Big Oil Buyback

JohnL
2022-11-09

These days, big oil is no longer expanding at all cost. Financial discipline is key and the popular names like $SHELL PLC(SHEL.UK)$  and $Occidental(OXY)$  are giving back shareholders via buybacks and dividends. 

Consistent with Mr Buffet, buyback benefits long term shareholders given improved RoE. In turn, dividend per share will go up assuming the return to share holders is constant. Shell launched a buyback of USD 4b until release of Q4 '22 results. Check out the screenshot whereby the average buyback price is USD 55 upwards.

I am near term bullish on $Light Crude Oil - main 2212(CLmain)$  given the end of US SPR release and Russia oil cap. In today's world, commodity is no doubt the better hedge against inflation. Plan to sell puts to collect daily premium until Dec. If the situation of China becomes clearer, it will be another boost to oil price. 

Reminder to retail investors, risk control is important. 

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Comments

  • PhilipChow
    2022-11-12
    PhilipChow
    Will buyback decrease in the future since it will be tax?
    • PhilipChowReplyJohnL:Ā 
      With Democratz gainning majority in Senate, it will give Biden more power to pressure those oil firms
    • JohnLReplyPhilipChow:Ā 
      Big oil are much more disciplined these days, ie rationalised Capex and increase exposure to renewables. Rig count is slowing increasing but not like those reckless days. Imho, US companies gets more pressure from Democrats to increase production.
    • PhilipChowReplyJohnL:Ā 
      Thanks for the input. Will more money poured into production to increase oil output?
    • JohnL:Ā 
      Yes. Additional tax impacts cash flow and big oil scale its buy back and dividend based on CF from operations. Big oil is tax efficient and at times like this, government wants to balance energy security vs additional tax. Shell CEO actually openly called for the government to tax big oil more.
  • Hosay_hosay
    2022-11-11
    Hosay_hosay
    [Cool][Cool][Cool]
  • Carrotski
    2022-11-10
    Carrotski
    šŸ‘
  • Oswald Ng
    2022-11-10
    Oswald Ng
    Ok
  • Ansome 413519
    2022-11-10
    Ansome 413519
    k
  • kevin chang
    2022-11-10
    kevin chang
    šŸ‘
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