Russia, not Ukraine, is Gazprom’s real problem 7 Mar 2014 The 20 pct slide in the gas giant’s shares during the Kiev-Moscow spat looks like an overreaction. Gazprom has become less reliant on Ukraine as a transit point. Its valuation reflects its status as a Kremlin tool. A chillier investment climate in Russia is a bigger threat.
Big Oil faces no-win on rampant cost inflation 6 Mar 2014 Energy bosses at an industry shindig in Houston this week agreed that a doubling of labor and equipment prices over the past decade is their biggest headwind. Meanwhile, on recent form, they’ve struggled to keep production flowing. Cutting costs is likely to dent future output.
Elon Musk’s Gigafactory puts utilities on notice 6 Mar 2014 The Tesla CEO reckons he can kick off a virtuous circle by doubling world lithium-ion battery production. Musk expects that to slash costs by more than 30 pct and add a turbo boost to Tesla’s sales. It may also leave electric pylons looking as outdated as telephone poles.
Energy titans tap yet another dry well: inequality 5 Mar 2014 The industry’s grandees are gathered for their annual confab in Houston, celebrating shale and lamenting higher costs. Amid the hoopla, Chevron CEO John Watson said renewable policies hurt the poor while BHP boss Andrew Mackenzie claimed oil can help them. That’s all a bit rich.
Mexican oil cash cow could go dry absent tax fixes 3 Mar 2014 Pemex’s quarterly pre-tax profit dropped 30 pct to $10 bln, but the energy giant had to pay $16 bln in government levies. Investment and production predictably suffered. President Peña Nieto’s revenue-raising reforms and plans to let in foreign cash can’t be enacted too soon.
Big Oil could use some venture capital mojo 28 Feb 2014 An unwillingness to tackle small wells meant oil majors missed out on the lucrative U.S. shale oil boom. Exxon and its ilk were too focused on mega-projects. Seeding a new generation of nimbler upstarts, a strategy that worked for Big Pharma, might renew verve and boost output.
TXU’s carcass scavenged for tax meat 27 Feb 2014 The Texas utility renamed Energy Future is nearly bust six-plus years after the $45 bln takeover led by KKR and TPG. A flock of buyout firms and hedge funds, including Apollo and Avenue, are clawing at each other for the scraps. This odd beast has juicy bits buried in its books.
Repsol makes the best out of bad YPF deal 26 Feb 2014 The Spanish oil group will get $5 bln from Argentina as compensation for the expropriation of its stake in YPF. It’s half what Repsol wanted and will be paid in government bonds. Still, the final deal enshrines that Repsol must ultimately receive the value Buenos Aires promises.
SolarCity needs to get the basics right 25 Feb 2014 Elon Musk’s green energy provider has a flair for pioneering new ways to fund installing solar panels. That’s helped its stock skyrocket sevenfold since its late 2012 IPO. SolarCity’s failure to get its Q4 earnings out on time, though, shows more humdrum tasks need more focus.
Sinopec spinoff shows desire to pump valuation 24 Feb 2014 The Chinese oil giant plans to sell up to 30 percent of its marketing division, which operates 30,000 forecourts and brings in half the group’s revenue. Exposure to China’s consumer boom should lure investors. More importantly, it suggests Sinopec is serious about boosting value.
JPMorgan in awkward place in Essar Energy buyout 21 Feb 2014 The investment bank led the troubled Indian group’s London IPO, and remains a house broker. So it’s far from ideal that JPMorgan is now advising independent directors on a potential buyout by the majority owners. Board members urgently need a fresh outside perspective.
Oxy’s restructuring plan just California dreamin’ 18 Feb 2014 The oil and gas giant says it will spin off operations in the Golden State. That will raise cash and remove a lagging unit, but loading it with debt may deter buyers. Selling valuable chemical and pipeline assets instead could streamline the company and boost investor returns.
Hamm is latest case study in U.S. oil sector murk 11 Feb 2014 The Continental boss has overseen a sevenfold rise in its shares since 2007. But like some less successful energy patch CEOs, he has done oil deals on the side. A shareholder lawsuit isn’t really the point. It’s inviting trouble for Hamm to trade with the firm he runs.
Tech isn’t the only threat to Exxon’s S&P standing 10 Feb 2014 For the first time in a decade the oil giant isn’t one of the two largest U.S. firms. Google is now second only to Apple. But it’s not just the rise of technology that has eclipsed Exxon. Soaring capex and flat oil prices mean it may have to get used to even lower rankings.
Petrobras risks becoming Latin America’s Gazprom 6 Feb 2014 Brazil’s petro-giant increasingly resembles Russia’s gas monopoly as state meddling and rampant spending destroy value and crowd out more productive investment. Petrobras shares have fallen so low it’s like 2007’s “gift from God” never arrived. It’s not too late to change course.
BP starts to shine next to Shell 4 Feb 2014 It’s all relative: BP’s profit fell almost a third in the fourth quarter, but it was no worse than expected. Russia and mounting Gulf of Mexico spill costs make its earnings hard to predict. But, unlike Shell, it has set more concrete targets to back up its promises.
Chevron looking cheap despite its big spending 31 Jan 2014 The oil giant’s Q4 profit slumped 32 pct as it splurged on capex at a pace that put bigger rivals to shame. The emphasis on mega-projects that have yet to produce is worrisome. But steely-nerved investors should eventually be rewarded with an output growth rate twice Exxon’s.
Exxon outlays should pump up 2014 after down year 30 Jan 2014 The oil giant’s quarterly profit slid 16 pct to $8.4 bln due to sluggish oil and gas production and record capital spending. But output should pick up as mega-projects stop guzzling funds and go online. With cash beginning to flow, investors can look forward to brighter times.
Forget WTI – Louisiana crude is the new spread bet 29 Jan 2014 With U.S. output surging, West Texas Intermediate oil costs less than global Brent crude by about $11 a barrel at present. Louisiana Light Sweet, though, still trades nearer the world price. With no sign of American production growth slowing, that discount will soon widen.
SolarCity’s newest bright idea shines only so much 23 Jan 2014 A plan by Elon Musk’s panel installer to let individuals finance its projects looks smart. It could reduce SolarCity’s costs while using collateral that’s generally safer than houses. Unless the company can increase customers 12-fold by 2018, though, its shares remain pricey.