Energy

French cable group suffers earnings power shortage

18 June 2018

Nexans lost almost a fifth of its value after saying EBITDA may fall 15 pct. The company’s racy growth plans rest on trends like offshore wind and soaring data use, but investors value it as a sector basket-case. Given the profit warning and a departing CEO, that looks fair.

Exxon muddies the picture with new trading push

12 June 2018

The $350 bln oil giant is bulking up in energy trading by poaching several veteran dealers from rivals. It could help mitigate fluctuations in the price of the commodity. But it also adds risk and opacity just as investors want otherwise, and does nothing for diversification.

Elliott didn’t get into activism to make friends

11 June 2018

Paul Singer’s hedge fund wants board seats at $31 bln utility Sempra, and has accused it of over-expanding. Presumably that includes the Oncor deal Elliott itself backed last year. Singer is arguably helping Sempra again, though the target’s board may not feel that way.

UK’s Aramco sop could lead to worst of both worlds

8 June 2018

The UK regulator is bending its own rules to entice the oil giant to London. The plan will weaken tough laws that safeguard competition and protect minority investors. Making legal exceptions for opaque companies is a slippery slope – and there’s no guarantee Britain will win.

Shareholder climate activism needs more heat

5 June 2018

Owners of companies from Exxon to Rite Aid are asking for more disclosure on sustainability. That’s important, but insufficient. Ensuring bosses take climate goals seriously requires an informed board – and exec pay tied to green goals. These are what investors should target.

Nuclear deal flags UK’s public investment caprice

5 June 2018

Britain may take a stake in Hitachi’s likely $20 bln-plus Wylfa power plant. That could make it cheaper than the controversial Hinkley deal. Yet it’s still a big bet on a scheme that energy shifts could render ill-advised, at a time when simpler public projects have been spurned.

Enel’s Brazil dominance needs elbow grease

31 May 2018

The Italian utility offered $2 bln to buy grid operator Eletropaulo, over three times its market value in March. It makes sense for Enel to grow its presence in South America’s biggest country, but extracting value at this price will require hefty cost savings and efficiencies.

Gas move gives PetroChina first of several breaks

31 May 2018

China will cut some implicit subsidies for the fuel. The main winner is the $210 bln state-run giant, which as the country’s top supplier will lose less on imports. More freedom is likely to follow - benefiting investors while stoking spending in infrastructure and production.

Oil rally puts New Delhi in a bind

29 May 2018

As a major energy importer, India is in a tight spot. Taxes introduced when crude was cheap are now squeezing consumers. The government can’t reverse course without creating a budget hole – unless it makes up the shortfall by taxing ONGC and other producers instead.

Santos gambles on crude with $11 bln bid rebuff

23 May 2018

The Australian gas group rejected the last in a string of approaches from private equity-backed Harbour Energy. New Chairman Keith Spence is optimistically betting energy prices will stay high. Given the industry’s volatility, this could come to look like a missed opportunity.

Shell investors take a narrow view of climate risk

22 May 2018

The oil major easily fought off an attempt by shareholders to turn carbon-reduction ambitions into hard targets. That prevents it being hamstrung compared with rivals. But even the relatively enlightened Shell assumes oil demand forecasts that are vulnerable to political shifts.

EU’s Iran sanctions riposte is late and lame

18 May 2018

The bloc took 10 days to come up with a plan that will give its companies cover if they defy U.S. restrictions. That’s unlikely to stop businesses pulling out of the Islamic Republic. The dollar’s dominance in the financial system limits Europe’s ability to offer real protection.

Energy firms stuff MLP minority owners in pipe

17 May 2018

Williams is only offering a 6 pct premium for the quarter of its subsidiary it doesn’t own. Enbridge and Cheniere put even less on the table. The recent loss of some tax breaks makes MLPs less attractive and prompted the moves. But independent shareholders are getting a raw deal.

China’s Portuguese power bid may yet lure rivals

17 May 2018

It’s no surprise that EDP rejected a lowball 12 billion euro approach from China Three Gorges. The Chinese state’s effective 28 pct stake in the utility suggests a counterbid has little chance of success. But some European utilities may yet have grounds to get involved.

OPEC high point is an Indian summer

16 May 2018

The cartel’s biggest member, Saudi Arabia, wants oil to reach $100 per barrel. West Texas bottlenecks offer hope prices could get close. But cyclical forces are at work. Fresh pipeline capacity will unleash a tidal wave of supply. With prices high, demand will fall, too.

Santos suitor clears one of three major hurdles

15 May 2018

China's ENN and Hony Capital, top owners of the $10 bln Australian oil and gas producer, have aligned themselves with bidder Harbour Energy. That's vital support for the private-equity-backed group. A rising oil price is a remaining complication, and government approval another.

Saudi risks squandering looming oil boon

14 May 2018

The scope to plug gaps left by sanctioned Iranian oil will help Riyadh’s budget. The surplus would be best spent on education and measures to grow the private sector. The danger is that the money will be used for flashy Vision 2030 state projects that look good but change little.

Chinese utility misfires with bid for Portugal’s EDP

14 May 2018

China Three Gorges is offering investors a tiny premium to take control of EDP. This may be a way to avoid paying the near-$11 bln that would be needed for full ownership. But the move could fail entirely without an increase. And being so stingy invites political blowback.

California helps Paris send solar message

11 May 2018

The most populous U.S. state is making panels mandatory on most homes built after 2020. It will cut emissions only a little. But the clean-energy focus will push other states along. Fossil-fuel producers will have fewer excuses to ignore the renewable writing on the wall, too.

Viewsroom: What’s eating at Elon Musk?

10 May 2018

Tesla’s CEO berated analysts for asking “boring, bonehead questions” after the electric-car maker reported a record quarterly loss. He then taunted Warren Buffett, suggesting his idea of corporate “moats” is sugary nonsense. Breakingviews columnists discuss why Musk is so testy.