Russian Oil Shares

[Kman]

I've been looking into Russian oil companies

Apparently they can be profitable $20+ whereas the US companies need a barrel of oil to be $50+

They seem in safer places financially, much better margins, higher dividends with more money to cover them

I made something to compare them to exxon, chevron and shell; Might not have everything you want but gives a general overview

What am I missing? why put money into the US companies and shell over the Russians

 

 

[Martlet]

10 minutes ago, Kman said:

What am I missing? why put money into the US companies and shell over the Russians

 

US/UK are less likely to seize the assets than Russia?  Exxon and Chevron look expensive at those P/E ratios though. 

[Kman]

Hmm I got the info from Stockopedia, some of it may be wrong 

Looking at the dividend figures for Gazprom for instance  by site..

1. Stockopedia: 13.72%
2. Google: 8.55%
3. Etoro: 3.34%,
4. Yahoo finance: 9.28%
5. MSN Money:15.24%
6. Bloomberg: 9.39%
7. Investing.com: 9.39%

A couple more sites says 9.39% so my best guess is it's that but who knows

 

 

 

[KDave]

I am doing something similar with copper miners and found a similar story. Its hard to pin it down to something exactly measurable, but it seems related to where the nation is on the corruption index, perhaps also with account taken of political stability and local culture? The market is taking all of this into account and pricing accordingly? If you think the market is wrong about these things, you can take the opposite bet at good odds and returns if you are proven right (low p/e, high yield). 

I was surprised to learn that Chile is one of the least corrupt places to do business when it comes to mining (likely thanks to its fascist heritage), which is why the miners there come at a premium compared to those mining in former soviet countries and the other South American nations. There is something the market does not like about countries with socialist tendencies - perhaps this explains why the FTSE is still cheap 

[cravethatcoin]

Completely agree with the ability to profit from a lower oil price than US/UK companies.

I am a beginner at investing but the chart for gazprom does not look particularly inviting. -11% YTD but then maybe that suggests that the company has always been fairly valued compared to inflated US/UK companies. Their balance sheet and income statement look very healthy though.

[Bumble]

The obvious point is simply that these companies are in Russia, so there is political risk. The Russian government derives most of its income from exports, and oil and gas are its biggest exports by value. At current prices, Russia will go bust in about 3 to 5 years. They are effectively playing chicken with the Saudis and the US shale producers. If they are close to going bust they may choose to impose additional taxes on oil companies that could severely restrict their ability to pay dividends. They could even simply ban all foreign dividend payments. The dividends are really the only thing holding up the share prices, so that would be catastrophic.

That said, lots of countries are in danger of going bust over the next few years, so company profits and dividends are at risk almost everywhere. Russia may not be the worst place to be.

[Kman]

On 25/05/2020 at 07:09, KDave said:

I am doing something similar with copper miners and found a similar story. Its hard to pin it down to something exactly measurable, but it seems related to where the nation is on the corruption index, perhaps also with account taken of political stability and local culture? The market is taking all of this into account and pricing accordingly? 

Is an indication what the markets are predicting are the safer bets the % down they are from years high?

1. Rosneft  24%
2. Chevron  26%
3. Lukoil - 31%
4. Exxon 38%
5. Gazprom neft 39%
6. BP 46%
7. Shell 50%

Also I realised I put Gazprom not Gazprom neft in the comparisons, Gazprom is the gas side and neft is the oil side I think, I will redo my comparisons with the neft oil 

Also would the ruble vs dollar be something to think about or not since oil is traded in dollars?

 

[SVK]

Am I too simple minded by looking only at 2 things here ?

1; Russia has little to no debt.

2; Gazprom is going to be here as long as Russia is pumping oil and gas.