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.
John Browne’s Russian truce points to oil M&A boom 2 Mar 2015 The former BP boss will head L1, a $10 bln energy fund owned by oligarch Mikhail Fridman. The duo once sparred over BP’s assets east of the Urals. Their alliance today highlights the deal opportunities created by oil’s rout - even if L1’s Russian roots are a problem.
Iberdrola takes baby steps to grow U.S. business 26 Feb 2015 The Spanish utility is paying $3 billion mostly in shares to merge its U.S. assets with much smaller listed UIL. The U.S. has greater growth potential than Spain, and the price isn’t cheap. But the small cash outlay makes this a relatively low-risk, if not transformational, deal.
Solar strikes it rich in oil’s financial wells 25 Feb 2015 A SunPower and First Solar JV will pool assets in a company that could pay fat dividends. The renewable energy page out of fossil fuel’s playbook generated $1.5 bln of extra market value. The structure presents some conflicts and the pressure will be on to supply new projects.
Cheap oil highlights multifaceted resource curse 24 Feb 2015 Commodities-dependent nations got more bad news, as BHP warned on iron ore prices. To survive, many will need to turn their economies upside down. Resources prevent long-term strategies, dull the good and bad governance gap and ultimately cloud voters’ views of who’s responsible.
Centrica’s new CEO wastes no time 19 Feb 2015 Shares in Britain’s top utility plunged after Iain Conn cut dividends 30 pct, gave a gloomy outlook and began a big strategic review. At least he’s being decisive, unlike German rivals. Political and oil-price pressure is just the start. The business model itself is under threat.
Eni has levers to protect dividend 19 Feb 2015 The Italian oil and gas firm faces a cash crunch. Fears that Eni may have to reduce its dividend, as it did in 2009, account for some of the 19 pct share price discount to peers. Yet newly outlined self-help measures give some comfort that the payout may be safer than it looks.
Crude rout lays bare Big Oil’s opportunity deficit 18 Feb 2015 State-owned companies hold the best fields, while Western producers are lumped with the leftovers. High prices subsidized ever-bolder engineering projects during the boom. If low prices linger, a lack of good alternatives may push oil majors into another round of consolidation.
BP hunkers down for prolonged oil slump 3 Feb 2015 The UK oil and gas major is cutting capital spending by 20 pct. That’s a robust response to cheaper oil for a company with a strong balance sheet, but BP has more problems than most. If such spending cuts keep coming from the industry, the oil price might rebound further.
Shell refuses to hit panic button 29 Jan 2015 The Anglo-Dutch major, which met its 2014 targets, doesn’t want to overreact to the oil price rout. It has cut three-year capex plans by a modest 14 percent and is maintaining the dividend. Shell has a strong balance sheet, but even it will need a sharper axe if oil stays low.
Monetary mess threatens gains from oil oversupply 27 Jan 2015 Too much production accounts for about half of the oil price slide, by one calculation. The surplus of cheap crude should boost oil-importers’ GDP. But the gains may not materialise, thanks to central banks’ ultra-low interest rates and wobbling anti-deflation credentials.
Obama’s nuclear gift to Modi is shrewd investment 26 Jan 2015 The U.S. president has unblocked a stalled nuclear power deal with India, allowing Prime Minister Narendra Modi to build new reactors. While that will boost orders for GE-Hitachi and Westinghouse, bigger gains to the U.S. economy will come from ending India’s energy deficit.
Siemens faces big oil deal debacle 23 Jan 2015 The collapsing oil price turns the German engineer’s dash for shale into a costly blunder. Its $7.6 bln September bid for U.S. oilfield kit maker Dresser-Rand will stain CEO Joe Kaeser’s reputation. With shares of Dresser’s peers clobbered, a major impairment is looming.
Oil billionaire pumps Kinder Morgan for tidy gain 22 Jan 2015 Continental boss Harold Hamm sold Hiland Partners, his private pipeline firm, to its giant rival for $3 bln. That ends a conflict arising from his initial stake in Hiland and covers his $1 bln divorce. Kinder, meanwhile, gets a prized – if pricey – foothold in the Bakken shale.
Big Oil’s dividends look safe – for now 20 Jan 2015 Leverage is low and costs and capex can be cut, so the likes of Shell and Total don’t need to slash payouts now. But the current oil price drop has a 1986 feel. Then it took five years to regain the previous peak. If the pain lasts that long, payouts will have to be sliced.
Cheap oil comes with hidden risks for airlines 19 Jan 2015 Falling oil prices cut airlines’ fuel bills and will lift earnings this year. European carriers’ share prices are up, but weaker players will find it easier to stay in business so needed consolidation may slow down. Excess capacity could soon put pressure on ticket prices.
Oil price trough could be far away 13 Jan 2015 Petro-economics are painfully simple for producers. Lower prices hardly push up demand. And it will take a price below $30 a barrel before supply falls enough to balance the market. Unless producers can regroup into an effective cartel, their suffering will continue.
Petrodollar drought is new risk for markets 6 Jan 2015 Low oil prices are not only a blight for energy producers. They could hurt global financial markets too. After years of surplus petro-earnings gushing into a range of assets, notably fixed income, the flows are at risk of reversing. The sharp equity market fall may be a first sign.