Hugo Dixon: Gas and bank security have similarities 8 Sep 2014 Europe is conducting simultaneous stress tests on its lenders and energy suppliers. An effective regime for gas security requires many of the same elements as financial stability. The main difference is you can’t print gas if Russia turns off the taps.
Blowout BP oil-spill ruling brings sliver of hope 4 Sep 2014 The UK energy giant could pay $18 bln in penalties after a U.S. judge found it reckless in handling the Macondo well disaster. But punitive damages may be off the table, and the final tally could well be lower. Investors, at least, are showing they can stand the pain for now.
Scottish secessionists in bind over North Sea oil 4 Sep 2014 Both sides of the independence debate are arguing over how many barrels are left. Oil revenue is key for an independent Scotland to manage its finances. But the need to raise funds could undermine an equally vital imperative: tax breaks to incentivise flagging exploration.
Investors decide not to worry about the world 1 Sep 2014 The demise of the post-Cold War vision of Europe? Not a big problem, markets say. Nor do investors see the rise of Islamic State, arguably the biggest threat to Middle East peace in decades, as their issue. The financial indifference is defensible, but increasingly precarious.
Sinopec petrol sale attracts a motley bunch 19 Aug 2014 The Chinese oil giant is seeking investors for its vast network of filling stations. Retail, energy, technology and private equity groups are keen. With a price tag of $16 bln for a minority stake, they will have to club together. That will make it harder to exert influence.
Venezuela digs way to distressed seller status 14 Aug 2014 The country wants to offload Citgo, its U.S. refinery and pipelines unit. It may be worth up to $15 bln, money that’s sorely needed thanks to President Nicolas Maduro’s barmy economic policies. And the drop in value of heavy-oil assets like Citgo owns makes it a bad time to sell.
Petrobras woes go way beyond Brazilian president 12 Aug 2014 The energy giant’s stock is rising despite a 20 pct drop in profit last quarter. That’s largely because investors pin the firm’s problems on Dilma Rousseff – and sense she’s losing influence. They should watch Petrobras’ soaring debt and lagging oil output instead of the polls.
Kinder Morgan’s large-number solution: get bigger 11 Aug 2014 Energy boss Richard Kinder’s master class in financial engineering is back in session with $71 bln of deals to unite his sprawling pipeline empire. Various partnerships had reached a scale that was limiting returns. The new structure should benefit everyone but Uncle Sam.
Pemex troubles could drag down Mexican oil 8 Aug 2014 The nation is lifting its 75-year ban on private drilling while easing costs at the state-owned energy giant. That may boost falling output but won’t do much to make Pemex more efficient. Without a broader overhaul of the company, plans for an oil and gas revival may flounder.
Chevron’s gas deal setback a blessing in disguise 1 Aug 2014 The energy giant’s Canadian project is in doubt after partner Apache said it wants out. That may seem a blow to boosting flagging production. Like Exxon, though, Chevron has other gushers in the pipeline to help. And any reduction in capex after a couple of misfires is welcome.
Exxon’s Q2 production slump not as bad as it seems 31 Jul 2014 The oil giant beat estimates. But a 6 pct output drop, the worst in years, wiped up to $9 bln off its market value. Exxon, though, has several projects coming online that should reverse the decline. With capital spending on these all but over, cash flow’s healthy again, too.
REITs and MLPs make tax inversions a diversion 30 Jul 2014 U.S. authorities are letting Windstream call its telecom cables real estate, qualifying them for tax breaks. And a partnership will shield Hess assets from the IRS. Politicians, though, are indignant over firms that move overseas – even when home-grown tax loopholes are costlier.
Russia casts mid-sized shadow over BP 29 Jul 2014 The UK oil major’s results benefitted from strong upstream earnings, including a big contribution from its stake in Russian firm Rosneft. Sanctions and a court judgment have made Russia look less reliable, but the dividend looks safe. BP will have to rely more on self-help.
Yukos ruling casts Russia further into the cold 28 Jul 2014 The Hague’s arbitration court ordered Russia to pay $50 bln to the expropriated oil group’s former shareholders. Moscow will appeal, but could lose again. It will then have to either blow a hole in public finances or ignore the penalty – and spend years in debtors’ hell.
Pemex gives Big Oil an even bigger mess to fix 28 Jul 2014 Mexico’s energy giant lost more money in Q2. Chronic inefficiency is pushing crude output to its lowest since 1990. And the government upped its tax take to 132 pct of Pemex’s income. It’s a blessing and a curse for rivals finally allowed to participate in Mexico’s core oil biz.
Russian sanctions wide of bullseye for energy firms 24 Jul 2014 U.S. measures will raise financing costs for the likes of Rosneft or Novatek, but have limited impact on their projects with Western partners. Still, the threat of tighter sanctions, including from the EU, will keep the industry on edge.
Whiting bid for Kodiak leaves minorities in cold 14 Jul 2014 The Bakken oil driller is offering no premium in a $3.8 bln all-share bid for rival Kodiak. That’s OK for the 60 pct of shareholders who the companies say own both stocks – like hedgie John Paulson. And the deal’s logic is solid. But it short-changes the rest of Kodiak’s owners.
Renzi can show market bona fides with Eni shakeup 9 Jul 2014 Italy’s oil giant trades at a discount to peers partly due to project delays, geopolitical turmoil and downstream difficulties. Giving Eni more freedom to run itself for shareholders, and maybe sell its stake in oil-services firm Saipem, would best serve the state’s 30 pct interest.
Half-decade of $100 oil more blessing than curse 7 Jul 2014 The five-year average crude price is in triple digits for the first time. Global growth has been sluggish but not disastrous. The period also brought better efficiency, the fracking boom, cheap solar, and new products like Tesla’s. It’s a score for innovation against pessimism.
Linn pumps more risk into energy partnerships 30 Jun 2014 A $2.3 bln acquisition of gas wells by the largest drilling MLP is the latest example of how a sector once dominated by ultra-safe pipeline owners is becoming increasingly adventurous. Exposure to volatile U.S. gas prices puts the stable cash flow desired by investors in danger.