Energy

Past storms are still blowing against Orsted

15 Aug 2024

The Danish renewable energy firm has gained nearly 60% in market value since surprise US impairments shook confidence last year. Upcoming rate cuts can help but wind farm delays and supply chain risks remain. CEO Mads Nipper will find it hard to get the stock out of the doldrums.

Iran danger marks return of oil’s risk premium

13 Aug 2024

Conflict in Gaza and tit-for-tat attacks in the Middle East have desensitised markets to possible supply shocks. A US warning of imminent retaliation against Israel changes that. Despite weaker demand, oil prices reflect the dangers of infrastructure and tankers becoming targets.

Power grids’ low-wattage resources may spark M&A

13 Aug 2024

European electric utilities have to invest big to meet rising demand. Yet balance sheets are laden with debt and raising equity is tough. Some will have to sell assets, or whole companies. Iberdrola’s $5 bln acquisition of a UK peer at a decent premium could be the first of many.

Glencore may be the next UK listing to head west

7 Aug 2024

The $61 bln miner had planned to spin off its coal unit via a New York IPO. Given the pollutant’s profit remains alluring, it now won’t. But Glencore boss Gary Nagle could weigh up US investors’ greater fondness for fossil fuels, and opt to move the whole company instead.

Exxon’s dominance may not be good for Exxon

2 Aug 2024

The oil giant’s quarterly results show why its shares have outperformed Chevron's. Its $60 bln acquisition of Pioneer is reaping more savings, while production in the giant Permian and Guyana fields hit records. Exxon’s power is growing, but it could use friends here and abroad.

Airlines’ margins head to lower cruising altitude

2 Aug 2024

Carriers from $2 bln Air France-KLM to $7 bln Lufthansa reported healthy demand in the first half of 2024. But earnings are falling as expenses bite. With the switch to sustainable aviation fuel threatening to push costs ever higher, investors are bracing for smaller margins.

Shell-BP fantasy M&A has some grounding in reality

1 Aug 2024

Merging the two big UK oil groups is an idea that’s decades old. Shell boss Wael Sawan has minimal need or inclination to take the plunge. But $97 bln BP’s cheap valuation and potential synergies mean his hand might be forced if a rival lobbed in a bid, or if oil prices slumped.

Green hydrogen fever gets needed doses of reality

1 Aug 2024

Over the past five years, supporters argued the low-carbon gas would be a big fossil fuel killer. Cost and science makes much of that fanciful. Fortescue nixing production goals and EU targets being dubbed too ambitious suggest the industry is getting more practical and smaller.

Jilted M&A target opens books on data room angst

29 Jul 2024

Oil giant Phillips 66 is due in court over charges it stole trade secrets while deep in talks to buy Propel Fuels. Penalties could be as high as $3 bln. Just as punitive would be greater suspicion from future prey. Even before money changes hands, dealmaking is riddled with risk.

UK growth fix can start with pampered rich savers

19 Jul 2024

New Prime Minister Keir Starmer wants to unblock Britain’s dismal economy. One aid would be to raise revenue by cutting superfluous tax perks for wealthy savers. Another is to find a way to deploy UK savings in more growth-enhancing assets than is currently the case.

UK green fund has risky but valid investor carrots

10 Jul 2024

The new government’s ‘National Wealth Fund’ is really $9 bln of public cash with capped returns. The risk is private investors slated to provide treble that figure get too good a deal. But with the UK’s energy transition requiring $64 bln a year, a degree of largesse makes sense.

Copper’s green step change is an uphill struggle

9 Jul 2024

Supplies of the red metal have to motor if the world is to adequately decarbonise. In this Exchange podcast Tae-Yoon Kim, senior energy analyst at the International Energy Agency, lays out the challenges that need to be overcome if the private sector is going to make that happen.

Data centre boom reveals AI hype’s physical limits

4 Jul 2024

The investor frenzy over artificial intelligence assumes there will be enough infrastructure to support apps like ChatGPT. But a $1 trln rush to build data centres faces planning restrictions and energy constraints. That will limit processing power and push up costs for users.

Middle East reignites Santos’ M&A pipe dreams

4 Jul 2024

Shares of the $17 bln Aussie driller jumped on a Bloomberg report that Aramco and ADNOC are each studying bids. That may yet lure in BP, Chevron and others. But the return on investment remains as ho-hum as when Santos CEO Kevin Gallagher opened the door to a deal last year.

Net zero arbitrage is large, but no one-way bet

14 Jun 2024

There’s a big gap between the rich world’s ambitions to reduce carbon emissions and the ability of governments to achieve that goal. Investors can try to exploit that disconnect. However, economic, technological and geopolitical constraints can quickly change in unexpected ways.

Biden’s hydrogen goals are like oil and water

4 Jun 2024

The White House wants to foster production of the abundant element as an alternative to fossil fuels, but oil and gas companies want a chance to pitch in. Environmentalists see that as a trap. Even so, there may be no choice but to extend oil majors like Exxon an olive branch.

Aramco’s $12 bln share sale is borne of necessity

31 May 2024

Saudi Arabia is selling an extra 0.6% slice of the $1.9 trln oil giant. Riyadh needs cash because budget concerns have delayed projects to diversify its economy. The company’s low valuation versus global rivals makes the timing suboptimal. At least buyers get an attractive yield.

Conoco’s Marathon deal is cheap and cheerful

29 May 2024

As rivals like Chevron buy premium assets at high prices, the $139 bln Conoco is bagging OK assets at a reasonable $23 bln. The return on investment of 10% is attractive, though. And it leaves the oil sector positioned for future consolidation – maybe with Conoco as a target.

Chevron has chance to save doubtful Hess deal

17 May 2024

If Hess shareholders are sensible they will vote down Chevron’s uncompelling $51 bln offer. The premium is small and closure is uncertain. Besides, Hess’s offshore crown jewel in Guyana may be gaining in value. Chevron has a brief opportunity to up its game.

Wood Group is parable for takeover-wary UK boards

16 May 2024

Shares in the energy-services group have languished since Apollo ditched a $2 bln proposed bid last year. The board is struggling to get a new suitor to match the old price. With UK firms facing record takeover interest, it’s a reminder that cash premiums are often hard to beat.