Shell Transport and Trading leave London? Unthinkable right?
Maybe, but it’s not hard to imagine Netherlands-based investors in the Royal Dutch half of the oil and gas giant believed similar before it upped sticks and departed The Hague for the UK in 2021.
And many brokers are suggesting it is this issue, not green policy, how much to give to shareholders or investing in new oilfields, that new chief executive Wael Sawan has to address at Wednesday’s capital markets day.
According to Citi today; “If there is an elephant in the room this week at Shell's investor day, the first under new CEO Wael Sawan, it is bound to be one about location.
“The decision to hold the presentation in New York looks recognition that US investors are more engaged in energy than European ones are.
“But are 'more engaged' US investors enough to engineer a re-rating? Surely Shell's European domicile needs to be part of any discussion.”
Earlier this month, Deutsche Bank made a similar point, highlighting the “different approaches to decarbonisation between the European and US integrated oil sectors, what should oil companies be doing, the very significant valuation disconnect between the two sub-sectors.”
Brokers have suggested that if Shell was to move its listing and HQ to New York, it might double its valuation based on the ratings of rivals Exxon and Chevron.
These two US peers are valued at about six times their cash flow, compared with about three times for Shell.
On free cash flow of US$46bn in the year to December 2022 that is worth an extra £110bn on the current market cap, a significant upgrade by any yardstick.
It would also take itself out of the firing line of green activists who have already scored one notable victory in a court case in the Netherlands, something believed to be a key reason Shell switched its domicile to the UK.
True, Sawan is said to have already rejected a move to the US when the group decided to shift to the UK two years ago.
But with windfall taxes rising here, Shell exiting its retail supply businesses in Europe and the regulatory pressure only likely to get more intense if Labour is elected, he will need a good answer to the question if nothing else on Wednesday as it is a certainty to be asked.