If you were expecting a blog about Brexit you’re out of luck as I’d rather discuss Oil and Norway. Because its $1 trillion Sovereign Wealth Fund is getting a makeover. Yes, trillion. One thousand billion. One million million.

Rich reserves of oil & gas have allowed Norway to amass significant wealth. The biggest sovereign wealth fund in the world, in fact. It’s no surprise then that, whilst invested widely, some – a lot actually – ended up in well-known Oil & Gas names.

As the world looks to a future less reliant on fossil fuels, aiming to address climate change, and we deal with big rises and falls in oil price, the fund is looking to protect itself and its nation’s future from future oil price shocks. That said, the decision is being billed by Oslo as purely financial.

As they say, don’t put all your oil in one barrel.

Oslo has thus decided – after much deliberation (discussions began years ago with coal divestment) – to divest from Upstream-biased names. This will mean dumping shares in names involved in Exploration & Production (E&P) activities.

Does this mean disaster for your BP and Shell shares? Does this mean a big overhang, with a forced seller in the market? Not quite.

Both are certainly heavily involved in E&P, but their saving grace is existing activities in renewables and refining (downstream). They are this spared from sale. Hypocritical some might say, but a blessing in disguise for others who own shares.

The strategy decision will have an impact on 1.2% of the fund’s holdings, worth in the order of $7.5 billion. Small by comparison to the fund overall size, but significant for a sector popular with investors. It will affect around 150 names, including pure-play explorers from round the world, US frackers and many others.

Some London-listed names you might be familiar with include Cairn Energy, Kosmos Energy, Gulfsands Petroleum, Igas Energy, Nostrum Oil & Gas, Ophir Energy, Premier Oil, President Energy and Tullow Oil.

If you own any of these names, or plan to, you will notice they took a knock on Friday and trading has varied since. What you have to decide now is whether a major headwind has been removed, or whether a new one blows? Could the shares be more attractive, especially if oil prices keep climbing? Or could they come under pressure.

Whatever you think, Accendo’s award-winning research service regularly includes Oil & gas names among its trade opportunities, of which we publish 60 per week. There is a high probability that the names you like get mentioned.

Whether you focus on ranges, candidates for a bounce, shares in the midst of a breakout, those showing solid momentum or who’s reporting results or paying dividends, we’ll have something for you.

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Mike van Dulken, Head of Research, 8 March 2019