GE finally puts Jack Welch era out to pasture 15 Nov 2013 The conglomerate is spinning off its North America retail finance business. The move helps return GE Capital to its roots lending to mid-market companies and its parent’s industrial units, spelling the end of GE’s mission creep under its ex-CEO. That’s good news for shareholders.
U.S. utilities want to rain on solar parade 15 Nov 2013 A lobby group says solar power may put $170 bln of utility revenue at risk. Meanwhile Elon Musk’s panel installer SolarCity could quadruple sales in two years, and solar ventures abound. No wonder a big Arizona utility is fighting back with a fee on citizens with solar panels.
Peru swaps Brazil’s oil loser for China’s 13 Nov 2013 Petrobras is selling fields that pump about 16 pct of the tiny nation’s crude to PetroChina. Little distinguishes the two state-controlled titans. The inefficient Chinese group has lost $750 bln of market value in six years. Peru shouldn’t expect much of a partnership upgrade.
E.ON investors underrate green energy risks 13 Nov 2013 Germany’s largest utility has pruned profit guidance again. The dash for renewable energy in Europe’s powerhouse economy endangers E.ON’s business model. Yet a share-price rebound, kicked off in September, goes on. Overly optimistic investors should brace for a rude awakening.
Even Petrobras can’t hold Brazil back forever 12 Nov 2013 The dysfunctional energy giant has been slow and inefficient in developing huge oil and gas reserves. But the nation could still triple crude output by 2035, the IEA reckons. That should mean the eventual return of lost economic momentum despite the shortcomings of Petrobras.
Oil majors struggle to make ends meet 12 Nov 2013 The big integrated firms have put billions of dollars’ worth of assets up for sale to fund expensive projects and return cash to shareholders. But it’s a one-sided market. After the recent acquisition binge, the universe of buyers is shrinking. Something will have to give.
Carl Icahn pushes Transocean to dig too deep 11 Nov 2013 The billionaire notched a win with a $1.1 bln dividend after he was rebuffed in May. The offshore driller isn’t that flush, though, and the payout could erode its competitive position. It’s hardly comparable to Apple, another Icahn target, where there’s plainly too much cash.
Review: Frackers needed long view to make history 8 Nov 2013 The revolution in U.S. energy came from an unlikely source, “The Frackers” shows. While deep-pocketed giants like Chevron gave up on shale, tiny drillers like George Mitchell and Harold Hamm persisted. True leadership triumphed over short-term shareholder value.
Bright financing flies SolarCity too close to sun 5 Nov 2013 The solar panel installer backed by Elon Musk is securitizing income in a bid to slash its cost of capital. The clever idea gave another lift to shares already soaring on the back of fast sales growth. But it cannot justify SolarCity’s stratospheric valuation.
Canadian driller bares false economy of cheap gas 5 Nov 2013 Struggling Encana is slashing its workforce, capital spending and dividend. Such cutbacks, welcomed by investors, probably will make gas prices more volatile. The situation should pique the interest of policymakers who have been slow to embrace North American exports.
Chevron deserves a bit of investor patience 1 Nov 2013 The oil giant’s Q3 earnings missed estimates due to lagging output and a 27 pct jump in capital spending. Yet these huge outlays are designed to boost output over the next four years and grow at twice Exxon’s pace. What’s more, Chevron’s stock trades at a discount to its rival’s.
Gazprom can’t shake shareholder-unfriendly habits 1 Nov 2013 Better volumes and pricing have helped the Russian gas giant outperform the main Moscow index since the summer. Investors should be cautious. Swollen capex and a fresh row with Ukraine are reminders that Gazprom works more like an arm of the Kremlin than a normal listed company.
Conoco shows rivals splitting up is great to do 31 Oct 2013 The driller had a bumper Q3 thanks to hiving off refining and pipelines 18 months ago. Shares in Conoco and its two spinoffs have also bested its full-service brethren, despite similar overall performance. The benefit of a breakup is getting harder for Exxon and Shell to ignore.
Even bankruptcy can’t subdue Batista’s swagger 30 Oct 2013 The Brazilian tycoon is selling gas assets cheaply to a utility he partly owns, practically goading creditors of insolvent OGX. Their odds of recovering more money still improve by injecting new cash. Pushing these bondholders too far, though, could lead to a painful liquidation.
BP’s memo to the market: we are cheap 29 Oct 2013 The UK oil major has bumped its dividend and is buying back stock despite falling profit and hefty capex. BP is trying to show strength to a market that values its shares at a discount to peers. To be convincing, BP may have to show it can also generate sturdy earnings growth.
Lump of coal leaves Consol shareholders wanting 28 Oct 2013 Splitting its gas business off from mining the black rock could boost the energy company’s $9 bln market value by half. Instead, Consol has decided just to sell five older coal mines. It’s no disaster, but it’s an early Christmas gift its investors could have done without.
Batista’s proposed gas sale looks like a giveaway 25 Oct 2013 The fallen billionaire’s OGX seems poised to unload wells for $100 mln, or barely half their value. They already generate some $1 mln of revenue a day, with plenty of untapped capacity. As demand soars in Brazil, bargain hunters stand to profit handsomely from the tycoon’s woes.
Brazilian auction shows the price of oil populism 22 Oct 2013 Roping Shell and Total into the development of a giant offshore oilfield qualifies as a partial win for Brasilia. Unfriendly policies scared off others, who might have given Brazil a bigger share of profits. President Dilma Rousseff is lucky her pandering didn’t do more damage.
UK’s nuclear rebirth comes at a fair price 21 Oct 2013 An EDF-led consortium will invest 16 billion pounds to build the first plant of the UK’s nuclear reset. The government will pay a fixed price for the energy produced from 2023. Investors will take on any extra cost. The deal looks balanced – barring major energy market turmoil.
It’s time to throw good money after Batista 18 Oct 2013 Liquidating Brazil’s OGX probably would bring creditors just 10 cents on the dollar for their $3.6 bln of bonds. A $150 mln injection, while ousting founding tycoon Eike Batista, may buy enough time to get production going at its main field. In this case, it’s the least bad plan.