Shell and TotalEnergies, two of Europe’s largest oil companies, are considering moving their stock listings from London and Paris to Wall Street. Both companies are frustrated with the low value of their stocks compared to US oil majors and believe that listing in the US could increase their valuation. TotalEnergies CEO Patrick Pouyanne mentioned that European shareholders are not buying shares at the same rate as US shareholders, leading to the consideration of a move to New York.
TotalEnergies and Shell have a lower price-to-cash flow ratio compared to US counterparts like Exxon Mobil and Chevron, indicating that the stocks may be undervalued. The gap in valuations between European and US companies has grown wider in recent years, prompting discussions about potential moves to US exchanges. Companies listed on US exchanges have access to a larger pool of capital, making them more appealing to investors.
Despite the potential benefits of moving to Wall Street, Shell CEO Wael Sawan stated that it is not a live discussion at the moment and the company is focused on buying back shares to increase their value. However, the possibility of Shell leaving London has caused concern for the city’s main stock exchange, with fears that it may lead to a crisis. The departure of Shell and TotalEnergies from their home stock markets could have significant implications, particularly for London’s exchange.
If Shell were to leave London for Wall Street, it could have a ripple effect on other companies, such as BP, who may consider following suit. The pressure from European shareholders to address climate commitments and ESG issues has heightened in recent years, influencing discussions surrounding potential stock exchange moves. Despite the attractiveness of listing on US exchanges, there is still value in maintaining ties to European markets for some global energy producers.
Former Shell CEO Ben van Beurden emphasized the need for European oil and gas companies to demonstrate their value in the energy transition and not just as a cost. While the probability of Shell and TotalEnergies actually leaving London and Paris is considered low by experts, the discussions reflect a broader trend of European companies facing pressure to address environmental concerns. The potential move to Wall Street reflects the changing landscape for energy companies and the shifting priorities of investors in relation to climate and sustainability.
