Sarkozy pulls rug from under Suez/GdF deal 13 Jun 2006 The French interior minister has spoken out against the merger of Suez and Gaz de France, making it that much harder for it to go ahead. But his proposed alternative that the two groups should buy stakes in each other is crackers and will destroy massive shareholder value.
Is Browne right to expect lower oil prices? 12 Jun 2006 The BP chief doesn t think peak oil production is at hand. So he anticipates an oil price of $40 per barrel. Or even $25 in the long term. But is he right? Possibly, as far as supply and demand are concerned. But politics and inflation could get in the way. The BP chief sees a mediumterm oil price of $40 per barrel. And a possible fall to $25 in the long term. True, the current high price is stimulating supply and constraining demand. But politics will have the last word.
Verasun IPO fuelled by ethanol exuberance 12 Jun 2006 A crop of ethanol producers is fetching premium IPO valuations. But their growth is predicated on unsustainable ethanol prices. As Alan Greenspan noted this week, the economics of the business aren t there. Investors may be in for some nasty surprises.
French Suez shambles revives Enel bid hopes 7 Jun 2006 The French government is in disarray over the privatisation of GdF, and there s now a real chance the merger with Suez will fall apart. That might make Suez shareholders more amenable to a bid from Enel, which has not gone away. But Enel must be careful not to overpay.
Kinder Morgan founder’s $22bn MBO offer looks cheap 30 May 2006 Richard Kinder is offering an 18% premium to take private the energy company he founded a decade ago. That looks low. The stock is already above the offer price. Kinder s 18% stake might discourage other bids, but the board should push for a better deal.
Enron duo found crooked at long last 25 May 2006 The convictions of Ken Lay and Jeffrey Skilling were no surprise and were not based on the nuances of style or demeanour. Evidence that the company s finances were shaky and that the defendants lied to hide the facts was simply overwhelming.
OMV scraps ridiculous merger with Verbund 24 May 2006 The Austrian oil group s planned takeover of its compatriot utility was a clumsy attempt to create a national champion. Combining the two made little industrial or financial sense. The resulting fall in OMV s share price destroyed the political logic too.
Mining sector sell-off is overdone 23 May 2006 Most mining stocks have underperformed the market this year. Yet even after the last week, metals prices are up massively. That s left mining stocks looking cheap. Xstrata understands this, which is why it is paying cash for Falcobridge.
Rosneft investors should demand a big discount 21 May 2006 The Russian oil group s IPO will highlight how much money the Kremlin made from the seizure of Yukos s assets. Russia showed scant regard for international investors interests then. Who can be sure it won't happen again?
Will someone put Repsol out of its misery? 11 May 2006 The Spanish oil and gas company has had a rough few months with a 25% cut in reserves and nationalisation in Latin America. Bidders may be holding off until all the bad news is out. But a deal would make sense.
Austria creates E29bn energy giant 10 May 2006 The marriage of oil and gas company OMV with utility Verbund looks to be one of convenience. The industrial logic isn t really there. It s hard to avoid concluding the Austrian government, which would own about 40% of the beast, has pushed its two champions together.
Shell promises more jam tomorrow – maybe 4 May 2006 To compensate Shell is offering more jam today through buybacks and dividends but at a fraction of BP s levels. The oil firm is investing hand over fist, but says rising costs may jeopardise its long term reserves and production targets.
Bolivian nationalisation adds to pressure on oil prices 2 May 2006 But history suggests their own economies will suffer the most. Longerterm, weaker supply is likely to lead to even higher oil prices. High oil prices are tempting populist leaders such as Bolivia s Morales and Venezuela s Chavez to sieze control of their energy industries.
Oil investors should beware of the super contango 2 May 2006 Rising crude prices and a flood of speculative money has ensured that the oil show has played to packed audiences. A steepening of the oil market s current contango into a super contango could see investors suddenly rushing for the door.
Echoes of dot-com era heard in emerging markets 28 Apr 2006 One day Dmytro Firtash is afraid to disclose his ownership of a lucrative gas trading company. The next he s planning a London IPO. It s a rapid change. But he has little to fear from London investors. Enthused for Russian stocks, they are failing to ask tough questions.
There’s still money left in BP 25 Apr 2006 Capex may be rising and production falling, but thanks to the oil price, BP is throwing off prodigious amounts of cash. But BP s shares are still only discounting an oil price in the low $40's per barrel. That s far too pessimistic.
What should Russia do with its petrodollars? 19 Apr 2006 The World Bank thinks Russia should spend them on foreign assets including equities. Russia does need to invest outside its energy sector. But its petrodollars would be better spent at home in building up a broader economy.
Oil price still doesn’t reflect Iran crisis 18 Apr 2006 At $70 a barrel, the price is up by 25% over the last year. That makes it a laggard among commodities. The oil price would rocket with even mild Middle Eastern chaos. But the standoff over Iran s nuclear plans makes chaos much more likely.
Total gets better of Santander in Cepsa war 4 Apr 2006 The two sides fell out when Santander tried to force Total to buy it out of the Spanish oil company in 2003 by raiding the shares. The French have seen off the Spanish bank through the courts, ending up with near control on juicy terms.
Enel bid may flounder through lack of political support at home 22 Mar 2006 The Italian centre left, which is likely to take power next month, now seems at best lukewarm about Enel making a hostile bid for Suez. If Enel's board postpones a decision on whether to bid until after the April elections, that may be the end of its ambitions.