Poland’s coal mine meddling saps its credibility 5 Oct 2015 Premier Ewa Kopacz’s Brazilian-style intervention in the country’s energy sector has seen one state-controlled company replace defiant executives. It may soothe irate unions with elections imminent. But it’s far from what Poland’s capital markets and vibrant economy need.
Spain’s Big Oil beast has balance sheet work to do 2 Oct 2015 Repsol’s balance sheet looks stretched. It’s good it has exceeded its $1 bln asset sale target but the $13 bln Talisman deal leaves a burden. It will struggle to finance capex and dividends in a $50- $60 oil environment. It needs a game plan for its forthcoming strategy day.
Carney hits potential sustainable-finance goldmine 1 Oct 2015 U.N. goals, a U.S.-China pact and papal concern are all fine ways to highlight global development issues. The problem is financing the $4 trln a year needed to solve the issues. The BoE governor’s idea to make companies lay out climate-change risks is one promising approach.
Glencore shares priced for commodity apocalypse 28 Sep 2015 The Swiss trader’s shares fell by a quarter after an analyst suggested its equity could be worthless. The fear rests on cataclysmic maths. But Glencore’s quirky model means its valuation is highly dependent on confidence in management – a resource that is much depleted.
Shell’s Arctic retreat better late than never 28 Sep 2015 The Anglo-Dutch major faces a write-off of up to $4.1 bln after ditching oil and gas exploration in Alaska. Environmentalists will be happy. But if the group wants to bed down BG and ride out low oil prices, investors should cheer the demise of costly and brand-dilutive forays.
Abengoa cash call keeps it from emergency room 24 Sep 2015 The Spanish engineering firm’s main creditors will underwrite a dilutive 650 mln euro rights issue to cut debt. It will also sell assets, cancel the dividend and the founding family will lose control. That helps restore credibility but Abengoa needs to show it can deliver.
Glencore model is battered but not broken 14 Sep 2015 Ivan Glasenberg’s mining creation has been wrong-footed by commodity prices, China, and shareholder worries about debt. The pressures may undermine Glencore’s premium valuation and its penchant for doing big deals. Its mix of trading and mining, however, is logical and robust.
Nuclear waste contaminates E.ON breakup plans 10 Sep 2015 The stricken German utility’s attempt to free itself from the burden of dismantling its nuclear power plants has failed. E.ON will only hive off fossil assets and energy trading. Shareholders remain exposed to the risk that long-term cleanup costs may exceed group provisions.
China carbon scheme another case of faulty markets 10 Sep 2015 It’s not just stocks and exchange rates that are proving hard to control. Seven pilot schemes for trading carbon dioxide emissions are floundering due to cheap permits, low liquidity and flexible deadlines. In this case, state intervention may be better than supply and demand.
Russia has levers to cope with oil squeeze 3 Sep 2015 A low oil price will dent growth and public revenues, and Russia needs rebalancing. Yet President Vladimir Putin can hold the line by drawing on reserves and even inflating regional deficits, while the rouble’s fall helps competitiveness. That could enable a fragile equilibrium.
Why oil investors are so behind the curve 2 Sep 2015 Investors used to assume that the cost of pulling oil out of the ground was relatively static – or changed slowly. Reality is slipperier. Rethinking the way the “cost curve” works may help explain recent gyrations in oil and other commodity markets.
Freeport-McMoRan leaves Carl Icahn lots of targets 28 Aug 2015 Big cuts in spending and staff sent the struggling miner’s stock soaring – just before the activist revealed an 8.5 pct stake. The pre-emptive strike won’t be enough to satisfy the feisty billionaire. High debt and low commodity prices suggest he has asset sales in his crosshairs.
Lower oil will unclog more pipeline deals 28 Aug 2015 For oil majors desperate to protect their dividend, selling non-core infrastructure not linked to oil prices is a no-brainer. There is plenty of interest from investors, as Total’s pipeline sale in the North Sea shows. That should help overcome thorny deal issues.
Shell-BG merger still works with cheap oil 27 Aug 2015 The tumbling oil price has raised fears that Shell shareholders might balk at the $70 billion the Anglo-Dutch energy group agreed to pay for smaller rival BG. While the premium may now look bigger, so should the cost savings, even now that black gold has lost its shine.
Schlumberger’s daring deal looks carefully hedged 26 Aug 2015 The oilfield services provider is moving outside its comfort zone to buy drilling gear maker Cameron for $15 bln even as the price of crude falls. The 56 pct premium is flattered by the market selloff and covered by cost savings. Schlumberger may have threaded the M&A needle.
Miners’ dividends are a fragile commodity 25 Aug 2015 BHP Billiton has raised its payout even as prices fall. That helps win investor support for its aggressive iron ore production strategy. Yet across the sector, funding generous payouts will become tough unless supply and demand rebalance. There is little to suggest they will.
Oil has room to get even more irrational 24 Aug 2015 The plunge in WTI to below $40 a barrel leaves most of the U.S. shale industry unprofitable and budgets of many countries in the red. Yet cost cuts, currency devaluations and tolerance for losses keep black gold pumping. That may anchor oil at what seem like unsustainable prices.
RWE reform spark smothered by politics 10 Aug 2015 The stricken German utility plans to cut red tape, but it really needs to cut staff. EBITDA per employee has fallen 28 percent since 2010. While rival E.ON has opted for a radical breakup, RWE would struggle to sell tough action to its political shareholders.
Oil price slide complicates life for central banks 4 Aug 2015 Brent is back down at $50 a barrel. Bond prices show this is eroding investor confidence that inflation will pick up. Central banks usually ignore the temporary impact of commodity price swings, but can’t afford to be complacent with inflation and policy rates already so low.
Challenges to U.S. carbon rules won’t save coal 3 Aug 2015 President Obama will unveil new pollution caps for power plants on the same day a big coal miner, Alpha Natural Resources, filed for bankruptcy. The limits are riling energy industry supporters, but for coal it’s economic pressures, not politics, that are causing the pain.