Energy

Tycoon’s rig empire leaves lenders deep underwater

3 June 2020

Oslo-listed Seadrill, founded by billionaire John Fredriksen, wants to swap its $7.4 bln of debt for equity. A slump in crude prices means creditors will face heavy losses. But, with oil majors retrenching and rigs heading for the scrapyard, a bankruptcy could be even messier.

Corona Capital: Bank fears, Payments M&A, Coal

2 June 2020

Concise views on the pandemic’s corporate and financial fallout: A new U.S. regulator wants cities to reopen to prevent bank robberies. Western Union may bid for struggling rival MoneyGram. And the pandemic is hastening the decline of U.S. coal.

Energy’s titans will experience a dead cat bounce

21 May 2020

The virus-led crude price crash is upending petrostates and oil majors alike. Incumbent leaders with storage capacity and low costs might seem to be the winners as smaller competitors flounder. But they’ll fall victim to the longer-term behavioural shifts prompted by Covid-19.

Carmakers’ green future gets revved up by Covid-19

18 May 2020

The virus has added pollution fears to climate-change concerns. That should be a boon for electric vehicles when production restarts. But cheap oil makes gas guzzlers look even more economical. State incentives like trading in clunkers for EV discounts would help tip the balance.

Tesla pits electric-power hope against experience

14 May 2020

A big battery upgrade could soon make Model 3s as cheap as gas guzzlers, Reuters reports. That’d be a big leap ahead for electric vehicles and could also shake up utilities. But the infrastructure needs work. And boss Elon Musk has a history of overpromising and underdelivering.

Corona Capital: Air travel, Starbucks

14 May 2020

Concise views on the pandemic’s corporate and financial fallout: Airlines’ experienced hands offer warning; Starbucks begins dance with landlords.

Vedanta minorities can exact a better exit

14 May 2020

Tycoon Anil Agarwal wants to buy out a cash cow of his mining empire for $4.3 bln. True to form, the bid is opportunistically timed after a stock slump. Other shareholders have a route to improved terms but the group’s wider debt issues will limit how hard they push for more.

Aramco well placed for timid oil recovery

12 May 2020

The Saudi oil giant’s earnings slumped 25% in the first quarter, but its cash pile means it can keep dividends flowing. True, Aramco may not prevail in its Atlas-like attempt to prop up the world’s oil market alone. But there are tentative indications that it might not have to.

Climate activists get bigger bang from smaller ask

11 May 2020

U.S. fossil-fuel firms have been more resistant to shareholders’ demands on global warming than European rivals. But a majority of Phillips 66 owners just backed a climate vote that Exxon and Chevron will soon face. The activists’ success may be down to their more targeted scope.

Oil car crash highlights Aramco investors’ airbag

6 May 2020

The Saudi crude giant’s shares have fallen less than those of western peers. Shareholders’ scope to avoid the dividend cuts now hitting oil majors is one reason why. It helps that Riyadh may be able to borrow its way out of the crisis rather than have to drain its cash cow.

Trucks inch towards electric-vehicle critical mass

5 May 2020

Automakers have invested heavily in electric cars. But selling enough to justify needed infrastructure remains a chicken-and-egg problem. Putting batteries into the haulage fleets of Amazon, UPS and others could vault to a solution. A new report shows how utilities can help, too.

U.S. oil giants play chicken with shareholders

1 May 2020

Shell cut its dividend on Thursday and took a realistic outlook towards the fossil fuel’s future. But U.S. drillers are forging ahead as if the commodity’s only challenge is price. Without a thoughtful 30-year plan, Exxon and Chevron can only hope to tread water, at best.

Chevron is M&A-ready. Exxon, not so much.

30 April 2020

The oil-price rout has left small and mid-tier U.S. drillers in pain and ripe for takeovers. Major players are hurting too, but Chevron, though not as big as Exxon, has been more prudent with cash and debt, and its stock has held up better. Occidental may even be in its sights.

Shell’s dividend surrender is a necessary evil

30 April 2020

Given it hadn’t reduced shareholder payouts since WW2, the Anglo-Dutch major’s two-thirds cut hurts its pride. But amid an epic price crash boss Ben van Beurden couldn’t have kept Shell’s rating and paid to transition from oil. Stubbornly clinging on would have been even worse.

U.S. oil bailout should pay to still the drill

28 April 2020

The White House is mulling how to keep the fossil-fuel industry afloat. Emergency loans or equity stakes have many drawbacks. Compensating companies for keeping black gold in the ground has risks, too. But it would give Uncle Sam a semblance of control over demand and price.

Italy gives glimpse into post-pandemic dealmaking

28 April 2020

Politicians in Rome want to wed gas-grid operator Snam with power network Terna. Creating a 25 bln euro group would offer few cost savings and blur their industrial missions. It’s a sign that governments will want bigger, less-risky, more-diversified “champions” in the future.

BP’s dividend sangfroid may not last long

28 April 2020

The oil giant held its payout steady in the first quarter, despite crude prices falling off a cliff. CEO Bernard Looney has enough cash to keep it up this year. But debt has spiked and oil is now even cheaper. At the very least BP should let investors take dividends in shares.

Oil market inferno claims victims of all sizes

24 April 2020

This week’s price crash in U.S. crude looks an age-old example of small retail investors getting burned while savvy institutional players supply the matches. That does seem to have been part of the story. But some professional money managers probably also got singed.

Corona Capital: Primed debt, Lysol

24 April 2020

Concise views on the pandemic’s corporate and financial fallout: Senior creditors get “primed”; Reckitt Benckiser warns customers not to inject Lysol.

Russia’s oil-and-virus airbag is robust but finite

24 April 2020

The double whammy of a crude price collapse and Covid-19 could cause a hefty budget deficit. Moscow’s $170 bln wealth fund can plug a hole worth 5% of GDP if need be. The issue is more the optics of raiding the piggy bank while looking relatively stingy on subsidising wages.