Shell’s name change and shift of HQ to London is about oil and gas companies needing maximum financial flexibility and optionality, going forward, according to UBS.
That is what Shell’s move is about, says the broker, “with an efficient route for excess capital that we believe will be a feature of the industry as it heads towards peak oil demand and investment levels are rationed and allowing for both acquisitions and restructuring/divestments to support strategy”.
“With the company under activist scrutiny management needs the tools to act in as nimble a fashion as possible”.
If successful, this may mean a significant uptick in buybacks next year with the Shell general meeting on 10 December to give significant pointers for the future including a switch to the UK early in 2022.
“This would leave room to deliver a significant amount of the Permian proceeds and CFFO-based buybacks in the year which could amount to $15-$16bn in the supportive macro environment we envisage.”
Buy with a 2,125p price target is UBS’s view, shares eased 1.4% to 1,677.6p.