EU oil majors set to delay tough dividend calls 27 Jul 2015 All the European majors except Eni will cut capex and costs before they let dividends fall. But to judge from the 6 pct average yield, investors aren’t persuaded the profit prospects justify the current payouts. Unless the oil price rises, the scepticism looks merited.
Politics is weak ally in K+S fight against Potash 22 Jul 2015 Regional politicians are siding with German fertiliser group K+S in its attempt to deflect a 9.5 bln euro offer by Canada’s Potash Corp. But apart from vocal interventions, policymakers can do little to foil a deal. With credible job guarantees, Potash can force K+S into talks.
Chesapeake makes for lousy canary in pipeline 21 Jul 2015 The gas producer cited low prices as it suspended quarterly payouts, the first large U.S. energy company to do so. Heavy debt and expensive contracts mean Chesapeake is a poor proxy for the industry, however. For now at least, other big drillers can avoid the same painful step.
Conoco’s shrinking ambitions may make it a target 17 Jul 2015 Low oil prices and heavy debt are forcing the $71 bln U.S. driller to sacrifice deepwater exploration for a higher share dividend and less risky projects like shale extraction. Unless crude rebounds, more diversified rivals like Chevron and Exxon could be tempted to pounce.
Mexico oil sale can handle underwhelming start 14 Jul 2015 The government may award just a handful of 14 contracts on offer as it starts to open up the sector. That’d be no disaster. State-owned Pemex and others are waiting for richer pickings. And Mexico is adapting to investor concerns. A goal of $50 bln of investment may yet happen.
Iran nuclear deal is huge potential step forward 14 Jul 2015 The hope is that the 100-page agreement will help keep oil cheap, spur rapid growth in the Iranian economy and lead to less fighting in the Middle East. But sanctions can be revived quickly if things don’t go to plan. Mistrust remains endemic. Optimists will have to be patient.
Energy deal treadmill has bounce left in it yet 13 Jul 2015 Marathon Petroleum’s pipeline unit will pay $15.6 bln for gas processor MarkWest. It’s fresh evidence that energy-sector partnerships crave big deals that lower capital costs and boost payouts - despite two prominent rivals’ attempts to pull the plug on the structure.
Oil is grounded in a sub-$60 bear market 7 Jul 2015 Brent crude fell over 6 percent on the back of worries about Greece and the prospect of an Iran nuclear deal. The latter has a much bigger, if delayed, impact. As U.S. shale drillers cut costs fast and Saudi Arabia goes for volume, ample supply is likely to keep a lid on prices.
Potash Corp may have to go too far to get K+S 3 Jul 2015 The Canadian fertiliser giant is willing to bid $10.5 bln for its German peer. It will need to improve its offer and give credible job guarantees to win over the target. But these concessions could become contradictory. A higher price implies Potash will need bigger cost cuts.
BP may now get closure on Gulf spill 2 Jul 2015 The UK oil major has settled claims with the U.S. government and five states for $18.7 bln. It brings the total bill to $53.8 bln. But it could have been worse and it’s payable over as much as 18 years. It may also mean BP can finally put the Deepwater disaster behind it.
Iberdrola’s American dream gets harder to realise 2 Jul 2015 The Spanish utility’s $3 bln takeover of listed U.S. peer UIL has been dissed by the Connecticut regulator. Iberdrola can probably offer concessions to get the deal done. But the costs of doing so risk making its attempt to crack the fragmented American market less attractive.
Dirty coal deal dents Merkel’s climate credentials 2 Jul 2015 A costly compromise protecting carbon-heavy lignite has sent RWE shares up 5 pct. But it puts Berlin’s ambitious 2020 emission goals at risk. Angela Merkel’s green credentials are suffering just when she needs them to push for consensus at December’s crucial Paris climate summit.
Potash Corp’s German foray reflects cartel woes 26 Jun 2015 The Canadian group that controls a fifth of global potash wants to buy K+S for over 7 bln euros. Success would give Potash Corp its German rival’s new Canadian mine and more pricing power. With a Russian cartel in flux and BHP also a threat, the move looks defensive.
Endesa LBO merchants may fall between two stools 26 Jun 2015 Private equity funds eyeing Spanish energy utility Endesa might need to go big to get anywhere at all. There’s reported interest in buying a chunky stake from Italy’s Enel. A takeover costing 29 bln euros with debt would make more sense. But that could prove too gutsy.
Mega-rejections signal M&A’s Taylor Swift moment 22 Jun 2015 U.S. health insurer Cigna brushed off a $54 bln takeover bid from Anthem while pipeline operator Williams spurned Energy Transfer’s $53 bln approach. Meantime, the 25-year-old pop idol forced Apple to pay up for music. In a hot market like this, love won’t be unrequited forever.
Vedanta could pay more for Cairn India 15 Jun 2015 The debt-laden Indian miner wants full control of its cash-rich oil subsidiary. The fate of the $2.3 bln all-share bid hangs on Cairn’s two big outside investors. If they object, Vedanta could afford to lift the skinny 7.3 pct premium by paying more in preference shares.
Forget ethics, carbon divestment looks profitable 11 Jun 2015 Norway’s state fund and insurer AXA are ditching carbon-rich companies. The rhetoric may be ideological, but the economic case against coal and legacy utilities is strong. They face tough challenges, even if political action against climate change remains lacklustre.
G7 carbon coup worsens Merkel’s domestic coal woes 9 Jun 2015 Prodded by the German chancellor, the big rich nations’ leaders have pledged to get rid of all fossil fuels by 2100. But at home, her party has joined the unions in fighting a crackdown on heavily polluting lignite. Merkel risks undermining her credibility – and the G7 deal.
Why the oil price will fall again 1 Jun 2015 Most industry observers expect a slow climb from the current levels. But global supply is rising, as U.S. shale drillers cut costs fast and Saudi Arabia and others go for volume. With non-U.S. shale on the horizon, $65 a barrel for Brent looks more like a ceiling than a floor.
Real cost of Hong Kong mega-slump: under $3 bln 22 May 2015 The mystery collapse of Hanergy, Goldin Financial and Goldin Properties wiped $44 bln off their market values in two days. But actual losses for those who bought during the rally in recent months are far smaller. Big numbers aren’t always what they seem – especially in China.