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.
BP can handle double-digit oil price 28 Oct 2014 The UK major has bumped up the dividend despite obvious headwinds of the low oil price, exposure to Russia and uncertainty over Gulf of Mexico fines. Yet cashflow is growing, it has room to cut costs and its leverage is comfortable. BP can afford to be confident.
Shale gas could blow up U.S. politics 27 Oct 2014 It’s playing a big part in upcoming midterm elections. Coal’s downfall is an important issue in one race that could swing the Senate Republican. Obama’s “war” on the dirty carbon is real, but so are market forces. Fracking-related jobs and manufacturing could rock future votes.
Hunt life lesson: Ideology and business don’t mix 22 Oct 2014 The right-wing beliefs of Nelson Hunt, dead at 88, colored his judgment on 1970s policies and led him to buy silver. An attempt to corner the market blew out when the Fed tightened money. Hunt’s failure showed why billionaire politics are best limited to funding candidates.
Total’s Margerie may need two successors 21 Oct 2014 The death of the French oil group’s chairman and CEO in a plane crash deprives the company and the industry of a flamboyant leader. It poses a challenge for succession planning at Total at a critical time. A solution could be to separate the jobs of corporate figurehead and CEO.
Cheap oil is no tonic for sluggish Asian economies 17 Oct 2014 Less expensive petrol and diesel mean smaller subsidy bills and healthier budgets in India and Indonesia. For others in the region, though, falling crude prices are a worrying sign of stalling global growth. Asia has too much debt to welcome disinflation.
Chesapeake gets double win in $5.4 bln shale sale 16 Oct 2014 The U.S. gas driller’s market cap jumped 17 pct, or about $2 bln, after rival Southwestern agreed to buy some wells. The acquirer’s 11 pct share-price slide suggests the deal favors Chesapeake. But it also gives CEO Doug Lawler a one-shot fix for his company’s balance sheet.
Saudi supply games expose OPEC impotence 15 Oct 2014 The cartel’s swing producer is watching prices fall. Why? Maybe it’s trying to slow down U.S. shale growth, but that requires crude at well below $90 per barrel. Or it may want to cajole others into sharing painful production cuts. Either way, OPEC is too weak to control markets.
BG’s new CEO will walk pay-performance highwire 15 Oct 2014 The UK gas company has poached Statoil’s well-regarded boss. Helge Lund transformed the Norwegian rival and his skills will serve BG well. But his pay, potentially worth 10 mln stg or more a year, is rich. BG will need to lay out his performance targets very clearly.
Markets finally side with economy on bad news 13 Oct 2014 For the past five years, an addiction to easy money explained most stock market moves. That era may be ending. Investors seem to be paying more attention to the surprisingly harsh economic environment. With policymakers running out of options, the gloom could worsen.
Gas Natural’s Chile deal smacks of empire-building 13 Oct 2014 The Spanish utility will pay $7.6 bln including debt for CGE, Chile’s largest electricity distributor. This increases Gas Natural’s footprint in Latin America, countering weak growth at home. But it is paying more than 10 times 2013 EBITDA with few obvious synergies.
Petrobras’ post-election pop looks premature 6 Oct 2014 The $95 bln Brazilian petro-giant’s stock leapt after pro-business candidate Aecio Neves put in a strong showing against President Dilma Rousseff. But even if Neves wins in a runoff, Petrobras will still be saddled by the massive debt and bad investments of the Rousseff era.
Asset price disinflation may be next big thing 6 Oct 2014 Iron ore led the way, oil is following and stocks may be joining the bandwagon. Even some hot property markets are cooling. Less ultra-loose U.S. monetary policy is blamed, but this looks more like the spread of a disinflationary tide. If so, safe bond prices will keep rising.
Double-digit oil forces majors into more self-help 2 Oct 2014 The Big Oil groups already had a profitability issue before prices started falling. There’s no quick fix. They will have to step up efforts to boost cashflow by cutting costs and capex, and selling assets. At least balance sheets aren’t stretched, so dividends are safe – for now.
Encana’s pirouette demands greater fanfare 29 Sep 2014 The Canadian driller’s $7 bln acquisition of Athlon Energy cements a commitment to move from gas to shale oil. It’s paying a full price, especially after the recent fall in crude to $94 a barrel. If Encana can get the transition right, though, its valuation will deserve a lift.
Sinopec’s petrol station revamp is an uphill job 25 Sep 2014 The Chinese oil giant wants to sell more from its 23,000 pump-side stores. But even if non-fuel sales rise sixfold, the unit won’t be worth a lot more than the $58 billion valuation put on it by outside investors. Breakingviews’ calculator spells out the scale of the challenge.
Oligarch arrest shows Russia back to siege economy 17 Sep 2014 The owner of Sistema is being accused of money laundering. A row over his oil group Bashneft, eyed by state-owned Rosneft, may be the cause of his troubles. That would be the latest sign that, with sanctions hitting hard, Russia is turning back to its old authoritarian model.
Putin gives Exxon a blessing in disguise 16 Sep 2014 The Russian president’s belligerence drew U.S. sanctions that could squelch the oil giant’s $700 mln Arctic drilling venture. That may deprive the company of a shot at a gusher down the road. For now, though, it’s a chance to make needed cost cuts – and delay a risky project.
Sinopec $17.5 bln pump deal lacks reform drive 15 Sep 2014 The Chinese oil titan has sold 30 pct of its petrol station arm to 25 mostly-domestic investors. For them to get a good return, Sinopec’s convenience store sales will have to multiply. Yet the new shareholders have little retail expertise – and even less control over the unit.
Global glut means more pain for Europe’s refiners 11 Sep 2014 New plants in China and the Middle East will flood the world fuel markets, lifting output at the fastest rate since 1999. U.S. firms like Phillips 66, with access to cheap crude, can weather the storm. Rivals across the Atlantic, where margins are low, won’t be so lucky.