Above left, Mr Ben van Beurden the CEO of Royal Dutch Shell.
Above right, Mr Bernard Looney, FREng, the CEO of BP.
Many people have a daily routine. Your Editor is one of them. The first thing you have to learn about the “RDR” (Rogers Daily Routine) is that it varies in terms of the start times and end times. This is because unless I have a fixed appointment such as catching a train, I do not use an alarm clock. This because setting an alarm causes my mind to become more unsettled at night that it already generally is and makes my insomnia even worse! I suffer from broken sleep patterns which result in meet starting my day somewhere between 7AM and 8:30AM. Apart from that, the routine is much the same each day. After having breakfasted, I switch on the PC in what I call “the office” and what the estate agent selling the flat called “bedroom one” and download the emails. I delete the junk and spam and read the rest.
Today, one of the emails I received from the stock commentators “Seeking Alpha” of 52 Vanderbilt Avenue, 13th floor, New York, NY 10017 the following bullish commentary on Royal Dutch Shell: https://seekingalpha.com/article/4379359-royal-dutch-shell-shift-to-renewables
After reading the emails I then start up the web browsing programme and – on weekdays – surf onto the Google Finance website (which gives more or less real time stock prices) to see what prices my shareholdings are trading at.
Today my two troubled companies (Lloyds Bank and Royal Dutch Shell) were down whilst the others were up. Thus the bullish report above gave some cheer. I have already outlined in previous posts vis-à-vis these shares and that is to A, transfer the shares into the name of my stockbroker’s nominee company to enable me to trade the shares over the telephone (job being done – it takes a fortnight) and B, to wait and see what happens and if the shares crash to a very, very low price point, C buy more of them. Following C – or B if the shares don’t crash to a certain value, D, hope for the best!
What really worries me vis-à-vis my Shell shares is that the company will be subject of a cash takeover by one of the large US oil majors in 2021! This is because of the large amount of money I will have to spend buying additional Shell shares to average down the cost so as to be able to recoup my losses (get my money back) when the shares go up in value. This is the scale of my problem:
Currently, my cost per share is £18.90. This before the outbreak of COVID-19 was a very comfortable position! I was sitting on a considerable capital gain. If over the next 12 months I can scrimp and save enough of my meagre resources to fund a “war chest” of £10,000 and the the RDS “B” shares drop to below £5.00 per share and I purchase 2,000 shares at £5.00 each – this inclusive of Stamp Duty and stockbroking fees – the cost per share will have dropped to £15.42.
This is one reason why I am not tempted to purchase any more RDS “B” shares at their present levels. The other reason of course is that don’t yet have the money!
Insofar as Royal Dutch Shell is concerned, there a number of critical dates ahead.
The first is Tuesday, 3rd November 2020 – the US Presidential election.
The second not only has a date. It also has a time! This is 11PM on New Year’s Eve, Thursday 31st December 2020.
This is when the EU/UK transition agreement (aka to patriots as Purgatory) ends!
I fervently hope that the prospect of a “No Deal” concentrates the minds of two gentlemen in particular: One is an Irishman, Mr Bernard Looney, FREng, the CEO of BP. Mr Looney hails from near one of the most beautiful places on the planet; Kenmare Bay in County Kerry. The other is a Dutchman, Mr Ben van Beurden, the CEO of Royal Dutch Shell.
Of the two oil majors, the smaller (by market capitalisation) BP is the more vulnerable to a takeover but if Sterling collapses in January 2021, Royal Dutch Shell is vulnerable too. The way that these two firms can protect themselves is of course to merge. However, this merger will have to gain the consent to the competition authorities in the EU and the UK!
Taken together with Royal Dutch Shell ceasing to be an Anglo-Dutch company but a PLC registered in England and Wales only, this would be a prudent move as it will create a company of sufficient size to resist a takeover from the US oil majors.
What would such a company be called?
How about Shell PLC?
After all, they already have a website: https://www.shell.com/
Readers will recall that for myriad sins, I have the great misfortune to live one and a half miles away from a village that is an Extinction Rebellion hotspot! Middle class intellectuals who have downsized from the Home Counties to the far south west of Cornwall. Some of this group of hair shirt enthusiasts (it’s others who will have to don the hair shirts – not them!) from time to time surf onto the BG website to see what one of the devils incarnate is promulgating! To say that they are experiencing a degree of schadenfreude vis-à-vis my travails is to understate the matter considerably! They are chortling in delight and take the greatest enjoyment in telling me that the oil and gas reserves of the company in whom I have sunk much of my money will very soon be worthless and I will have lost all my money! This is a prospect they await with the a degree of excited anticipation that would exceed that of the Marquis de Sade preparing to torture one of his victims!
They, unlike the late and unlamented French deviant will be sorely disappointed.
The FACTS – in relation to the travails of the oil companies – are these:
The bulk of their customers are in what is known as “the 1st World”. These essentially are the countries in Australasia, Europe and North America. Oil and gas are of course used by the Africans, the Chinese, the Indians and the Central and South Americans, but it is those in the rich 1st World countries who own the private cars, take air flights to holiday destinations and purchase goods that require a vast network of hauliers and delivery companies to deliver said goods.
What we are seeing is the rich 1st World suffer the economic privations brought about by their governments trying to stop COVID-19 from killing their elderly and vulnerable citizens.
This does NOT mean of course that the 2nd World (China, Mongolia, North Korea, Russia and the former republics of the USSR) and the 3rd World (all other remaining countries) are not suffering the dreadful effects of COVID-19 – they are. Of course, readers will point out that there are many rich people in the 3rd World countries and this is of course the case, but the 3rd World economies are characterised by the fact that most of their citizens are very poor indeed.
Several of these economies are growing fast and their middle classes (the people who buy lots of goods and services) are growing rapidly. Of course, the hair-shirters who live down the road from me fantasise about the 3rd World developing in what they call “a sustainable manner”. They mean by this generating electricity by wind turbines and solar panels and driving electric vehicles and flying in electric (battery powered) aeroplanes. Apart from a minor element to appease 1st World politicians, this of course is NOT going to happen! What WILL happen is that countries (other than the 1st World countries) will have PHEVs (plug-in hybrid electric vehicles) on their roads.
PHEVs are electric vehicles whose batteries can be recharged by plugging it into an external source of electric power, as well as by its on-board engine and generator. Most PHEVs are passenger cars, but there are also PHEV versions of commercial vehicles and vans, utility trucks, buses, trains, motorcycles, mopeds, and military vehicles.
PHEVs use fossil fuels!
Then there is of course the hair shirters greatest fantasy of all; battery powered passenger aircraft!
I’m not going to waste the reader’s time with this one!
Suffice it to say, WHEN the deadly pal of COVID-19 has gone, demand for oil and gas and airline tickets WILL return and with them, the profits of the oil companies.
Speaking the Truth unto the Nation
