E.ON’s "bad power" spinoff promises little upside 1 Dec 2014 Germany’s largest utility is exiting conventional generation, bundling unwanted risk into a new company to be handed to shareholders. E.ON can concentrate on distribution and clean electricity. Both managements will benefit from focus. Still, the new entity’s prospects are bleak.
BG board has major repair job on its hands 1 Dec 2014 Investor pressure has made the UK gas firm slash a share award for CEO-elect Helge Lund. The package remains generous but needs no investor vote. A better board would have anticipated the row at the outset. That says something about BG’s culture – which still has to be addressed.
China solar saga puts foreign lenders in the shade 1 Dec 2014 Troubled LDK Solar avoided liquidation after bondholders agreed to convert around $700 mln of offshore debt into shares. But the loss-making company owes mainland banks $2.5 bln. It’s a reminder that when things go wrong in China, overseas creditors are at the back of the queue.
An energetic financial innovation worth nurturing 28 Nov 2014 New York’s $1 bln Green Bank, led by former Wall Streeter Richard Kauffman, is partnering with the private sector to fund clean energy projects. Through securitization it may help investors fund small-scale ventures. The full mark of its success will be its gradual disappearance.
Market too bearish on European oil services 28 Nov 2014 Petrofac has fared especially badly, falling 30 pct in a week. Sub-$75 oil is rattling explorers’ and producers’ nerves. As projects are shelved, oil service companies are being hurt. Share ratings reflect the pain and much depends on oil prices. But some stocks now look cheap.
Review: Congo’s problems run deeper than oil 21 Nov 2014 Virunga Park sits on top of reserves and between hostile states inhabited by warring militias. A new documentary casts UK oil firm Soco as the park’s top threat. Unethical exploiters are just one symptom of a nation whose institutions are too weak to assure economic stability.
Endesa’s 3 bln euro quasi-IPO bucks a tough market 21 Nov 2014 The second half of 2014 has been rocky for share sales, particularly in Spain. A secondary offering of 22 pct of Spanish utility Endesa succeeded because vendor Enel wasn’t greedy. It treated the deal like a new issue. That will help if Enel wants to sell more in future.
Brazil faces its come-to-Corcovado moment 19 Nov 2014 A corruption scandal at $63 bln national oil champion Petrobras is unfolding quickly with news that one executive has been fired and about 15 more fingered. Writedowns could hit $15 bln and political fallout may spread. The debacle affords Brazil an opportunity for major reform.
Areva holders pay for years of state blunders 19 Nov 2014 The French nuclear plant maker lost a fifth of its market cap after a profit warning. The state still owns 90 percent of the group, limiting the damage. But the collapse is an opportunity to review a long series of destructive government errors, both industrial and political.
Baker Hughes wins tactical $35 bln battle 17 Nov 2014 Playing hard-to-get squeezed a premium north of 50 pct out of Halliburton. The larger U.S. oil services group’s target of $2 bln in annual cost savings just about justifies the price it is paying. But integration challenges and competitive concerns make that look aggressive.
Investors might get hurt in French privatisations 17 Nov 2014 The government is planning to sell 5-10 billion euros of assets this year, starting with stakes in state-owned utilities. That’s welcome, but in the process Paris wants to increase its voting rights of the remaining stakes, disadvantaging outside shareholders.
Oil price fall challenges all the theories 13 Nov 2014 In the summer, producers seemed to have finally found the key to price stability. But the stable cartel model was faulty. The supply-demand equilibrium and marginal costs explanations look even lamer. Will the principle that lower oil prices lead to faster GDP growth also fail?
RWE needs Plan B for 5.1 bln euro oil deal 13 Nov 2014 The German utility’s planned sale of oil and gas unit DEA to a group of Russian investors led by Mikhail Fridman has run into British government opposition. RWE needs the sale to cut debt and capital spending. Time to start looking for alternatives.
E.ON gets better at managing decline 12 Nov 2014 The largest German utility beat expectations in the third quarter but confirmed net profit would fall about 20 pct this year. The group is still hobbled by low energy prices, Germany’s dash to green power and its Russian exposure. It is stabilising, but not yet out of the woods.
China oil groups juggle profit and patriotism 11 Nov 2014 Having PetroChina source fuel, and Sinopec refine it, made political sense, especially when oil was cheap. Now with investors as well as the government to please, both are duelling in upstream, where returns are better. Of the two, PetroChina’s prospects look more compelling.
Malaysia’s $3 bln sovereign IPO faces many hurdles 6 Nov 2014 Listing the energy arm of 1MDB will be a test for the government. The state investment vehicle is a target for Malaysia’s opposition after overpaying for assets and forking out high fees for Goldman Sachs-led bond issues. It may be hard to win investors amid the political din.
Endesa investment case warms up 5 Nov 2014 Up to 22 pct of the Spanish utility is being sold by Italy’s Enel. Disposals have left Endesa a pure-play Iberian utility with stable cashflow. A good dividend should help buck weak demand for Spanish issuance. And lowly geared Endesa could afford to be even more generous.
China affair may test Italy’s protectionist reflex 5 Nov 2014 Chinese state and private firms are piling into Italy. The country is a tough market for outsiders to crack, but offers value and technology. Italy is also desperate for cash. A political backlash could sour this love-in, but China has so far been a courteous suitor.
Unfazed oil kings could make crude bulls bolt 31 Oct 2014 Exxon, Chevron and Conoco reported solid earnings and remained optimistic despite falling prices. Shale drilling, for example, is profitable at current rates. But investment cuts won’t hit other projects for a few years, making price rises unlikely. Investors may get antsy.
New Shell chairman has a tough job on his hands 30 Oct 2014 Charles Holliday arrives at the Anglo-Dutch major as oil prices slump towards $85 a barrel. After a dismal 2013, Shell is making good progress. But while Holliday has sound experience at DuPont and Bank of America, he will need to learn the tricks of his new trade quickly.