Big Oil hits its peak 26 Oct 2006 Lower energy prices are not the only threat to the future profitability of large oil firms; costs are soaring too. That's taken its toll on sector valuations, but at least share prices are now cheap one reason to expect another wave of consolidation.
France must pay for Suez-GdF merger agreement 23 Oct 2006 Suez and GdF have been overcoming their differences since the GdF chairman threatened to resign. The only sticking point now is price. Suez had to make concessions to get EU approval. But its shareholders are still demanding better terms and should get them.
Shell offers $6.8bn for Shell Canada minorities 23 Oct 2006 By taking full control of its Canadian subsidiary, the AngloDutch oil group should be better able to tackle its spiralling cost problems. Shell Canada shares have slumped this year so Shell is hoping the offer of a 22% premium will be enough to persuade investors.
Cheaper oil may fuel energy M&A 17 Oct 2006 As oil prices fall and drilling prospects dryup, don t be surprised to see conservative oil majors return to the acquisition trail. Energy companies like ExxonMobil are starting to window shop. But if prices continue to fall, big deals may be in the offing.
Sacyr joins in Repsol stitch-up 17 Oct 2006 The Spanish construction firm has joined forces with La Caixa to forestall a bid for Spain s beleaguered oil and gas company. Thanks to some aggressive financing by Santander, Sacyr's 9% stake is not as risky as it looks. But it's bad news for Repsol's minorities.
British Energy leak puts government sale in doubt 16 Oct 2006 It s been one thing after another at the UK nuclear group ever since the government announced earlier this year plans to sell its 65% stake. Following the latest leaks at two reactors, the stake s value is now 40% below its peak. And an imminent sale must be unlikely.
France will have to pay to rescue Suez-GdF merger 16 Oct 2006 The big energy deal is on the rocks. Frictions are increasing between the companies, and asset disposals will be greater than expected. GdF management feels shortchanged, and so do Suez shareholders. But the French government cannot afford to see the merger fail.
Pinault’s hostile interest in Suez breaks French taboo 12 Oct 2006 The billionaire's readiness to pay E18bn for Suez's water interests in a breakup shows how the French fortress mentality is splintering. Pinault's scheme may come to nothing. But it strengthens the case of Suez shareholders to get better terms from merging with GdF.
EU regulators play tit-for-tat with Gazprom 12 Oct 2006 This may be political concerns dressed up as regulatory ones. But, ultimately, both sides need to find some way to cohabit on energy. Russia is making it hard for western oil firms to operate; now Brussels says Gazprom could face antitrust issues if it expands into Europe.
Gazprom snubs foreigners on gas deal 10 Oct 2006 While this might ease supply concerns in Europe, it will also redouble Russia s efforts to capture direct access to European gas customers. The decision to develop Shtokman alone is another example of resource nationalism. The gas will now go to Europe, rather than the US.
Opec can get its way for a while 9 Oct 2006 The oil producer s cartel wants to defend $60 per barrel oil. It s not impossible. Demand and supply are well balanced at that price. But not forever. The cost of new oil production is much lower. The lure of profits will eventually prove stronger than the will of Opec.
Gas Natural goes speed-dating 4 Oct 2006 The Spanish utility is rumoured to have its eye on EDP, the Portuguese electricity champion, in case it can t get a Spanish mate. But a deal with EDP would probably be the leastpreferred option. It could also run into all sorts of tricky political and control issues.
Kinder buyout sets a poor example 3 Oct 2006 That's why they should inform the board promptly of MBO plans. Kinder Morgan seems to have been tardy on this score. Executives contemplating a buyout may find themselves torn between maximising shareholder value and snapping up their company on the cheap.
Refinery stocks look cracked 2 Oct 2006 The recent decline in oil and petrol prices has hit shares of refiners like Valero and Tesoro hard. Yet despite a slight recent recovery, crack spreads suggest refinery stocks have yet to hit bottom.
Gazprom bear hug on BP-TNK is not all bad news 29 Sep 2006 The Russian gas giant has for the first time openly said it would like to buy out BP s local partners at TNK. That is mixed news. Gazprom could unlock BP s stalled Russian projects. But it might also leave local rivals jealous. Rosneft might want a slice of TNK too.
How do you finance Europe’s biggest cash bid? 28 Sep 2006 Quite easily. E.on can raise most of the E37bn cash it needs to take over Endesa by piling on more debt and still keep a singleA rating. The Germans should be able to make up the balance with a rights issue, asset sales and, possibly, hybrid capital.
Spanish firms’ voting caps should be scrapped 28 Sep 2006 Talk that La Caixa might buy an Endesa stake, however erroneous, has focused attention on a bylaw that may its deny investors a juicy bid. Endesa s voting cap is a silly rule that should be scrapped. Such caps are supposed to protect minorities. The opposite is true.
E.on forced to raise Endesa bid by nearly 40% 27 Sep 2006 The German utility couldn't sit by and allow Acciona to snap up Endesa shares as that could have torpedoed its own bid. By raising aggressively, E.on may knock out the competition. But the move looks valuedestructive.
Acciona launches shock dusk raid on Endesa 26 Sep 2006 The Spanish construction firm has bought 10% of Spain s power company, and says it might go up to 25% bankrolled by Santander. The latest twist in the Endesa bid battle raises the stakes dramatically for E.on, the German bidder. It all points to a Spanish plot.
GdF-EdF merger initiative is nonsense 19 Sep 2006 Some French MPs close to Nicolas Sarkozy are reviving an old project to merge the two companies and keep them in state s hands. The project is financially barmy. It is merely a political ploy that will make the current GdF privatisation debate more confusing.