Shell shares are justifiably expensive 1 Nov 2012 Despite some hiccups in the latest quarter, there was nothing in the Anglo-Dutch oil giant’s results to weaken its investment story. Shell has no shortage of opportunities to invest, a jump in cashflow lies ahead. The shares are pricier - but safer - than rival BP’s.
Exxon diversification masks ailing production 1 Nov 2012 A doubling of refining earnings helped the U.S. energy giant to a $9.6 bln Q3 profit - and a smaller decline from 2011 than pure explorers like Conoco. Exxon’s portfolio can be justified if different units smooth earnings. But in this case it’s hiding a losing bet on U.S. gas.
BG Group shows peril of sailing close to the wind 31 Oct 2012 The UK gas company’s shares fell 18 pct after predicting flat output next year due to project delays. That’s harsh. But without growth, richly valued BG is just another driller wrestling with debt and rising costs. A lost year will hurt credibility - and the trading multiple.
Eike Batista comes to his own rescue 26 Oct 2012 With his energy and infrastructure empire a mess, the Brazilian billionaire is trying to hold things together. He offered to buy $1 bln of oil company OGX stock at a premium and is also raising his stakes in two other units. In this case, shareholders should beware the buyer.
Conoco already falling behind new chosen peer 25 Oct 2012 After shedding its refineries in May, the energy explorer set its earnings to coincide with new rival Occidental. Conoco’s Q3 profit of $1.8 bln beat expectations. But output slipped, while at Oxy production increased 4 pct. Conoco has its work cut out to keep shareholders happy.
Rosneft buy may leave Russian oil industry wanting 24 Oct 2012 The country needs to enhance the efficiency of its lucrative oil business. Rosneft’s $55 bln swoop on Russia’s number-three producer might help, if TNK-BP’s superior oilfield know-how rubs off on the lumbering state-dominated giant. More likely, the deal will stifle competition.
Russian resolution helps put BP in play 22 Oct 2012 The UK oil major is exiting its fractious Russian JV for $12 bln in cash and 19 pct of state-backed Rosneft. If a settlement for the Gulf of Mexico disaster follows then BP will be free of poison pills. Factor in weak shares and wounded management and it’s an enticing bid target.
Spat with Exxon bad for Iraq – and oil consumers 18 Oct 2012 The U.S. major may exit the country’s top field, and Baghdad could push Exxon and others out of deals with Kurdistan. The tangle undermines hopes that Iraq could supply half the expected increase in world crude demand by 2035. Falling short would cost Iraqis and raise oil prices.
Rosneft offer could give BP cash flow headache 18 Oct 2012 The Russian state-owned group is about to make an offer for BP’s stake in TNK-BP. The UK oil major would lose access to the cash flows from its Russian joint venture. It would be better if Rosneft bought out BP’s oligarch partners. But Russian energy politics could preclude that.
U.S. energy boom spurs economic vs political clash 18 Oct 2012 Meaningful exports of oil are banned. But with output surging and crude fetching a 20 pct discount at home, producers want to ship it overseas - a red flag in Washington. There are similar reasons to export gas, but big practical hurdles. Unblocking trade could benefit everyone.
No need to dress up Exxon gas deal as an oil play 17 Oct 2012 The energy titan says it is buying Celtic to spur crude production. But the Canadian firm’s assets are 75 pct gas. The feint is understandable, given investor grumbling over Exxon’s splurge on gas producer XTO. With exports to Asia looking up, though, the $2.6 bln deal makes sense.
Oligarchs and BP would both score in Rosneft deal 17 Oct 2012 Rosneft has agreed to pay four billionaires $28 bln for half of TNK-BP, Russia’s third-biggest oil producer. It’s a good price, although the mix of cash and shares on offer is unclear. And the state giant would be doing a big favour for the oligarchs’ joint-venture partner BP too.
Murphy’s law means something new for Big Oil 17 Oct 2012 The U.S. energy company’s value jumped 8 pct after executives said they would split off its retail business. Sure, they only acted after pressure from activist investors. But if larger players like Marathon follow suit, it could unlock billions of value for shareholders.
Gas and electricity may put UK QE on back burner 16 Oct 2012 UK inflation is down to 2.2 percent but is going to head back up. The energy companies have announced large gas and electricity price rises. That’s bad for UK consumers and growth. But it should also make the Bank of England wary of printing still more money in November.
BP’s Russian partners threaten shaky plan B 9 Oct 2012 The UK oil major’s oligarch partners say they want to list or sell 50 pct of TNK-BP if they can’t buy BP’s other half. But a float would mean a hefty governance discount, and there isn’t an obvious alternative bidder for the Russians’ stake. Full value isn’t around that corner.
Oil price benchmarks left at risk of Libor moment 8 Oct 2012 Soft proposals from those who oversee influential oil price yardsticks may leave the likes of Brent open to insider manipulation. Braver reform - along the lines followed by the UK financial watchdog fixing the scandal-hit Libor interest rate - is merited.
Oil industry steals page from pharma M&A playbook 3 Oct 2012 Honeywell’s purchase of Thomas Russell was the ninth oil services deal in as many days. Scavenging the deep sea and icy climes requires exploration DNA. Specialized technology is becoming to energy giants what biotech is to the drugs sector. Smaller firms are in big demand.
Shale gas-led U.S. boom is lesson for wary Europe 25 Sep 2012 In five years, the price of natural gas has halved in the U.S. and doubled in the UK. One result is an industrial renaissance in America. Europe could do with the economic and political benefits of plentiful gas, too. EU governments, reluctant to allow fracking, need to rethink.
Mexican oil giant can take lessons from Brazil 21 Sep 2012 President-elect Enrique Peña Nieto is eyeing Latin American lessons for revamping downtrodden state-owned Pemex. Mexican law bars private investment in oil, but related businesses are less constrained. Cutting taxes on Pemex is another option. Reform may have to start small.
Exxon picks right place at wrong time for U.S. oil 20 Sep 2012 A $1.6 bln purchase of North Dakota assets could herald more deals to come for the energy titan. The state is America’s fastest-growing producer, but its low jobless rate means oil production costs are soaring. Exxon’s renewed if belated interest in domestic crude cuts both ways.