Bid Oil’s bid to attract investors could eventually fail

Exxon Mobile Corporation and Saudi Basic Industries Corporation (SAB) Gulf Coast Growth Ventors are under construction in Gregory, Texas, USA on Wednesday, July 28, 2021.

Eddie Seal | Bloomberg | Getty Images

LONDON – The world’s largest oil and gas investors want to attract investors by returning more cash to shareholders. Market participants, especially long-awaited ones, are highly skeptical.

Oil and gas companies have been making huge profits since the outbreak of the Coronavirus.

During the first three months of June, a strong performance was built on the expected first quarter earnings and further supported the industry’s efforts to pay off debts and reward investors.

Exxomobile in the United States announced at the end of last month that its shareholder would return its dividends and Chevron would continue to buy shares between $ 2 billion and $ 3 billion annually.

In Europe, British BP, France Total Energy, Norwegian Equatorial, Italian Inni and Anglo-Dutch oil giant Royal Dutch have all added stock purchase programs or dividends — or both. In the wake of the next CV-19 crisis, it reflects the broader industry trend that investors seek to ensure a more stable foundation.

Stock purchases benefit shareholders who are designed to increase the company’s stock price. Paid payments, in turn, reflect the shareholder’s reward for their investment. There are two options for a company that wants to reward investors.

These investments can be a failed asset, and investors do not want to keep the purse.

Kathy Hipl

Professor of Finance at Bard College

Prior to the second quarter results, energy analysts warned that Big Oil was still facing a lot of mistrust and challenges. Some of these include the impressive success of shareholders in recent months, the persistence of investor skepticism, and the intensification of pressure to reduce bulk fossil fuels.

Daytime traders can make short-term profits, but heavy-handed long-term investors are getting old-fashioned oil and gas, that’s just old-fashioned, on a day-to-day basis, “Katie Hipl, a professor at Bard College in New York, told CNBC.

He added: “If institutional investors decide that the demand is high – it has already happened – they will leave the sector permanently. Over the years, many have already had a stake in the sector.

IPCC reports ‘death cry’ for fossil fuels

The energy sector is one of the strongest performers on the S&P 500 this year, with financial growth up nearly 30%. However, major oil stocks continued to monitor earnings.

In the UK, for example, BPP has seen stock prices rise by about 20% this year, but the oil and gas giant By 2020, it was down more than 47%. Another: “The Covenant-19 crisis because of its impact on world power.

Since then, oil prices have reached $ 70 per barrel and the three major forecasting agencies – OPEC, IAAA and the US Energy Information Administration – are expecting a demand-driven recovery by 2022.

Hip-wise long-term investors say they will stay away from oil and gas experts until “until and when they do not fully understand the crisis.” Ignoring IEA findings, they are still investing tens of billions in unnecessary oil and gas infrastructure. [degrees Celsius] The situation, ”Hipple mentioned a key target in the Paris Agreement.

These investments can be a failed asset, and investors do not want to keep the purse.

Last week, the world’s leading climate scientists warned of a severe climate emergency. A recent report by the Eastern Panel on Climate Change warns that greenhouse gas emissions could be broken down in ten years’ time due to rapid, rapid and large-scale reductions in greenhouse gas emissions.

UN Secretary-General Antonio Guterres described the report’s findings as “Code Red for Humanity” and called for the death of coal, oil and gas.

Energy agencies are traditionally still heavily dependent on oil and gas revenues for their revenues – a concept that is unsuitable for climate change questions.

“Obviously we don’t think these are very good businesses,” said David Moss, head of European exports at BMO Global Assets Management.

“Europe’s energy majors are currently generating” very strong “cash flows due to the steady improvement in oil prices, but Moss noted that many are choosing to continue spending relatively tightly instead of investing in future production projects.

“We still don’t think they represent good long-term business with oil companies,” Moss said. Although they seem to be in a good position right now, they do not generate consistent returns on capital or cash flow.

However, not everyone is so optimistic about the oil and gas industry.

Rohan Reddy, a New York-based exchange analyst, said there are currently positive signs for energy agencies: rising stock prices, rising second-quarter earnings and increased shareholders’ distribution.

“The energy sector is currently performing well in the S&P 500 and many European markets, and although some major regulators, such as BP and others, have hampered the large-scale energy sector, we now think it is due to local hesitation. Delta [Covid] Alternatively, ”Redi told CNBC on August 11.

We think there will be a lot of investors who will start listing some big names.

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