Gazprom/Ukraine dispute is proxy for Putin’s whims 16 Jun 2014 The Russian energy group will deliver only pre-paid gas to Ukraine, after talks on $4 bln of overdue bills collapsed. Combine that with renewed hostilities by Russian separatists in the east of the country, and markets were premature in believing that the Ukraine crisis has ended.
China’s shale gas ramp-up may surprise skeptics 13 Jun 2014 Beijing wants Chinese drillers to grow output from fracking to a third of current U.S. levels by 2020. That’s a stretch, but on plausible assumptions the PRC could get there within a decade. New discoveries and further JVs with the likes of Texas-based FTS would help, too.
Stingy oil nations realize it pays to loosen up 12 Jun 2014 Mexico, Russia and others want to share black gold with the Chevrons of the world after decades of shutting them out. Concerns about lower prices and outdated technology explain the friendlier approach, but it’s also sound economics. The benefits of hospitality can flow both ways.
Siemens needs more than Mitsubishi to win Alstom 11 Jun 2014 The German engineer has teamed up with Japan’s Mitsubishi Heavy Industries in its potential bid for Alstom. A joint approach lowers antitrust risk and cash outflows for Siemens. But trumping GE’s rival $15.4 bln proposal and job commitments will still be difficult.
One U.S. coal miner could be a canary 10 Jun 2014 When $11 bln Consol bet big on gas in 2010, investors sold in favor of rivals focused exclusively on the black rock. Now, with a clean air crackdown coming, Consol’s value dwarfs that of once-larger Peabody. The prescient hedge could be a telltale sign for the energy industry.
Pemex and Repsol separation is for the best 4 Jun 2014 The Mexican oil firm is selling most of its stake in its Spanish rival. The investment, made in another era, serves little purpose. Pemex can use the cash at home. For Repsol, the sale removes a stock overhang and underlines the challenge of spending its growing cash pile.
Middle East spending gap may let Big Oil off hook 3 Jun 2014 The region needs to invest 23 pct more a year in its wells, says the IEA. Otherwise, a shortfall in black gold could push the price up by $15 a barrel. These states’ other priorities make such outlays unlikely. That’s good news for Exxon and others under pressure to cut costs.
Cheniere pay deal is Coca-Cola with added sugar 2 Jun 2014 The board wants up to 16 pct of the $16 bln energy company’s shares handed to staff over five years. That’s more dilutive than the recent Coke plan that irked Warren Buffett. Charif Souki was also last year’s best paid U.S. CEO, with $142 mln. Shareholders can justifiably worry.
U.S. carbon emissions crackdown is well timed 2 Jun 2014 Obama’s proposed steep cuts in power plant pollution are bad news for the coal industry. But unlike Germany’s expensive retreat from nuclear power, the U.S. has cheap gas to fall back on. America’s shale dividend will offset any costs of going greener – at least at home.
U.S. energy independence death greatly exaggerated 27 May 2014 A new government report slashes California’s estimated oil endowment by 96 pct, roughly halving the nation’s supply of frackable crude. But it only impacts total resources, not reserves that can be drilled profitably. These remain intact, as do U.S. hopes of curbing oil imports.
Hess $2.9 bln sale vindicates high-octane activism 22 May 2014 The oil industry laggard will shed its retail outlets to refiner Marathon and focus on lucrative exploration. Hedge fund Elliott can take credit for the transformation that has allowed Hess to catch up with rivals. It’s more evidence that uppity investors can drive useful change.
Big Oil can learn from $50 bln Kazakh fiasco 21 May 2014 The oil majors running the Kashagan field may have to wait until 2016 before any black gold flows again. That’ll be a decade late and five times over budget. The debacle shows the drawback of too many partners involved in the same project under tough climate conditions.
Reborn Chesapeake starts to hit its stride 20 May 2014 A year to the day after replacing profligate CEO Aubrey McClendon, the U.S. oil and gas explorer secured a two-notch credit rating upgrade to nearly investment grade. By slashing debt and simplifying Chesapeake, new boss Doug Lawler is winning over stock and bond investors alike.
Joke’s on lenders in $2.6 bln Batista payback plan 19 May 2014 The fallen Brazilian billionaire wants investors in his bankrupt shipbuilder, OSX, to wait until 2040 for full payment and proposes an $11,000 installment after a year. To think he once boasted that his assets were “idiot proof.” His chutzpah now threatens OSX’s reorganization.
Populism may come back to bite Argentine president 16 May 2014 Cristina Fernandez nationalized YPF to win votes and control the nation’s oil. A growing fight over fracking pits those two motives against each other. Caving to demands to stop shale drilling and curb foreign investment might be popular. But it would raise costs and hurt growth.
Stanford’s snub to coal typical of Silicon Valley 8 May 2014 The black rock is an easy target for the university’s $18.7 bln endowment. Yet shouldn’t the principle behind it apply equally to oil producers, even local titan and Stanford donor Chevron? Like some of its grads, the university seems willing to shun certain evils only so far.
Shale laggard’s $3 bln deal just a baby step 7 May 2014 Encana is paying Freeport just half the price per barrel Devon paid in a similar deal last year. After snubbing the shift from cheap gas for longer than rivals, the Canadian firm needed to do something. But catching up with shale leaders like EOG takes more than one canny deal.
Alstom chase is distraction from Siemens revamp 7 May 2014 The German engineering giant’s long-awaited new strategy sensibly focuses on improving efficiency and cutting slack. A possible Alstom deal comes at a bad time, even though the French rival would be a good industrial fit. Siemens management has enough to deal with in-house.
Alstom’s train future is with Siemens, not GE 6 May 2014 Paris opposes an offer by the U.S. group to buy Alstom’s power business unless the French company gets the American’s transport assets in exchange. That is a barmy idea. What Alstom should try instead is use GE’s money to build a pan-European train business with Siemens.
Brazilian blunders fuel a better Mexican oil plan 2 May 2014 State meddling, onerous buy-local rules and limits on foreign control slowed Brazil’s expected boom in crude. So its rival to the north has proposed looser regulation and more freedom for government-owned Pemex. The scheme faces hurdles, but it’s a recipe for boosting output.