Energy

Budging a little can win Veolia its trash crown

4 Sep 2020

Suez’s biggest shareholder Engie wants a higher offer from its waste rival. Veolia’s debt concerns give it only limited leeway. Still, a hike to 17 euros a share would give Suez investors a premium over pre-pandemic levels and still leave the buyer with an acceptable return.

Apollo and Abu Dhabi scratch each other’s backs

2 Sep 2020

A consortium led by the private equity titan has struck a $2.7 billion deal for a 49% stake in a real estate company held by the emirate’s energy group ADNOC. Apollo-linked insurers snap up long-term secure assets. Abu Dhabi gets a cash injection from selling the family silver.

Veolia’s trash dominance drive is worth the money

31 Aug 2020

The French water-and-waste group is at last pouncing on rival Suez. The 15.50 euros a share cash bid for Engie’s 30% stake is ballsy as a full takeover will face antitrust scrutiny. Yet the returns look attractive. Jumping on the green economy bandwagon should pay off over time.

Vestas wind blows holes in BP’s green ambition

12 Aug 2020

The oil major is late to the party it called in 2000 with its “Beyond Petroleum” rebranding. Renewables were cheap to enter back then, when the Danish wind turbine maker was worth under $2 bln. Not so easy now, with soaring orders and revenue puffing up Vestas’s value to $29 bln.

Aramco’s dividend defences are triple-locked

10 Aug 2020

The Saudi state oil giant is disbursing $18.8 bln despite quarterly earnings slumping to $6.6 bln. Ultra-low costs lend an edge over Western rivals. Low debt and priority for private shareholders are extra buffers for those willing to overlook environmental and social concerns.

BP gets serious about tough corporate reshaping

4 Aug 2020

CEO Bernard Looney’s dividend cut frees up cash for renewables investment. Plans to axe oil output by 40% by 2030 show added commitment to flicking the green switch. Selling assets is easy but growing new businesses is hard. BP risks ending up neither an oil nor an energy major.

Exxon boss drills deeper into strategic hole

31 Jul 2020

Darren Woods' business is already more indebted and capital intensive than Chevron or ConocoPhillips. Now he wants to slash costs to save Exxon's annual dividend. It's unsustainable even in purely financial terms: The $177 bln oil major’s performance no longer supports it.

Weakened Shell offers dim hope for pre-virus glory

30 Jul 2020

The $122 bln oil major’s sales fell nearly two-thirds in the second quarter, as the pandemic hurt crude prices. A dividend cut looks prudent. But a legacy of high debt, less investment and weak demand for fossil fuels mean investors are unlikely to see fat payouts restored soon.

Corona Capital: Baseball, Gas cloud, Luxury goods

28 Jul 2020

Concise views on the pandemic’s corporate and financial fallout: Baseball’s Covid-19 cases put popular college sports competitions in jeopardy; a recovery in drilling for gas is bad news for the environment; Gucci and other luxury retailers finally embrace the digital revolution.

Trump’s Venezuela curveball smashes more norms

27 Jul 2020

The U.S. belatedly asked a district court to reverse a decision allowing the forced sale of shares in refiner Citgo – a crown jewel among Venezuela's assets. Despite D.C.’s weak logic and wishful premise, it could muck up the case. There may be broader damage, too.

Centrica sale stresses scale of CEO repair job

24 Jul 2020

Shares in the UK utility jumped 20% after it offloaded its U.S. arm to rival NRG Energy for $3.6 bln. The cash helps CEO Chris O’Shea lower debt and a pension deficit which together total 4 times estimated 2021 EBITDA. Declining earnings still make it hard to restart dividends.

PetroChina’s $38 bln sale unlocks reform and value

24 Jul 2020

The state-owned giant is spinning off its oil and gas pipelines in an overdue shake-up that will allow more private competition. The assets will be divested at twice the parent’s book value. It’s a reminder that Beijing can attain its goals without hurting minority shareholders.

Silver rally may have a bright, green future

23 Jul 2020

The white metal’s price is up more than gold's so far this year. Silver’s industrial uses mean it shines when lockdowns lift, but there’s a political dimension too. As an ingredient in solar panels, it could benefit from U.S. presidential hopeful Joe Biden’s clean-energy plan.

Hydrogen investing is a lottery worth playing

22 Jul 2020

The element has huge potential as a carbon-free energy source. Prior false dawns, sky-high valuations and the difficulty of identifying which companies will endure are causes for investor caution. But the scale of the opportunity means there’s also a risk of missing out.

Seoul’s Green New Deal plants seeds for recovery

17 Jul 2020

Tackling climate change is at the centre of President Moon Jae-in's $133 bln stimulus plan. The country has a dismal environmental record, and previous green initiatives have disappointed. But the pandemic gives Moon a mandate to try again. Sceptics should give him a chance.

UK tests financial limits of green transition

9 Jul 2020

Britain’s regulator has halved the annual return energy companies can make by transmitting gas and electricity to under 4%. The cut is overdue given super-low interest rates. However, the watchdog’s zeal to squash excess profits risks choking investment for a zero-carbon future.

China-UK feud could spill over into nuclear power

7 Jul 2020

The two countries are facing off over Huawei mobile phone kit and Hong Kong. China’s key role in new British nuclear power stations may be the next flashpoint. Unpicking the agreement would upend strategic plans on both sides. But rising tensions suggest a rethink is looming.

Warren Buffett makes natural gas his new Dominion

6 Jul 2020

The Sage of Omaha’s energy unit is paying $4 bln plus debt for most of the U.S. utility firm’s pipelines for the fossil fuel. Natural gas prices have slumped thanks to virus-induced lockdowns. But the fuel’s future is more stable than oil’s, and Buffett has drilled a good price.

Oil majors’ Atlantic divide shows up in valuation

2 Jul 2020

U.S. and European producers’ divergence in climate change action is becoming increasingly obvious. Yet investors value Exxon Mobil and Chevron higher than Royal Dutch Shell and BP. At least for now, investors seem reluctant to view energy transition awareness as a good thing.

Tesla market milestone puts Musk pay in overdrive

1 Jul 2020

The Silicon Valley upstart has overtaken Toyota to become the world’s largest carmaker by market worth. Its rapid ride to a $210 bln value also starts the clock on another huge payout for CEO Elon Musk. But production and income show investors have gotten ahead of themselves.