus. Chevron CEO Mike Wirth said his company faced an uncertain future for energy demand and couldn't predict commodity prices with confidence right now. "We expect a choppy economy and a choppy market," Mr. Wirth said in an interview earlier this month. "It all depends on the virus and the policies enacted to respond to it." Oil and gas production by both Exxon and Chevron decreased in the quarter, down 7% and 3%, respectively, from a year ago, as the companies shut off wells to avoid selling into a weak market. Exxon's production and exploration business lost $1.7 billion, which it attributed to lower commodity prices. Chevron's production unit lost $6.1 billion. Stockpiles of U.S. gasoline and diesel rose last week, according to government data released Wednesday. That indicates a slowdown in demand for transport fuels, which had started to rebound this summer and are key to the industry's recovery, said data analytics firm Rystad Energy. Meanwhile, demand for jet fuel is recovering even more slowly than gasoline, and may not fully bounce back until 2023, according to Bank of America Corp. U.S. oil prices closed below $40 per barrel Thursday for the first time in three weeks. "Covid-19 is the elephant in the room and the U.S. death toll passing the milestone of 150,000 has spread concern to every kind of market, and commodities too," said Rystad analyst Bjornar Tonhaugen. For the entire second quarter, U.S. oil prices averaged $28 per barrel and Brent crude averaged about $33, according to Dow Jones Market Data, prices at which even the largest oil companies struggle to turn a profit, analysts say. While major stock indexes have recovered from April, when they fell to their lowest levels in years, oil and gas stocks have continued to lag despite the slight rebound in commodity prices, as some investors lose faith in the companies' business model. Many of the world's largest energy companies, including Exxon and Chevron, have for years used an integrated business model, which has historically allowed them to weather most market conditions. By owning oil and gas wells, along with the downstream plants to manufacture refined products like gasoline and chemicals, the companies were long able to capitalize in one sector of their business, regardless of whether oil prices were high or low. But that model has failed to deliver strong returns for most of the past decade, as the world has faced a glut of fossil fuels triggered in part by America's fracking boom, and it isn't protecting the companies now, according to Evercore ISI analyst Doug Terreson. The largest western oil companies invested about $1.2 trillion in growth projects over the past decade, according to Evercore, an investment banking advisory firm, while their combined debt increased by nearly $200 billion over the same period. "It's hard to support the idea that the integrated model has created a lot of value for shareholders," Mr. Terreson said. "A broad-based reassessment of the capital management programs at the big oils is required at this point." Oil companies have been forced to take dramatic action to shore up their finances in recent months, including cutting tens of billions of dollars from their budgets and laying off thousands of employees. Exxon, which had previously disclosed a 30% cut to capital expenditures in 2020, said on Friday that it has "identified significant potential for additional reductions" and is now conducting a comprehensive review of its business, adding that it would provide details when plans are completed. Shell has been among the most aggressive, deciding in April to cut its dividend for the first time since World War II to avoid having to borrow to fund it. Shell reported a second-quarter loss of $18.4 billion on Thursday, which included a $16.8 billion write-down, while French giant Total posted a $8.4 billion loss including a $8.1 billion write-down. Both companies report net income attributable to shareholders, a proxy for net profits. ConocoPhillips also posted a $1 billion loss Thursday. BP PLC reports Tuesday. Excluding impairments, Shell and Total actually turned a profit during the quarter as their trading units helped stave off even larger losses. Exxon increasingly stands alone among its peers for not taking a write-down this year as industry estimates for future oil and gas prices sour. In addition to Chevron, Shell, and Total, Italy's Eni SpA has written off billions of dollars of assets, and BP has said it will also take an impairment. Some have called for Exxon to write-down billions of dollars of shale natural gas assets. Exxon and Chevron have promised they will maintain their dividends, viewed by many investors as the most attractive part of owning their stocks. But both companies have also taken on more debt this year. Some analysts predict Exxon may be forced to cut its dividend in 2021 if market conditions don't recover. Exxon's dividend payments cost the company almost $15 billion a year. The company's debt grew by $8.8 billion in the quarter, according to Goldman Sach Group Inc., which said Exxon will need oil prices around $75 per barrel in 2021 to cover its dividend payments from cash flow. Exxon said Friday it wouldn't take on additional debt. Dan Pickering, chief investment officer of energy investment firm Pickering Energy Partners LP, said the industry can survive at $40 oil but needs significantly higher prices to thrive. According to Mr. Pickering, who said he holds small positions in Exxon and Chevron, oil companies will have to continue cost-cutting for the foreseeable future. "You've got to assume that this is the world we're going to be in, Mr. Pickering said. "And, if this is the world we're going to be in, the cost structure is too high." --Dave Sebastian contributed to this article. Write to Christopher M. Matthews at christopher.matthews@wsj.com (END) Dow Jones Newswires July 31, 2020 10:22 ET (14:22 GMT)
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