What's going to happen to the FTSE100 when BP and Shell go bankrupt?

Sebo027

CreditCardChris said:

The world is moving away from oil to electric and renewable energies so where does this leave the oil giants? Not just BP and Shell but all the oil companies around the world.
BP and Shell both hold considerable weight in the FTSE and when they got bust due to oil usage decline, won't the FTSE100 take a massive hit as we'd be losing 2 of the largest companies in the index?

Or do you think that by the time this happens the FTSE100 will have more extremely valuable companies listed on it that will dilute the weight of the oil companies and their collapse won't affect the FTSE100 too much? 

The major oil companies are aggressively targeting a transition. This isn't the first time they've feigned a change to cleaner energy, though it seems that now they are reacting to market pressures to ensure long term sustainability as a business and it would appear, taking it more seriously. It's entirely possible in 30 years time BP and Shell will be primarily involved in electricity generation from clean energy projects, and less so in fossil fuels.

Thrugelmir

Brido88 said:

CreditCardChris said:

The world is moving away from oil to electric and renewable energies so where does this leave the oil giants? Not just BP and Shell but all the oil companies around the world.
BP and Shell both hold considerable weight in the FTSE and when they got bust due to oil usage decline, won't the FTSE100 take a massive hit as we'd be losing 2 of the largest companies in the index?

Or do you think that by the time this happens the FTSE100 will have more extremely valuable companies listed on it that will dilute the weight of the oil companies and their collapse won't affect the FTSE100 too much? 

The major oil companies are aggressively targeting a transition. This isn't the first time they've feigned a change to cleaner energy, though it seems that now they are reacting to market pressures to ensure long term sustainability as a business and it would appear, taking it more seriously. It's entirely possible in 30 years time BP and Shell will be primarily involved in electricity generation from clean energy projects, and less so in fossil fuels.

In the past the returns weren't available on the capital investment. So they divested their investments. People want the cheapest product available. Global warming has made little difference to peoples views on globe trotting. Like the virus. I'm going to carry on regardless. If there was no demand for product the switch would be quicker. 

Sebo027

Thrugelmir said:

Brido88 said:

CreditCardChris said:

The world is moving away from oil to electric and renewable energies so where does this leave the oil giants? Not just BP and Shell but all the oil companies around the world.
BP and Shell both hold considerable weight in the FTSE and when they got bust due to oil usage decline, won't the FTSE100 take a massive hit as we'd be losing 2 of the largest companies in the index?

Or do you think that by the time this happens the FTSE100 will have more extremely valuable companies listed on it that will dilute the weight of the oil companies and their collapse won't affect the FTSE100 too much? 

The major oil companies are aggressively targeting a transition. This isn't the first time they've feigned a change to cleaner energy, though it seems that now they are reacting to market pressures to ensure long term sustainability as a business and it would appear, taking it more seriously. It's entirely possible in 30 years time BP and Shell will be primarily involved in electricity generation from clean energy projects, and less so in fossil fuels.

In the past the returns weren't available on the capital investment. So they divested their investments. People want the cheapest product available. Global warming has made little difference to peoples views on globe trotting. Like the virus. I'm going to carry on regardless. If there was no demand for product the switch would be quicker. 

I agree. The world has also moved on a lot with government subsidising alot of renewable work which has taken the brunt of the R&D costs, and manufacturing costs have dramatically reduced (e.g. Chinese solar panel story). On top of that, i think pressure is mounting from the public (particularly the younger generation), which is why these company's are acting now as they know it will take decades to reorganise themselves, continue to remain attractive, and subsequently turn a profit.

Username999

On April 1, 2020, the Whiting Petroleum Corporation and certain subsidiaries announced that they had commenced voluntary Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas.

Thrugelmir

Username999 said:

On April 1, 2020, the Whiting Petroleum Corporation and certain subsidiaries announced that they had commenced voluntary Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas.

Shale producer?  Asset strippers like Exxon Mobil will pick the bones out of the assets. 

DiggerUK

The opportunity to asset strip the bones of the shale industry do not exist. The only way that shale can survive is dependent on oil prices way higher than they are for now.

The achilles heel of US self sufficiency in energy can be collapsed by a weapon no more sophisticated than a tap on an oil well. 

As to the high hopes of future energy needs without fossil fuels, dream on. Nuclear is shunned by most who support the cockamamy belief we can live on wind and sun. A future  based on the biggest proportion of electric supply coming from nuclear is however viable..._

Thrugelmir

DiggerUK said:

The opportunity to asset strip the bones of the shale industry do not exist. The only way that shale can survive is dependent on oil prices way higher than they are for now.

The achilles heel of US self sufficiency in energy can be collapsed by a weapon no more sophisticated than a tap on an oil well. 

As to the high hopes of future energy needs without fossil fuels, dream on. Nuclear is shunned by most who support the cockamamy belief we can live on wind and sun. A future  based on the biggest proportion of electric supply coming from nuclear is however viable..._

The achilles heel of business is debt.  Loans need repaying. With no debt the business model is very different.  Once all the exploration, groundworks and infrastructure is in place. Shale is not expensive to pump out of the ground.

AnotherJoe

couriervanman said:

CreditCardChris said:

It can and will go to 0 if they don't switch to renewable energies double quick.

Someone doesn't like Shell & BP......me personally i will be buy a load more BP shares 

You must be someone that doesn't like money then ! I sincerely wish you good luck, I have no dog in that hunt, but all oil companies are going to have a very torrid next few years.

fWIW whilst these oil majors are doing some stuff with renewables, it's a pathetically small amount compared to their revenue even at its current reduced amount. Also there is no way they can continue with their dividends (that was true even before CV19) and so whilst no doubt that realisation is somewhat built in to the share price there's probably more to fall on account of that alone let alone future lack of profits.

i suggest you Steer.Well.Clear. 

Stargunner

AnotherJoe said:

couriervanman said:

CreditCardChris said:

It can and will go to 0 if they don't switch to renewable energies double quick.

Someone doesn't like Shell & BP......me personally i will be buy a load more BP shares 

You must be someone that doesn't like money then ! I sincerely wish you good luck, I have no dog in that hunt, but all oil companies are going to have a very torrid next few years.

fWIW whilst these oil majors are doing some stuff with renewables, it's a pathetically small amount compared to their revenue even at its current reduced amount. Also there is no way they can continue with their dividends (that was true even before CV19) and so whilst no doubt that realisation is somewhat built in to the share price there's probably more to fall on account of that alone let alone future lack of profits.

i suggest you Steer.Well.Clear. 

 If Couriervanman bought more BP shares back on the 16th March when he posted that comment he will already be almost 40% up so your suggestion is rather pointless now.  

redmalc

I can advise you I have brought a large number of BP shares this last month,