Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

BP plc (ADR) (BP) and Royal Dutch Shell plc (ADR) (RDS.A) Top Oil Play On Exciting Dividend Yield

OPEC member’s decision to maintain oil production at 30 million barrels a day came as a surprise to many companies as a reduction could have averted further drop in prices.  Despite the sentiments by the OPEC nations, Eastspring Investment’s Nicholas Ferres during an interview on CNBC reiterated that BP plc (ADR) (NYSE:BP) and Royal Dutch Shell plc (ADR) (NYSE:RDS.A) remains attractive oil plays on exciting oil plays.

BP plc (ADR) (NYSE:BP)

“If you look at Europeans oil plays they are trading at blow out book value now as a basket and that includes the U.K majors so BP and Shell. They are trading at about seven times earnings BP plc (ADR) (NYSE:BP) and Shell, for example, are paying you 5.5% dividend yields. Quite possible that dividends get cut if oil prices get to fall further,“ said Mr. Ferres.

A drop in oil prices has gone to reduce the cost of spending on fuel for the end consumers but to the disappointment of oil companies like BP whose margins have been affected. Ferres maintains that a drop in oil prices could, on the other hand, be compared to tax cuts for the global consumers.

BP plc (ADR) (NYSE:BP) may at the moment be offering some of the most impressive dividends yields in the oil sector but a further slump in oil prices according to Ferres could affect the same. Ferres remains skeptical of investing in RD.A and BP plc (ADR) (NYSE:BP) as the market could swing either way at the back of gas natural gas being relatively cheap to oil.

“One of the things we are concerned about and I think is a genuine risk is you have seen U.S natural gas, for example, is still extremely cheap relative to oil. So if you can substitute for a while from oil to natural gas, for example,   that could put ongoing  secular pressure technology efficiency improvement over time could reduce global oil consumption,“ said Mr. Ferres.

Ferres argues that the likes of BP plc (ADR) (NYSE:BP) and Royal Dutch Shell plc (ADR) (NYSE:RDS.A) will continue to suffer a great deal going forward as they have higher costs of productions compared to other plays in the space. U.S energy stocks also continue to suffer a great deal as investors continue to shun them on the uncertainty of the space.

Warren Buffett and BillionairesFree Report: Warren Buffett and 12 Billionaires Are Crazy About These 7 Stocks
Let Warren Buffett, David Einhorn, George Soros, and David Tepper WORK FOR YOU. If you want to beat the low cost index funds by an average of 6 percentage points per year look no further than Warren Buffett’s stock picks. That’s the margin Buffett’s stock picks outperformed the market since 2008. In this free report, Insider Monkey’s market beating research team identified 7 stocks Warren Buffett and 12 other billionaires are crazy about. CLICK HERE NOW for all the details.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!