Energy

Suez/GdF merger comes back from the dead

28 Jun 2006

The French cabinet s confirmation it will push ahead with the privatisation of GdF after the summer makes the deal much more likely. But two big obstacles remain: EU clearance and a renegotiation of the terms. Suez may yet be able to swing both in its favour.

Rosneft pushes investor appetite for risk to the limit

27 Jun 2006

Investors beware. The Russian oil company s prospectus has 25 pages of reasons not to buy the company. Some are more worrying than others. But at the heart is whether investors are willing to take a punt on the Russian state.

Rosneft plays hardball with $60bn IPO

26 Jun 2006

The Russian oil company isn t bending the knee to Western investors by offering its stock at a discount. In fact, it's asking for a premium. The reason? It has Asian strategic partners who it thinks will buy shares. That strengthens Rosneft s hand. But institutions should be wary.

Has Anadarko put itself in play?

23 Jun 2006

It s long been seen as a target for a Total or Shell. And the $23.3bn takeovers of KerrMcGee and Western highlight its low valuation. But they also artfully insulate Anadarko from a takeover. A buyer would have to bid for all three firms.

Energy giants place different bets on oil’s future

19 Jun 2006

The investment decisions of the oil majors vary with their judgement on the outcome of the energy boom. BP has taken a bearish view while ConocoPhillips believes high prices are here to stay.

Suez/GdF merger heading for the long grass

16 Jun 2006

With the French government in disarray, the chances of a deal going ahead this side of the 2007 French presidential election look remote. For Suez shareholders, that will come as a relief. They now have a chance to unlock the true value of the French utility.

Russia to test bear market with Rosneft IPO

15 Jun 2006

Moscow is right to push ahead. It has a political timetable to stick to, and the Bank of China float shows large IPOs can get away. But while the timetable is intact, there's still a lot of uncertainty about Rosneft s valuation.

Sarkozy pulls rug from under Suez/GdF deal

13 Jun 2006

The French interior minister has spoken out against the merger of Suez and Gaz de France, making it that much harder for it to go ahead. But his proposed alternative that the two groups should buy stakes in each other is crackers and will destroy massive shareholder value.

Enel’s Suez demands aren’t realistic

13 Jun 2006

The Italian utility is now looking for a political deal that will allow it to share Suez s Belgian subsidiary. But this makes no sense. Enel s Conti has weakened his position by appearing to back down on his threat to go hostile. His credibility is now on the line.

Is Browne right to expect lower oil prices?

12 Jun 2006

The BP chief doesn t think peak oil production is at hand. So he anticipates an oil price of $40 per barrel. Or even $25 in the long term. But is he right? Possibly, as far as supply and demand are concerned. But politics and inflation could get in the way. The BP chief sees a mediumterm oil price of $40 per barrel. And a possible fall to $25 in the long term. True, the current high price is stimulating supply and constraining demand. But politics will have the last word.

Verasun IPO fuelled by ethanol exuberance

12 Jun 2006

A crop of ethanol producers is fetching premium IPO valuations. But their growth is predicated on unsustainable ethanol prices. As Alan Greenspan noted this week, the economics of the business aren t there. Investors may be in for some nasty surprises.

French Suez shambles revives Enel bid hopes

7 Jun 2006

The French government is in disarray over the privatisation of GdF, and there s now a real chance the merger with Suez will fall apart. That might make Suez shareholders more amenable to a bid from Enel, which has not gone away. But Enel must be careful not to overpay.

Kinder Morgan founder’s $22bn MBO offer looks cheap

30 May 2006

Richard Kinder is offering an 18% premium to take private the energy company he founded a decade ago. That looks low. The stock is already above the offer price. Kinder s 18% stake might discourage other bids, but the board should push for a better deal.

Enron duo found crooked at long last

25 May 2006

The convictions of Ken Lay and Jeffrey Skilling were no surprise and were not based on the nuances of style or demeanour. Evidence that the company s finances were shaky and that the defendants lied to hide the facts was simply overwhelming.

OMV scraps ridiculous merger with Verbund

24 May 2006

The Austrian oil group s planned takeover of its compatriot utility was a clumsy attempt to create a national champion. Combining the two made little industrial or financial sense. The resulting fall in OMV s share price destroyed the political logic too.

Mining sector sell-off is overdone

23 May 2006

Most mining stocks have underperformed the market this year. Yet even after the last week, metals prices are up massively. That s left mining stocks looking cheap. Xstrata understands this, which is why it is paying cash for Falcobridge.

Rosneft investors should demand a big discount

21 May 2006

The Russian oil group s IPO will highlight how much money the Kremlin made from the seizure of Yukos s assets. Russia showed scant regard for international investors interests then. Who can be sure it won't happen again?

Will someone put Repsol out of its misery?

11 May 2006

The Spanish oil and gas company has had a rough few months with a 25% cut in reserves and nationalisation in Latin America. Bidders may be holding off until all the bad news is out. But a deal would make sense.

Austria creates E29bn energy giant

10 May 2006

The marriage of oil and gas company OMV with utility Verbund looks to be one of convenience. The industrial logic isn t really there. It s hard to avoid concluding the Austrian government, which would own about 40% of the beast, has pushed its two champions together.

Shell promises more jam tomorrow – maybe

4 May 2006

To compensate Shell is offering more jam today through buybacks and dividends but at a fraction of BP s levels. The oil firm is investing hand over fist, but says rising costs may jeopardise its long term reserves and production targets.