Energy

CNOOC walks away from $18.5bn Unocal bid

2 Aug 2005

In the end, the political hurdles in the US proved too much for the Chinese oil company to handle. This is bad news for Unocal shareholders. US politicians beating the protectionist drum should hang their heads in shame.

New Royal Dutch Shell is same as old Shell

28 Jul 2005

The unification of the oil giant s shares increased Shell s index weighting and gave the stock a technical boost. But now it's back to fundamentals. And here Shell still lags its main competitor BP in profits, production growth, dividends and buybacks.

British Energy premium doesn’t make sense

27 Jul 2005

Thanks to rocketing power prices, the UK nuclear group now trades at a premium to the sector. The market seems to assume high power prices are here to stay and that British Energy's troubles are behind it. These are big assumptions.

Oil firms struggle to find a home for their cash

24 Jul 2005

Despite cutting debt and boosting capex, dividends and buybacks, oil firms are awash with cash. One solution is to gear up again and spend the proceeds on megabuybacks.

Chevron sweetens Unocal bid

20 Jul 2005

The US oil group has raised its offer by 4% and increased the cash component. That's just enough to close the gap with Chinese rival CNOOC. But it only holds if Chevron s shares don t fall. Unocal's board backed Chevron's $17bn bid, but the Chinese still have room for manoeuvre.

Shell hit again by the Watts effect

15 Jul 2005

The oil giant certainly seems to have looked on the bright side under its former CEO, Sir Phil Watts. It didn't just overegg reserves; it also seems to have underestimated the cost of developing the giant Sakhalin gas project.

Oil fund launch is sign of speculative fever

14 Jul 2005

The new exchangetraded fund is intended to cash in on soaring oil prices by luring in retail and institutional investors. But the ETF faces a big problem. Contango in the oil market means investors may suffer a loss, independent of whether prices rise or fall.

Energy prices close to critical levels

10 Jul 2005

Comparisons with previous oil shocks suggest oil prices will have to reach at least $100 a barrel before they change people's behaviour. That may still seem a long way off. But if one factors in the effects of soaring natural gas prices, we may be there already.

Unocal mulls whether to recommend CNOOC bid

7 Jul 2005

If oil were an ordinary business, Unocal s board would have a simple job. It would recommend the higher Chinese cash offer. But politics and nationalism has queered the pitch as it did during the Man Utd bid. Then, as now, the best price should prevail.

Should Shell sell its refining business?

6 Jul 2005

Downstream has always been the poor relation of upstream activities such as exploration and production in the oil industry. But thanks to soaring refining margins, downstream is staging a comeback. More companies including Shell might think about cashing in.

UK prepares to dismantle BNFL

29 Jun 2005

The government gave up on wholesale nuclear privatisation following problems at the Sellafield nuclear site in 2003. But it hasn t given up wholly on privatisation. So now it is going to break the nuclear operator up, selling of the juiciest bits.

Shell merger creates share dilemma

28 Jun 2005

Investors looking to increase their weighting in the oil giant before it merges its holding companies must choose between A and B shares. In the long run, it shouldn't make much difference. The bigger question is when to switch into BP.

US lawmakers urge review of CNOOC deal

27 Jun 2005

The Chinese are fast replacing the French as the nationality Americans love to hate. But criticism of the Unocal takeover is off base. It largely ignores the fact that without the free markets that engendered the deal, US oil companies would have no assets to speak of.

What should Chevron do next in Unocal battle?

27 Jun 2005

It would be crazy to get into a bidding war with China s stateowned CNOOC over Unocal. That would be a mug s game. Certainty is the card Chevron should play. To further reassure investors, it could use a collar to guarantee the value of its bid.

China goes hostile with $20bn cash Unocal bid

23 Jun 2005

But there's no certainty the Chinese bid will pass muster with either the company or the US government. Stateowned CNOOC looks to have delivered a knockout blow by offering some $1.5bn more for the US oil company than Chevron's bid.

Huge utility stock sales may be digestible

21 Jun 2005

European governments plan to sell E9.5bn of utility stock in the next few weeks seemingly enough to swamp markets. But as this week's highly successful float of Belgian utility Elia shows, investors still crave highyielding, regulated assets.

Does wind power make financial sense?

14 Jun 2005

Power companies and institutional investors are pouring money into wind power in the expectation of up to 30% returns. But the economics of the industry remain heavily dependent on government support and the vagaries of the wind itself.

Has UK power deregulation worked too well?

10 Jun 2005

The wholesale price of electricity has hit record highs, but for gasfired plants the spreads over fuel costs have fallen to record lows. Spreads will need to rise soon if new capacity is to be built in time for when it is needed.

Drax mulls IPO, but it won’t be an easy sell

9 Jun 2005

Creditors that took over the UK power station when it failed in 2002 now want to sell out taking advantage of high power prices. The refinancing looks pretty sensible from almost every point of view except that of incoming shareholders.

Veolia to offer inflation-linked bond

2 Jun 2005

The French utility hopes to tap into rising demand for such debt. And it would provide a natural hedge for the regulated business. But the time to issue such bonds is when inflationary expectations are high. That is hardly the case right now.