Brazilian blunders fuel a better Mexican oil plan 2 May 2014 State meddling, onerous buy-local rules and limits on foreign control slowed Brazil’s expected boom in crude. So its rival to the north has proposed looser regulation and more freedom for government-owned Pemex. The scheme faces hurdles, but it’s a recipe for boosting output.
Exxon investors can anticipate benefits of boring 1 May 2014 The oil giant isn’t the growth machine of yore, as falling production and a 4 pct slide in first-quarter income attests. But a fourfold rise in free cash flow from capital cuts shows it still pumps out cash. While not exciting, that allows owners to pocket generous dividends.
BP could be most tempted by BG 1 May 2014 Bid speculation around BG has intensified since the recent departure of the gas giant’s CEO amid fresh operational setbacks. Bigger majors like Exxon or Shell could be interested. BP might have better reasons to buy, though there are hurdles.
Record U.S. oil stocks show need for policy shift 28 Apr 2014 There’s more crude on hand than at any time in the last 30-plus years – perhaps since 1931. That reflects booming production. Drillers are getting less for their oil than global market rivals. The gap will tend to widen unless lawmakers rethink a long-running ban on exports.
Uncle Sam’s Putin sting also threatens investors 28 Apr 2014 Sanctions can cut both ways. The U.S. is targeting Rosneft boss Igor Sechin. Will Russia retaliate against BP, which owns 20 pct of the oil giant? Probably not, thanks to the British company’s approach. But all foreign business partners are subject to Putin’s wrath.
BG’s CEO exit highlights bid vulnerability 28 Apr 2014 Chris Finlayson is leaving the UK gas group abruptly after another profit warning. BG says it is a question of leadership, not strategy. Chairman Andrew Gould looks like a safe caretaker. But until a new CEO is in place, BG’s takeover defences are weak.
Suppose Brazilian CEOs saw light on pay secrecy 25 Apr 2014 Bosses of Vale, Ambev and other companies are fighting in court to keep their compensation under wraps. Concerns over privacy and kidnapping loom large. Yet there’s evidence that transparency could make them richer. Breakingviews imagines a closed-door meeting on the subject.
Sinopec retail sale is key to topping up its value 23 Apr 2014 The state-owned Chinese oil group is seeking investors for up to 30 pct of its petrol station arm. Though comparisons are tricky, multiples for other operators suggest a valuation of at least $50bln. A sale at that level could prompt a revaluation of the rest of Sinopec.
Regulatory dithering can cost the economy dearly 22 Apr 2014 The U.S. government’s continued deferral on the Keystone pipeline decision is a case in point. One year’s economic benefit from the project may be $1.8 bln; if the answer is no, the energy system can be optimized another way. Win or lose, regulators need to make up their minds.
Texas cracker spat hides Petrobras waste at home 22 Apr 2014 The state-run energy giant paid too much in buying a U.S. refinery for $1.2 bln in 2006, when President Rousseff chaired the board. But at $20 bln, a plant in Brazil is costing far more than similar facilities abroad. It’s a cash drain Petrobras and its investors can ill afford.
Exxon tries to make $133 mln of CEO pay invisible 16 Apr 2014 The U.S. oil giant says Rex Tillerson takes home less than peers – and far less than shown in SEC filings. Yet including stock he knows he’ll get later, he’s in the top spot. While delaying pay by up to 10 years is shareholder-friendly, claiming the CEO doesn’t receive it is not.
U.S. oil majors demand export satisfaction 4 Apr 2014 Energy Secretary Ernest Moniz threw down the gauntlet last month, effectively challenging the industry to make the case to ship crude overseas. Producers have laid out fresh evidence of benefits to GDP and jobs. Even if overstated, it’s a unique battle Big Oil needs to fight.
Anadarko’s $5.1 bln settlement adds up in market 4 Apr 2014 The U.S. oil driller’s pollution payment is at the low end of a court-defined range, which had a midpoint of around $10 bln. The 15 pct gain in Anadarko’s market cap equals that gap plus a small bonus for relief. And it brings the stock’s 12-month rise back in line with the S&P.
Oi’s botched offering besmirches Brazilian markets 3 Apr 2014 The telecom firm’s $10 bln share issue grants favors to top owners while severely diluting minority holdings. And the CEO’s big mouth almost derailed the deal. Still smarting from the failures of tycoon Eike Batista, Brazil can’t afford to test investor patience much further.
GM could use a tip from BP on contrition’s risks 2 Apr 2014 The automaker hinted it might compensate victims of faulty cars, despite the legal shield of its bankruptcy. The energy giant made similar concessions after the Gulf oil spill, with disastrous financial results. The cases differ, but both are reminders of conciliation’s perils.
Weir may struggle to extract a merger from Metso 1 Apr 2014 The Scottish engineer has tentatively bid for its $5 bln Finnish rival. A merger makes sense. But Metso has just shed a problem unit, has clear self-help plans, and is at a cyclical low thanks to its focus on mining. With two powerful backers, the Finns can afford to be patient.
Ukraine needs gas efficiency more than imports 31 Mar 2014 Congress is debating speeding up U.S. gas exports to curb Russia’s sway over its former satellite. A cheaper solution lies closer to home. Ukraine is the world’s second most wasteful energy user. Merely matching Romania’s efficiency would slash Ukraine’s gas bill by two-thirds.
U.S. LNG exports set for boost from Ukraine 28 Mar 2014 Though liquefying America’s plentiful gas for export makes business and economic sense, approvals are enmeshed in politics. U.S. gas wouldn’t reach Europe for years, but the energy implications of Kiev’s standoff with Moscow provide cover for lawmakers to give projects the nod.
Venezuela’s oil diplomacy is past its sell-by date 27 Mar 2014 The Bolivarian Republic still gives about $9 bln a year in free crude to the likes of Cuba. Even ignoring domestic shortages of staples, that’s enough to cover, say, a year of debt service. With economic cracks widening, President Maduro could start by cutting off this largess.
Exxon finally warms to climate change disclosure 24 Mar 2014 Investors fear that a crackdown on carbon emissions could make much of the energy giant’s crude reserves all but worthless. The company has agreed to reveal its assessment of that risk. The move could put Exxon ahead of rivals in weathering - and accounting for - global warming.