Oil bankers get over-excited about M&A 28 Apr 2005 The Chevron/Unocal and Valero/Premcor mergers have raised hopes that a series of mega copycat deals will follow soon. The idea is fuelled by the idea that high oil prices are here to stay. Yet historically, consolidation takes place when oil prices are low.
Chinese revaluation would keep oil prices high 18 Apr 2005 The west is worried about oil prices. It is also worried about China s fixed exchange rate. But solving the latter might worsen the former. A renminbi revaluation would cut China s oil import bill. But these savings could support an even bigger Chinese thirst for oil.
EDF faces Italian dilemma 8 Apr 2005 The French group is at a crossroads. It can either sell all of its Edison unit to Endesa, or share control with an Italian utility. EDF may prefer a partnership, to avoid a retreat from Italy. That could give the Italians an edge, even if they offered a lower price.
Will Enel’s fourth tranche deliver gains? 6 Apr 2005 The sale of a fourth chunk of the Italian utility will raise lots of interest given the cracking returns investors made on the last tranche. But now that Enel s restructuring is largely complete, future returns are likely to be more modest.
Fuel subsidies are a problem but not a solution 4 Apr 2005 The IEA wants to eliminate the distortions caused by belowmarket energy prices in developing countries. That makes sense. But the effect of subsidies is too small for cuts to make much difference to oil demand. Higher taxes are likely to be more effective.
Small oil stocks are overvalued 3 Apr 2005 Soaring oil prices and one or two lucky finds has put a gusher under smallcap oil exploration and production companies. It s not just cash shells or tiddler companies that are soaring. Shares of relatively large firms have also hit the roof.
Spain’s Union Fenosa soars on bid rumours. 21 Mar 2005 Draw up a checklist for what might make a company a hot M&A candidate in Spain, and the midsized utility has it all. Fenosa may not be sold today and its biggest investor has said as much. But with its credentials, Fenosa will sell at some point.
Suez should spin off Electrabel. 10 Mar 2005 The French group has owned half the Belgian utility for years. The plan was to end this inefficient arrangement by taking full control. But a better plan would be for Suez to give its Electrabel stake to its own shareholders.
Gazprom merger hits another speed bump 4 Mar 2005 The Russian gas giant has fallen out with oil firm Rosneft over their proposed merger, a central plank of Moscow s energy strategy. Such problems are to be expected from such a controversial deal, but they are not enough to stop it. Moscow remains too committed.
US oil producer Unocal attracts suitors far and wide 4 Mar 2005 It s a dowdy asset made sexy by the difficulties of oil majors to boost reserves and the desire of developing nations to secure supply. The risk for ChevronTexaco or others, coming after China s interest, is that they may find themselves bidding against an irrational buyer.
Markets return from winter holiday 23 Feb 2005 Financial markets have generally been optimistic since the beginning of 2005. Shortcovering coincided with New Year s cheer. One bad day does not mean that pessimism will prevail. But rising US rates and the enormous US trade deficit justify a gloomy prognosis.
EDF may face two more Italian taxes 22 Feb 2005 The French giant wants to avoid buying all of Edison, its Italian venture. That may mean selling a stake to Italian groups on the cheap. EDF also wants Italy to lift a 2% voting cap on its Edison stake. To secure that, it may have to give Italian rival Enel access to France.
Is the world running out of oil? 15 Feb 2005 A glance at oil firms latest results suggests so. None of the majors fully replaced the oil that they pumped last year with fresh reserves. Yet the problem is not the level of reserves, but how they are counted. The industry lacks an acceptable common standard.
Saudis act to preserve oil kingpin status 14 Feb 2005 The mulled plan to hike production by 50% is designed to push up market share and crowd out expensive nonArabian exploration. Rich countries might like the lower prices. But will they want to keep so many eggs in the fragile Saudi basket?
BP shines next to Shell 8 Feb 2005 BP is growing production and replacing reserves faster than Shell. Best of all, it has increased its dividend by 26% in dollar terms. By allocating more cash to dividends, BP has signalled that it believes it can sustain this outperformance.
Good may yet spring from bad in Yukos debacle 7 Feb 2005 On the face of it, Russia could do what it wanted with Yukos oil assets. Yet reality proved more complicated. This is a good thing. The contortions that the Kremlin has gone through to maintain a semblance of propriety make any similar action more unlikely.
Shell earnings hit the roof; reserves hit the floor 3 Feb 2005 The oil giant tripled profits in the fourth quarter. Dividends are up, and share buybacks are to start again. But there is a sting in the tail. Shell s reserves replacement rate has fallen again.
Investors should be more bullish about oil stocks 31 Jan 2005 The worry is that last year s bumper profits are solely due to high oil prices, which mask deep problems the industry faces. This pessimistic view is a hangover from the oil glut of the late 1990s, when crude prices tanked. It is time the mindset changed.
British Energy’s comeback ignores risks 17 Jan 2005 After a painful restructuring, the UK nuclear generator has returned to the stock market with a valuation less than half its previous peak. But this still looks generous, given the challenges ahead.
BP takes Yukos’ place as Russian oil bellwether 17 Jan 2005 The Yukos debacle may have accelerated capital flight from Russia, but TNKBP is moving the other way moving onshore and listing. This is designed to promote it as a good corporate citizen. With so many assets in Russia, that's probably the logical thing to be.