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Cars are all going electric

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dspp
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Re: Cars are all going electric

#138936

Postby dspp » May 14th, 2018, 9:41 am

TUK020 wrote:
dspp wrote:Investing in high carbon and/or long duration fossil producers is a very risky position.

That's why although I have a very substantial portfolio position in upstream oil & gas it is all in short duration / low carbon production.

regards, good luck,
dspp


dspp,
please can you help me interpret what duration/carbon content means. What is your perspective of BP & RDS?
I know the latter have made big investments in LNG, but I don't understand if this fits your 'low carbon' metric
tuk020


tuk,

My apologies for my baffling brevity.

Re duration: I prefer reservoirs that will be produced relatively quickly relative to the timing of the upfront capex, i.e. are least exposed to future increased RE penetration. Against this I will also point out that I prefer oilies that have a decent reserves:production bank so that they can harvest the higher price periods.
Re carbon content: I prefer asset mixes that are least exposed to high carbon content. So I avoid heavy oils, tar sands, coal. I prefer light oils or gas.

Re RDSB and BP if you look on the portfolio review board viewtopic.php?f=56&t=4396 you will see that I hold both, plus HUR in upstream. RDSB has long been going down the gas-centric pathway, BP slightly less so. HUR is a relatively short term play in this context (only 2-3 years is my guess). Before/if doing anything in HUR please read all my (and others') warnings about risks in the HUR thread viewtopic.php?f=16&p=137968#p137968 and most of my HUR exposure is profits from my RDSB + BP. I generally prefer RDSB to BP for many reasons, which ultimately come down to corporate culture. However I swapped some RDSB for BP for CGT reasons a year or so ago and decided to split my risks and stay with both. I also rate EXXON as a highly competent major, but don't want the hassle of US tax at the moment.

The real conundrum I have is that I cannot find any attractive investments (vs alternatives) in listed RE that I would want to hold as a small scale private investor. Fossil fuels are industrial crack cocaine, and it shows in the investment arena as with any other. If at some point all fossil negative externalities were fully taxed into reality then I am sure that would change ! In fact, slowly, the same outcome is occurring by a multiplicity of paths: petroleum taxes; carbon taxes; decreasing EROEIs; improving RE economics. Hence the timescale I have in mind for largely exiting the oilies. In the meantime there is money to be made !

Hope this helps.

regards, dspp

TUK020
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Re: Cars are all going electric

#139478

Postby TUK020 » May 17th, 2018, 6:41 am

dspp,
thank you.

As regards RE investments, I am thinking of investing in the shovels rather than the goldmines.

I have a heavy position in NG. which I have recently topped up.
Most major sources of RE involve electricity, and thus will need hooking up to the grid.


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