German utilities are living on borrowed time 21 May 2015 Berlin is likely to water down a proposed levy on carbon-rich lignite coal plants. But that’s just a short reprieve for stricken legacy utilities like RWE and Vattenfall. Germany’s ambitious climate policies still mean many coal-fired plants will have to go off the grid early.
Mystery sell-offs test Hong Kong at crucial point 21 May 2015 Regulators are probing Hanergy, whose $40 bln value halved in a morning. Two once-hot stocks backed by Goldin Group have also plunged. Hong Kong wants to act as a gateway to China for global investors. So maintaining a transparent, orderly market is more important than ever.
Shell’s LNG gamble with BG has sound logic 14 May 2015 The Anglo-Dutch energy major is betting big on liquefied natural gas via its $70 billion bid for rival BG. Demand for LNG is weak and the market is oversupplied. But the newly merged company would draw sizeable benefit from supply flexibility and added scale.
Elon Musk plugs Tesla valuation into the grid 1 May 2015 The Silicon Valley billionaire’s new home battery system is, like his electric cars, too pricey for many. But if costs keep falling, Tesla’s Gigafactory runs smoothly and the solar market expands, shareholders may find there’s more spark in batteries than vehicles.
Downstream cushions Shell while it waits for BG 30 Apr 2015 Like BP and Total, profit from refining and marketing limited pain from low oil prices for the Anglo-Dutch major. Short term, it will struggle. But there is value to be had from the $70 billion tie-up with BG. The deal synergies could well be higher than advertised.
BP and Total find downstream respite 28 Apr 2015 Strong results in refining and marketing limited the profit fall at the two European majors. With the oil price down, the gains are especially welcome. But downstream overcapacity will bite in the medium term, while upstream businesses remain hostage to the oil market.
Petrobras $17 bln charge lances festering boil 23 Apr 2015 The long-awaited writedown puts a concrete figure on years of corruption and mismanagement. The number looks big enough to satisfy investors, but shows the Brazilian oil giant’s problems go well beyond graft. It’s a start toward rebuilding financial and political confidence.
Brussels gains by bashing Gazprom 22 Apr 2015 The European Commission belatedly charged the Russian gas giant with abusing dominant positions. Gazprom has other, bigger headaches. But watchdogs gain credibility by taking on such a politically sensitive target. And Europe shows its commitment to a joined-up energy market.
Weak U.S. Q1 more a blip than reason to flip 20 Apr 2015 The New Year began with a shrug, as growth appears to have slowed from late 2014’s robust pace. The economy hasn’t felt the expected bump from cheap gasoline. Instead the shrinking energy sector provided a headwind. Look for signs of life this spring, from housing to spending.
Buyout barons find new ways to drill into shale 15 Apr 2015 Apollo, Carlyle and KKR suffered because of oil’s plunge, but such firms are on the hunt for investments in the sector. Energy companies may be reluctant to sell at distressed prices. Creative structures like those used recently by Blackstone and EIG could ease the way for deals.
Shell-BG bargain evaporates on closer look 13 Apr 2015 The target’s shares are trading at a tantalising 10 pct discount to Shell’s bid. That suggests a big arbitrage opportunity. In fact the gap is explicable: this is a year-long deal that must jump many hurdles, and Shell’s owners will get more dividends in the meantime.
Shell’s BG pounce puts major rivals on the spot 8 Apr 2015 The energy giant’s $70 bln swoop on its UK competitor may draw counterbids from Exxon or BP. The former hinted it’s open to a mega-deal, and the latter needs to get bigger and dilute exposure in Russia. BP could even be a target, though Conoco and Anadarko make easier prey.
Shell could win from bold $70 bln swoop on BG 8 Apr 2015 The oil major is offering a fat 50 pct premium for its UK rival. But the share price was depressed and the synergies are attractive. The deal could prove a smart and opportunistic way to boost growth via deepwater assets and liquid natural gas – provided Shell keeps costs down.
Shell-BG highlights rise of the micro-boutiques 8 Apr 2015 The $70 bln deal needed just three advisers: Merrill, Goldman, and minnow Robey Warshaw. Rivals like Zaoui & Co have also won major mandates. For big M&A shops, two worrying trends are intersecting: CEOs seem ready to hire fewer banks per deal and to use much smaller outfits.
Coal IPO may buck broader U.S. industry downturn 1 Apr 2015 Consol is preparing to float some anthracite assets. Coal is a troubled business, but the $6 bln U.S. energy group’s mines need little investment and make money at current low prices. And the stock offering is also being packaged as an MLP, which brings some handy tax benefits.
U.S. oil company drills to new depths – in markets 24 Mar 2015 Whiting Petroleum is raising up to $3.2 bln of new equity and bonds after failing to find a buyer. The deeply discounted share issue will slash debt added as part of the recent acquisition of rival Kodiak. The dilution stings, but getting ahead of the industry rush also is wise.
BHP takes no chances with South32 spinoff 17 Mar 2015 The new mid-sized miner will emerge with comparatively little debt. While BHP Billiton is spinning off unloved assets, South32’s balance sheet will be strong enough to allow new investment. The low gearing could also make it an attractive takeover target for a debt-funded bidder.
E.ON woes run against spinoff hope 11 Mar 2015 Germany’s biggest utility made a 3.2 bln euro loss after big writedowns last year. EBITDA is still falling. Investors seem unfazed, encouraged by E.ON’s plan to hive off coal, gas and nuclear plants. But it will take ages for any benefits to materialise – if they come at all.
Wood Mackenzie’s pipeline defies oil rout 10 Mar 2015 The research firm is fetching $2.8 bln, or 17 times EBITDA, from U.S. analytics company Verisk. WoodMac has gushed profit for several buyout firms. The global energy squeeze presents a risk for the new owner, but demand for data seems to persist regardless of crude supply.
RWE’s last, dim hope is political support 10 Mar 2015 The stricken German utility is more than keeping its promises on restructuring. But the company’s operating performance will still get worse, as heavily subsidised green energy pushes electricity prices down. The old utilities want the government to help, but that’s a long shot.