Energy

Corona Capital: Drug hoarding, Vacation-free world

1 Jul 2020

Concise views on the pandemic’s corporate and financial fallout: Stockpiling of Covid-19 treatment remdesivir may come back to haunt the Trump administration, while a forecast of $3.3 trillion in lost tourism is more than an inconvenience for some national economies.

Corona Capital: U.S. recovery, Small-business aid

30 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: White House virus adviser Anthony Fauci’s estimate that U.S. cases could breach 100,000 a day is bad news for the economy. Plus: Uncle Sam’s loan program for small businesses comes to an end with money in the bank.

Bankrupt shale pioneer’s backers need new model

29 Jun 2020

Chesapeake enters Chapter 11 with funding to come out again. Supportive creditors may be right that there’s a future in U.S. fracking, which the firm helped develop. But making money was hard when borrowing and dealmaking were easy. It’ll be even tougher as climate risk bites.

BP’s $5 bln chemicals sale is easy bridge to burn

29 Jun 2020

The UK oil major is offloading its remaining petrochemicals assets to privately held Ineos. Selling out of a growth area for an unspectacular price would usually seem like a strategic goof. But BP was a small player, and CEO Bernard Looney needs cash for his zero-carbon pivot.

BP’s funky debt charts end of credit’s lockdown

18 Jun 2020

The oil major issued $12 bln of bonds that count as equity, its first such deal. Investors’ hunger for esoteric securities from a tricky sector illustrates their enduring need for yield, thanks to central bank largesse. A weak economy and risk-hungry markets are a dangerous mix.

Greening global recovery is cheaper than it looks

18 Jun 2020

Scattergun stimulus for virus-hit economies may increase carbon emissions. But new research suggests it would cost only a fraction of the $9 trillion mobilised to fight Covid-19 for policymakers to combat climate change and grow their economies at the same time. It’s worth a go.

Aramco’s SABIC saga ends in unhappy compromise

17 Jun 2020

The $69 bln that the oil giant has ended up paying for a 70% stake in the chemicals firm is a lot more than its current value. Aramco’s consolation is that it can pay SABIC’s owner, a Saudi wealth fund, over a longer period. But neither buyer nor seller is getting what they want.

Oil prices are stuck in a narrow tunnel

12 Jun 2020

After spiking above $40 a barrel, crude has now slumped again. Voluntary and enforced supply cuts have put a floor under the market after April’s shock falls. But the risk of a second coronavirus wave, and the difficulties of coordinating production hikes, point to a ceiling.

Tycoon’s rig empire leaves lenders deep underwater

3 Jun 2020

Oslo-listed Seadrill, founded by billionaire John Fredriksen, wants to swap its $7.4 bln of debt for equity. A slump in crude prices means creditors will face heavy losses. But, with oil majors retrenching and rigs heading for the scrapyard, a bankruptcy could be even messier.

Corona Capital: Bank fears, Payments M&A, Coal

2 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: A new U.S. regulator wants cities to reopen to prevent bank robberies. Western Union may bid for struggling rival MoneyGram. And the pandemic is hastening the decline of U.S. coal.

Energy’s titans will experience a dead cat bounce

21 May 2020

The virus-led crude price crash is upending petrostates and oil majors alike. Incumbent leaders with storage capacity and low costs might seem to be the winners as smaller competitors flounder. But they’ll fall victim to the longer-term behavioural shifts prompted by Covid-19.

Carmakers’ green future gets revved up by Covid-19

18 May 2020

The virus has added pollution fears to climate-change concerns. That should be a boon for electric vehicles when production restarts. But cheap oil makes gas guzzlers look even more economical. State incentives like trading in clunkers for EV discounts would help tip the balance.

Tesla pits electric-power hope against experience

14 May 2020

A big battery upgrade could soon make Model 3s as cheap as gas guzzlers, Reuters reports. That’d be a big leap ahead for electric vehicles and could also shake up utilities. But the infrastructure needs work. And boss Elon Musk has a history of overpromising and underdelivering.

Corona Capital: Air travel, Starbucks

14 May 2020

Concise views on the pandemic’s corporate and financial fallout: Airlines’ experienced hands offer warning; Starbucks begins dance with landlords.

Vedanta minorities can exact a better exit

14 May 2020

Tycoon Anil Agarwal wants to buy out a cash cow of his mining empire for $4.3 bln. True to form, the bid is opportunistically timed after a stock slump. Other shareholders have a route to improved terms but the group’s wider debt issues will limit how hard they push for more.

Aramco well placed for timid oil recovery

12 May 2020

The Saudi oil giant’s earnings slumped 25% in the first quarter, but its cash pile means it can keep dividends flowing. True, Aramco may not prevail in its Atlas-like attempt to prop up the world’s oil market alone. But there are tentative indications that it might not have to.

Climate activists get bigger bang from smaller ask

11 May 2020

U.S. fossil-fuel firms have been more resistant to shareholders’ demands on global warming than European rivals. But a majority of Phillips 66 owners just backed a climate vote that Exxon and Chevron will soon face. The activists’ success may be down to their more targeted scope.

Oil car crash highlights Aramco investors’ airbag

6 May 2020

The Saudi crude giant’s shares have fallen less than those of western peers. Shareholders’ scope to avoid the dividend cuts now hitting oil majors is one reason why. It helps that Riyadh may be able to borrow its way out of the crisis rather than have to drain its cash cow.

Trucks inch towards electric-vehicle critical mass

5 May 2020

Automakers have invested heavily in electric cars. But selling enough to justify needed infrastructure remains a chicken-and-egg problem. Putting batteries into the haulage fleets of Amazon, UPS and others could vault to a solution. A new report shows how utilities can help, too.

U.S. oil giants play chicken with shareholders

1 May 2020

Shell cut its dividend on Thursday and took a realistic outlook towards the fossil fuel’s future. But U.S. drillers are forging ahead as if the commodity’s only challenge is price. Without a thoughtful 30-year plan, Exxon and Chevron can only hope to tread water, at best.