Europe risks losing its biggest oil companies to America

Two of Europe’s biggest oil companies, Shell and TotalEnergies, are considering abandoning their stock exchanges for Wall Street in a move that would deal a hammer blow to London and Paris.

Two of Europe’s biggest oil companies, Shell and TotalEnergies, are considering abandoning their stock exchanges for Wall Street in a move that would deal a hammer blow to London and Paris. Britain’s Shell (SHEL) is the second-largest company on London’s FTSE 100 index, representing 8.4% of its total market capitalization, while France’s TotalEnergies (TTE) is the fourth-largest on the CAC 40 index, accounting for 6% of its value. Despite their local heavyweight status, both have recently expressed frustration with the low value of their stock compared with US oil majors, and floated the idea of moving the listing of their shares across the pond. Shares of TotalEnergies and Shell trade on a price-to-cash flow ratio of 4.7 and 5.2 respectively, compared with a ratio of 8.4 for Exxon Mobil (XOM) and 7.6 for Chevron (CVX). The lower the ratio, the more likely a stock is undervalued. Alastair Syme, managing director of global energy equity research at Citi, says Shell and TotalEnergies have long traded at a discount. But that gap reached its widest point around two years ago, reflecting a broader divergence between European and US stocks. Companies listed on US exchanges enjoy access to a bigger pool of capital, he told CNN. Investors would “be much more comfortable” buying European energy companies if they were part of the more valuable S&P 500 benchmark index of US equities, according to Syme.