EDF’s costly bid to divert Constellation from Buffett 3 Dec 2008 France s stateowned electricity giant is betting $4.5bn on a move to buy the US group s nuclear energy assets. The offer values the unit at twice the price it agreed to be bought by Warren Buffett in September. EDF investors are rightly unamused.
Lukoil unlikely to pay a fortune for Repsol 20 Nov 2008 Persistent rumours that the Russian oil and gas company is about to buy a 30% stake in its Spanish rival at a huge premium don t add up. Russia is struggling and funding is scarce in the markets. Even if the Russians came up with the cash, they might not be welcome in Madrid.
TXU’s PIK-toggle surprise batters bondholders 5 Nov 2008 Even stablelooking buyouts like the Texas utility are flicking the switch on PIKtoggle debt. That causes bondholders even savvy ones like Warren Buffett grief. Bondholders should steer clear of issues with these options, no matter how unlikely their exercise appears.
Shell comes of age 4 Nov 2008 The scale of the culture change at the AngloDutch company is remarkable. In 2004, the company was a twoheaded monster which seemed to have lost its way in national fiefdoms. But now neither chief executive nor chairman is British or Dutch. This change is welcome.
Ethanol producers black out after binge 3 Nov 2008 Verasun is just the latest US alternative fuel company to go bust. It won t be the last. Collapsing gasoline demand and ethanol oversupply will cause others to crash and burn.
TCI defeat over J-Power pulls the plug on an era 31 Oct 2008 The famously combative hedge fund has sold its 9.9% stake back to the Japanese electricity company for a $110m loss. Its attempt to export activism to Japan always looked ambitious. The ignominious retreat signals that the heady days of hedge fund aggression are over.
New Shell boss inherits (relatively) cushy job 30 Oct 2008 The oil and gas company has come a long way since its 2004 reserves debacle. It will soon start harvesting a big pipeline of complex projects. The challenge for incoming chief executive Peter Voser is to manage these on a tight budget. It should come naturally to a finance man.
Exxon profit could follow oil south 30 Oct 2008 The oil giant raked in a Q3 profit of $14.8bn. With oil peaking in July and staying above $100 a barrel for most of the quarter, it s no surprise Exxon once again broke its earnings record. But lower production and falling prices could make this trend hard to sustain.
Russian energy sector gets $20bn Chinese lifeline 28 Oct 2008 The Chinese government is helping stateowned Rosneft with a multibillion line of credit, in exchange for a longterm supply contract. Russia s cashstarved energy majors might prefer to rely on their own government. But they need outside help to repay $70bn of foreign debt.
BG may be better off with second best 28 Oct 2008 The UK gas firm has pounced on smaller Australian gas producer Queensland Gas for $3.1bn after it lost out to Conoco for Origin, the bigger prize. But BG´s second option isn t necessarily second best: it has less downstream, and leaves BG less financially stretched.
Oil prices will cause pain – whatever they do 24 Oct 2008 Rapid global and looming recessions mean even Opec s announced cuts may not stop crude from falling. Even if the cartel holds the line on prices, tottering consumption in importing countries could fall further. But cheaper oil would add to financial market strains.
Expect more opportunistic bids among US utilities 20 Oct 2008 The popping of the energy and debt bubbles hit utilities too hard. Many are now valued below replacement cost. Exelon s $6.2bn bid for NRG will be difficult to pull off, but the economics are extremely appealing. There will be imitators.
How does Google’s green push help shareholders? 2 Oct 2008 The search giant has announced a plan to wean the US off fossil fuels clearly a worthy goal. But it could also prove a distraction for the company s executives. Google should consider its shareholders before trying to save the world.
Sacyr garage sale is in full swing 25 Sep 2008 The indebted Spanish company has slapped a for sale sign on several assets, including 20% of Repsol. But selling the holding won t be easy. Buyers look scarce, even if it could be a stepping stone to taking control of the Spanish oil company.
Buffett’s MidAmerican swoops in on Constellation 18 Sep 2008 The regulated US utility became a big energy trader. It depended on credit, but rising leverage undermined its rating. That made it vulnerable to the credit crunch. Warren Buffett s MidAmerican rode to the rescue, driving a hard bargain. It probably won t be his last.
EDF squares British Energy circle – for the brave 18 Sep 2008 EDF s £12.5bn agreed offer for British Energy gives investors just 1% extra in cash, at 774p a share. The CVRs could boost the value to 1275p, but only on heroic assumptions about prices and output. Not instruments for the fainthearted. Many will take the money and run.
Iraq not quite ready to run with Big Oil 9 Sep 2008 It is making a baby step in a deal with Shell. But the government hasn t yet worked out exactly how it will share the oil wealth with foreign oil companies. Meanwhile, these companies have a long way to go before they will feel secure putting money and people into the country.
Opec tries to anchor oil at $100 9 Sep 2008 Saudi Arabia, the cartel s thought leader and swing producer, believes the world can take tripledigit crude. The roundnumber target seemed mad a year ago, but after a spike to $147 and resignation about inflation it looks almost moderate. This line might hold for a while.
Conoco puts BG under high pressure 8 Sep 2008 The US major has offered A$9.6bn for half of Origin Energy s coal gas assets, trumping BG s offer of $14bn for the whole thing. BG isn t out for the count, since it has cash and certainty on its side. But beating Conoco s offer will be costly.
BP has been punished long enough 3 Sep 2008 The oil giant has deservedly underperformed rival Shell for the last two years. But it has worked hard to fix operational problems, and a resolution to the dispute over its Russian joint venture looks likely. What s more, BP is spending less than Shell to deliver higher growth.