Petrobras struggles even with baby steps 27 Mar 2013 Brazil’s state oil giant needs to find $15 bln to afford $50 bln of government-mandated capital spending. It’s already cut the dividend. Now it plans to sell its Nigerian wells. That may only raise a third of what’s needed. And Petrobras has a poor record of flogging assets.
U.S. energy sector activists not quite out of fuel 26 Mar 2013 Hedge fund Audley’s effort to inject fresh board blood into $1.8 bln coal miner Walter Energy suggests bigger targets with egregious governance like Chesapeake and Hess are growing scarce. But there are still a few, like Apache and Devon, where weak performance invites scrutiny.
Cyprus will struggle to make gas math work 22 Mar 2013 The struggling island is thinking about bundling future gas revenues into a fund to stave off financial collapse. But Breakingviews calculations suggest the recent discoveries off the country’s south coast won’t be enough to plug a 5.8 billion euro funding gap.
ETE’s $30 bln pipeline empire still too tangled 21 Mar 2013 Not since Chesapeake have energy investors had to wrap their heads around such a convoluted structure as the Energy Transfer family. A $3.75 bln deal eliminates one company from this four-headed beast. But the group still pays a high price for being too impenetrable.
Elusive future gas riches can’t help Cyprus now 20 Mar 2013 Even if early estimates of huge gas reserves prove right, recent finds off the Mediterranean island’s coast will take time and money to exploit. The dicey politics of exporting gas from Cyprus also poses risks to development. For now, Cyprus’ natural gas potential remains just that.
Icahn’s payout plan could put driller in a hole 19 Mar 2013 The billionaire activist is pushing Transocean for a $1.4 bln dividend. That’s nearly half the U.S. drilling outfit’s annual cash flow and could preclude upgrades to its aging rig fleet. The company’s counter of an $800 mln payout should appease investors while keeping operations humming.
Eni’s $4.2 bln gas deal has something for everyone 15 Mar 2013 Offloading 20 percent of a big Mozambique gas field to China’s CNPC cuts the Italian major’s development risk. China gets access to huge new energy supplies, at a price that vindicates Shell’s decision to pass up a more expensive deal last year. Mozambique wins, too.
Activists bring oil execs back down to size 14 Mar 2013 First they claimed the scalp of Chesapeake boss Aubrey McClendon for egregiously abusing his position. Now dissenting shareholders have all but ousted SandRidge’s Tom Ward and forced Nabors to cut pay. These are welcome victories in a sector notorious for big, mollycoddled egos.
Chevron stands to keep gaining on Exxon 12 Mar 2013 Over the last five years, shares of the second-largest U.S. oil company have vastly outperformed its larger rival’s, yet Chevron’s valuation still lags. As boss John Watson woos investors, there’s a good case that output growth and a focus on oil favor the gap closing even more.
Intrade sheds light on gray markets going dark 11 Mar 2013 The site, which took bets on everything from elections to oil, closed abruptly and mysteriously. Intrade’s predictive record was good, but didn’t foresee the rising controversy over under-regulated speculation. It’s a cautionary tale for the likes of SecondMarket and StarStreet.
Big Oil finds a new rallying cry: we’re green too 6 Mar 2013 ConocoPhillips boss Ryan Lance told colleagues at the industry’s annual CERA conference in Houston that they should take more credit for U.S. carbon emissions dropping by 13 pct. He has a point. Not everyone will care, but it’s a handy point to make when lobbying Washington.
Venezuelan oil gets a slightly new sheen 6 Mar 2013 Under Hugo Chavez, state-controlled PDVSA spent twice as much on welfare as it invested in production. Reversing the ratio would better exploit the world’s largest reserves. Whoever succeeds Chavez, however, probably will follow his model - at least until the price of oil falls.
Hess rejects activist push – by caving to it 4 Mar 2013 The $24 bln oil company’s inefficient sprawl and cozy board made it a ripe target for Elliott Management. Hess claims the hedge fund’s prescriptions are wrongheaded, but is selling assets, nominating new directors and returning capital. That’s much of what Elliott was pushing for.
SEC goes where Chesapeake board feared to tread 1 Mar 2013 The watchdog has launched an investigation into the gas company’s disgraced CEO Aubrey McClendon. Shareholders suing the company will welcome the news. But Chesapeake’s directors should have set up a more impartial inquiry themselves. That oversight could prove costly.
Big oil’s novel problem: fifty shades of gray 27 Feb 2013 Nearly half of petroleum engineers will hit retirement age in the next decade, leaving a skill shortage because of a 1980s hiring hiatus. Based on the last such occurrence, the lack of experience may lead to a $120 bln productivity drain. It’s a hidden risk in the price of crude.
A $4.3 bln oil deal parlays financial engineering 21 Feb 2013 Linn Energy’s purchase of Berry Petroleum is the first time an oil master limited partnership has swallowed a whole exploration company. The bold move leans on the tax advantages of such structures and raises the sector’s risk profile. Linn’s 8 pct yield is a necessary buffer.
Weakened Gazprom still packs a punch 19 Feb 2013 Gazprom’s grip on European markets is weakening, and it may soon face more competition from fellow Russian producers. But the gas exporter’s customers and rivals can’t get complacent. Gazprom may be a hegemon in retreat, but it’s not a spent force yet.
SandRidge board needs more reasons, fewer excuses 11 Feb 2013 Activist fund TPG-Axon wants to replace directors. A response that’s big on scare tactics doesn’t cut the mustard. One rebuttal - that such an overthrow could trigger a $97 mln payout to the CEO - only betrays the board’s weak governance record. Shareholders deserve better.
Canada-U.S. oil pipe beats shipping options 8 Feb 2013 Washington is stalling on the Keystone pipeline, so Canada is exploring alternatives for its oil-sands crude. But exporting it on tankers would be more polluting and riskier. American NIMBY opposition to Keystone is bad for the planet as well as for the nation’s energy supplies.
Eni crisis is a buying opportunity 8 Feb 2013 Days after the Italian oil major was hit by a profit warning at engineering subsidiary Saipem, a probe into alleged bribes has thwacked the shares again. Eni deserves a discount, and there’s plenty of uncertainty. Still, the 6 bln euro hit to its market cap looks excessive.