Best Research Ideas
Integrated Oil Companies – An Inconvenient Truth
Decarbonizing “black gold” is the job of oil company managements. Energy transition capex will increase more than 300% by 2025 from current levels to reach (only?) 15% of total investment. There is a clear Europe-to-U.S. divide at play here, with the U.S. names being much more cautious about the move towards renewables. Of course, move too fast and near-term cash flows and returns will be hard hit by transition spend. Move too slow, and there’ll be no business left. The good news for the sector is that cashflow is prodigious: free cash flow cumulates to more than 50% of sector market cap over 2021-25 so… Give it back or build a windfarm?
— Giacomo Romeo, Energy Research