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After Shell’s record results, do I buy BP shares?

Front view photo of a woman using digital tablet in London
Front view photo of a woman using digital tablet in London

Today (Thursday) has been a great day for shareholders in energy giant Shell (LSE: SHEL). As I write, the Shell share price stands at 2,436p, up 136.5p (5.9%) since Wednesday’s close. This followed an outstanding set of results from the oil & gas supermajor. So should I buy BP (LSE: BP) shares before the UK’s other energy Goliath reports its next set of results?

Shell’s gushing profits

At the current share price, Shell is valued at £171.2bn — a far cry from the levels it crashed to during 2020’s Covid-19 crisis. Indeed, almost exactly two years ago (on 29 October 2020), I said Shell shares were an unbelievable bargain. Back then, they traded at 866.4p, because Shell was going through hell. Had I bought at this low, low price, I’d have almost tripled my money by now. Wow.

In its latest results, Shell unveiled a third-quarter profit of $9.5bn (£8.2bn) — double that for the same period of 2021. Also, the group made record profits in the first half of 2022, thanks to gushing oil prices. As well as sending Shell stock higher, this news lifted BP shares to 482.25p, up 16.25p (3.5%) since Wednesday.

I’m expecting big profits from BP

Shell rewarded shareholders with a new $4bn share-buyback programme, as well as a 15% hike in its quarterly dividend. Yet British politicians were shocked to learn that the group had paid no UK windfall tax, thanks to its heavy drilling costs in the North Sea.

Turning to BP, the group announces its third-quarter 2022 results on Tuesday, 1 November. With Shell leading the way, will BP’s results and share price follow a similar trajectory?

With the price of a barrel of Brent crude trading close to $95, I’m expecting BP to have made money hand over fist in its latest quarter. What’s more, the company’s cash flow should be huge, despite a major outage at its US refinery in Whiting, Indiana.

BP shares have already soared in 2022

Then again, the BP share price has already gushed higher in 2021-22. Here’s how it has performed over six different timescales:

Five days

5.5%

One month

10.6%

Six months

24.3%

2022 YTD

45.9%

One year

34.9%

Five years

-3.1%

As I said, BP shares have had a good run, jumping almost a quarter in the past six months and zooming up almost by almost half this calendar year. This makes BP shares (and Shell stock) among the FTSE 100‘s best performers in 2022. Today, BP has a market value of £87.3bn — still a somewhat modest valuation when set against Shell’s vast capitalisation.

I’ll wait a while to buy BP shares

Earlier today, the BP share price hit a 52-week high of 483.15p, before easing back slightly. This has reduced the group’s dividend yield to under 3.7%, but this could rise if its next results allow. As for me, I shall hold off buying shares until I see BP’s latest financials. But I would prefer to own BP stock before this year is out!

The post After Shell’s record results, do I buy BP shares? appeared first on The Motley Fool UK.

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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

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