China is third-best option for Saudi Aramco 16 Oct 2017 With its $2 trln public offering in the balance, the Saudi oil giant may bring in a Chinese investor. That would provide cash the state doesn’t urgently need. The other perks of an international IPO, like regional influence and financial discipline, aren’t to be found in Beijing.
Uniper bid lacks spark for all bar E.ON 20 Sep 2017 Finnish utility Fortum’s plan to buy its German rival for 8 billion euros may create more losers than winners. Uniper's top shareholder E.ON has reasons to accept a 4.5 percent premium but its other investors will rightly grumble. Nor does the deal make much sense for the bidder.
Shell’s defence of big oil is too hopeful 11 Sep 2017 The Anglo-Dutch giant reckons demand will peak around 2030, but says crude oil will continue to play a major role in global energy supply thereafter. It’s a view that puts too much faith in the combustion engine’s survival – and China staying with its current course.
Glencore’s debt purge creates enviable problems 10 Aug 2017 Surging commodity prices are helping Chief Executive Ivan Glasenberg to slash debt faster than planned and restore profitability. That gives the mining giant scope to hand more money back to investors or make bigger bets on growing demand for resource-hungry electric vehicles.
Permian tech-like valuations come down to Earth 3 Aug 2017 Parsley Energy is the latest Texas driller to report sharply higher oil output yet see its stock fall. Companies’ growing efficiency drives global oil prices and has won multiples far higher than Google’s and Facebook’s. But in a commodity business, investors want profits too.
Rio Tinto right to take China’s $2.7 bln and run 27 Jun 2017 In selling a group of thermal coal mines, the miner weighed up a higher, less certain price from China’s Yancoal, or a lower, more secure bid from Glencore. The former looks better. Selling to China could bring other benefits. The main thing is to get shot of dirty fuel assets.
Natural gas inflicts fresh wounds on old victim 22 Jun 2017 Southern risks a new writedown after regulators tired of waiting for a novel “clean-coal” plant. As with its troubled nuclear project, the $50 bln U.S. utility tried untested designs. Efforts to diversify fuel sources are admirable but cheap gas prices continue to crush them.
Saudi Aramco IPO is exercise in reverse valuation 22 Jun 2017 The oil producer is worth $2 trillion, say its owners. The question might not be whether that valuation is right, but what Aramco’s owners and bankers will have to do to get it. A Breakingviews calculator suggests this will be a stretch of reason.
RWE can sparkle with a dirty energy merger 20 Jun 2017 The German utility risks turning into a mere holding company after spinning off clean power unit Innogy. It can avoid this fate by bulking up on coal and gas. An 8.4 billion euro bid for rival Uniper would create value even before synergies and fire up the group’s revival.
UK energy producer shows limits of futurology 15 Jun 2017 British utility Drax has stretched the definition of long-term targets with plans to triple its EBITDA by 2025. Though its business model is stable, much can go wrong in eight years. A less specific dividend promise exposes management’s limited belief in its own predictions.
Tax windfall charges up RWE, E.ON recovery 7 Jun 2017 Germany’s battered utilities can get back more than 6 bln euros in past tax payments, the country’s top court decided. It’s the final stage in the sector’s rehabilitation, following big restructurings and settlements on nuclear liabilities – and sets the scene for M&A.
Finnish-German utility would make odd couple 1 Jun 2017 Shares in Uniper jumped on a report that Finland’s Fortum is considering buying E.ON’s 47 pct stake in the 6.3 bln euro power group. Yet Uniper’s big carbon footprint would tarnish the Finns’ clean energy strategy, and its lackluster earnings make the financial logic a stretch.
DONG’s green energy premium is a work in progress 24 May 2017 By hiving off its North Sea oil and gas assets for $1.3 bln, the state-owned Danish utility is now one of the biggest clean energy pure-plays. Yet its stock market value does not reflect this unique position. A 20 pct discount to German rival Innogy seems excessive.
Engie can offer RWE a new spin on spinoff 14 Mar 2017 The French utility is reported to be interested in bidding for Innogy, which is majority owned by RWE. The latter wants to retain at least a 51 percent stake in the 19 bln euro business that it carved out in 2016. Yet a minority stake in enlarged Engie may be just as good.
Saudi’s Trump friendship more about money than oil 1 Feb 2017 Riyadh may boost its investments in American energy under the new president. An abundance of shale oil and a focus on domestic supply means Saudi Arabian crude is no longer enough to secure U.S. political support in the Middle East. Its cash is still attractive, though.
OPEC resolve is strong enough to turbo-charge oil 30 Nov 2016 The cartel’s deal to cut crude output for the first time since 2008 ends its two-year-old policy of putting market share before higher prices. This may be self-defeating if shale production rebounds. But OPEC unity is convincing enough for oil to extend and sustain gains.
Arch Coal jumps from bankruptcy frying pan to fire 11 Oct 2016 The U.S. miner, fresh from burying over 90 pct of its debt, is exiting Chapter 11 after coking-coal prices more than doubled of late. But uncertain Chinese demand, renewable-energy growth and global pressure to stem climate change leave the coal industry stuck in the pits.
RWE beats E.ON in parallel power spin-offs 7 Oct 2016 The two German utilities took opposite approaches to splitting up their dirty energy assets from newer, clean ones. E.ON spun off the bits investors liked least, while RWE has floated its best parts in a 5 bln euro IPO. The latter path looks smarter in the near term.
RWE gives masterclass in financial alchemy 26 Sep 2016 The troubled German utility is listing a minority stake in its healthy parts - grids, renewables and retail. Nothing will change much operationally. Yet the company hopes the spun-off part, Innogy, will have twice RWE's market cap. If that sounds illogical, that's because it is.
Corporate decline, thy new name is Uniper 9 Sep 2016 German utility E.ON is listing its coal and gas-fired power plants and other unwanted bits and bobs on the Frankfurt stock market. Uniper is wooing investors with high dividends. But over time, the carbon-heavy group will suffer badly from the fight against climate change.