Schlumberger 4Q20 schedule and more ?3

19:16 21-Dec-20

Congress is expected to pass a stimulus/relief bill by morning.  I will only update again if it somehow fails to become law, but one aspect that deserves a little additional attention is the extension of renewable energy tax credits.  This is a substantial positive for Amsc, Xebec, Clearway, and Orbital Energy Group, though OEG is the only one I would even consider buying anywhere near current prices.  Clean Energy's MoU with BP also bodes well for Xebec, and possibly Golar, though Brazilian politics may be even worse than India's right now.

Finally, for those more concerned with real life than finances, this article about the new virus strain I noted this morning is well worth reading.  Hopefully American handling of the pandemic is about to take a turn for the better, but it would be more reassuring if the powers that be acted on the realization that problems like this require global coordination.

Vodafone followed up its earlier PR with notice that it has completed the formation of Vantage Towers Greece, which is an important step toward the IPO.  Vodafone also has the option to acquire the remaining 38% of Wind Hellas in 2021 for €288M in cash, plus 5% if the option is not exercised by July 1st.

On the energy front, perhaps my notes today should have been explicit about RNG being the one exception to my hands off stance on such companies.  There is little doubt in my mind about the combination of that with solar and wind being the way forward, with fossil gas acting as a bridge.

Finally, even though I was already having no part of INTC, I think it's worth noting that Intel has been identified as one of the many entities affected by the Solar Winds security debacle.

On 12/21/20 8:42 AM, Esekla wrote:

Schlumberger has scheduled its fourth quarter report for the morning of Friday, January 22nd.  The average of analyst estimates comes to 17 cents of EPS from $5.2b of revenue, declining seasonally to an even $5.0b in the first quarter.  Though I was fairly on target for the bottom in SLB, Shell's poor business update this morning, which I will detail separately, shows why I will only be covering the call out of general interest in management's thoughts on the changing oil market.

My own thoughts are more on the financial markets, where despite a relatively low post-election VIX, volume has been modestly higher than beforehand.  Furthermore, I see two other factors that should be minor positives for Virtu.  First is the Fed relaxing restrictions on dividends and buybacks for profitable big banks.  Secondly, unless you've been living under a rock, you know that Tesla joins the S&P 500 today.  I expect institutional adjustments to noticeably increase the Execution Services side of Virtu's business in the next two reports.  Today's volatility won't hurt either, but I don't expect it to last.  News outlets are blaming the stimulus deal or pandemic news, even though most of the details have been there for a while.  I see it as normal post-options-expiration movement in a generally overbought market which is unlikely to last beyond tomorrow.

The one possible exception is VOD.  Vodafone has announced that discussions to sell its Egyptian business stake have terminated and attempted to put a good face on continuing operations, but I think it's an unwanted surprise ahead of the Vantage IPO.  I still see shares as a value, but also acknowledge the possibility of them continuing to languish unless the company gets close to its $20b valuation for Vantage, which I've viewed as ambitious.  VOD could still rebound, but other values that I've been calling out look like better alternatives.