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.
BP can handle double-digit oil price 28 Oct 2014 The UK major has bumped up the dividend despite obvious headwinds of the low oil price, exposure to Russia and uncertainty over Gulf of Mexico fines. Yet cashflow is growing, it has room to cut costs and its leverage is comfortable. BP can afford to be confident.
Shale gas could blow up U.S. politics 27 Oct 2014 It’s playing a big part in upcoming midterm elections. Coal’s downfall is an important issue in one race that could swing the Senate Republican. Obama’s “war” on the dirty carbon is real, but so are market forces. Fracking-related jobs and manufacturing could rock future votes.
ABB switches into rehabilitation mode 22 Oct 2014 After a series of nasty surprises, the Swiss engineering giant’s recovery is charging up. ABB has made progress in fixing its stricken power systems unit, while strong orders highlight operational strengths. But slipping profitability and a wobbly macro outlook remain concerns.
Chesapeake gets double win in $5.4 bln shale sale 16 Oct 2014 The U.S. gas driller’s market cap jumped 17 pct, or about $2 bln, after rival Southwestern agreed to buy some wells. The acquirer’s 11 pct share-price slide suggests the deal favors Chesapeake. But it also gives CEO Doug Lawler a one-shot fix for his company’s balance sheet.
New EDF boss’ big management problem: the state 16 Oct 2014 Former Vivendi chief Jean-Bernard Lévy will head state-owned electricity group EDF. He must engineer a government-ordered decline of nuclear in France’s energy mix, and prepare a partial sale of the state’s stake in the near term. Outside investors can no longer be overlooked.
Saudi supply games expose OPEC impotence 15 Oct 2014 The cartel’s swing producer is watching prices fall. Why? Maybe it’s trying to slow down U.S. shale growth, but that requires crude at well below $90 per barrel. Or it may want to cajole others into sharing painful production cuts. Either way, OPEC is too weak to control markets.
China coal tariffs blacken Aussie free trade talks 14 Oct 2014 Import taxes will help China to protect its ailing domestic producers from a glut of cheap foreign supply. Yet raising the defences makes it even harder for Australia, a top exporter, to present a long-awaited agreement with its top trading partner as evenly balanced.
Gas Natural’s Chile deal smacks of empire-building 13 Oct 2014 The Spanish utility will pay $7.6 bln including debt for CGE, Chile’s largest electricity distributor. This increases Gas Natural’s footprint in Latin America, countering weak growth at home. But it is paying more than 10 times 2013 EBITDA with few obvious synergies.
Rival solar IPO takes shine off Elon Musk halo 2 Oct 2014 Blackstone-backed Vivint is worth $1.7 bln, nearly double where it would trade if valued on the same rather flighty multiple as SolarCity, chaired by the Tesla boss. There’s some business logic to Vivint forging ahead. But at these prices, investors in either risk getting burned.
Siemens pays up for late entry to shale party 22 Sep 2014 The German engineer will pay a hefty $7.6 bln for Dresser-Rand, a U.S. maker of oilfield kit. This trumps Dresser’s possible merger with Sulzer of Switzerland and should stop a GE counterbid. But Siemens risks destroying value by joining a bandwagon late, as it did in solar.