Market too bearish on European oil services 28 Nov 2014 Petrofac has fared especially badly, falling 30 pct in a week. Sub-$75 oil is rattling explorers’ and producers’ nerves. As projects are shelved, oil service companies are being hurt. Share ratings reflect the pain and much depends on oil prices. But some stocks now look cheap.
Cheap oil worsens Asian debtors’ lowflation woes 28 Nov 2014 Sliding energy prices could make already-low Asian inflation vanish. That’s bad news for heavily indebted economies like China, South Korea, Thailand, Malaysia and Singapore. If prices and wages don’t rise, borrowers will curb spending. Slowing GDP growth could stumble.
OPEC inaction confirms new order for oil 27 Nov 2014 The oil cartel, led by Saudi Arabia, is either willing to sacrifice profit or unable to agree on production cuts. Either way, lower prices challenge U.S. shale oil producers, but that industry may still thrive. In the OPEC fog, one thing is clear: weaker members will suffer.
Review: Congo’s problems run deeper than oil 21 Nov 2014 Virunga Park sits on top of reserves and between hostile states inhabited by warring militias. A new documentary casts UK oil firm Soco as the park’s top threat. Unethical exploiters are just one symptom of a nation whose institutions are too weak to assure economic stability.
Brazil faces its come-to-Corcovado moment 19 Nov 2014 A corruption scandal at $63 bln national oil champion Petrobras is unfolding quickly with news that one executive has been fired and about 15 more fingered. Writedowns could hit $15 bln and political fallout may spread. The debacle affords Brazil an opportunity for major reform.
Activist row bigger than Keystone for TransCanada 19 Nov 2014 A sparring match with a dissident investor may be more important than the fate of the $35 bln Canadian group’s tar sands pipeline. Bay Street has welcomed activists, and the regulatory environment is favorable. But for now, TransCanada appears to have shareholders on its side.
Baker Hughes wins tactical $35 bln battle 17 Nov 2014 Playing hard-to-get squeezed a premium north of 50 pct out of Halliburton. The larger U.S. oil services group’s target of $2 bln in annual cost savings just about justifies the price it is paying. But integration challenges and competitive concerns make that look aggressive.
Halliburton raid puts shareholder rights to test 17 Nov 2014 With staggered boards increasingly rare, America has a freer market for corporate control than ever before. Halliburton’s hostile swoop on $26-bln oilfield rival Baker Hughes is a good test case. It’ll be up to investors to defend the value of their company in a proxy fight.
Halliburton can stump up $30 bln for Baker Hughes 14 Nov 2014 That’s if the $46 bln U.S. oil services giant finds cost cuts worth 5 pct of its rival’s sales, in line with past deals in the sector. Banding together makes sense in an industry downturn. And Halliburton could offset the risk of paying a potential 40 pct premium by using shares.
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.
New swing producers may shrug off cheaper crude 12 Nov 2014 Conventional wisdom holds that U.S. shale drillers will put a floor under world prices by pumping less if oil drops much below $80 a barrel. But committed costs and falling labor and equipment rates change the calculus. That could slow any response to falling prices.
Russia tries Chinese path out of European impasse 11 Nov 2014 Moscow has signed another mega gas deal with its southern neighbour. Vladimir Putin may have to accept bad terms, but the point is to show Europe that he can turn to China if the standoff over Ukraine persists. And that in the short term, Russia can bear the economic pressure.
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.
Divorcing oil baron braves market decoupling 6 Nov 2014 Billionaire Harold Hamm’s $14 bln fortune hangs in the balance of a spousal court battle. He is now scrapping hedges for his Continental Resources, betting on a reversal in the price of crude. Marital rifts can hurt investors, but in this case the business risk looks calculated.
Saudis drop gavel on OPEC confab three weeks early 5 Nov 2014 Brent crude hit $82.55 a barrel, a four-year low, after the kingdom cut the price of U.S.-destined oil ahead of the cartel’s meeting later this month. Cash-strapped Venezuela may bray about cutting supply. But the market reaction underscores how OPEC has become a majority of one.
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.
Sub-$100 oil will inflame geopolitical tempers 30 Oct 2014 Even with sharply lower crude prices, OPEC may not cut supply. Saudi Arabia, the lynchpin, can afford to run deficits. Not so Venezuela. Less pricey crude is painful for Russia, too. Oil at $80-plus per barrel will boost world growth, but it could make global tensions worse.
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.
Shell pipeline IPO blowout heralds more shrinkage 30 Oct 2014 The $230 bln oil giant’s tax-advantaged U.S. pipeline spinoff popped 46 pct on its debut on Wednesday. With an enterprise value of $4.6 bln, it trades on eight times the valuation ratio its parent gets. That kind of uplift makes it a no-brainer for Shell to offload more assets.