Fossil Fuels

Oil’s latest boost has longer-term thrust

25 Nov 2020

Multiple Covid-19 vaccines have lifted crude prices to March levels on hopes of an economic recovery. Producers may now pump like crazy, but renewed declines look less likely. Meanwhile, Big Oil’s virus-driven cuts to new supply should prop up prices further down the line.

Aramco’s mighty value reflects mini investor base

3 Nov 2020

Shares in the $1.8 trln Saudi oil giant are flat since January, while those of western rivals like BP have halved. Aramco’s solid and more-secure dividend explains some of the difference. But a tiny free float comprised of investors who are less likely to sell helps, too.

BP’s investment case falls between two stools

27 Oct 2020

The $54 bln oil major’s shares have sunk further than peers in recent months. Boss Bernard Looney won’t mind if his renewable energy shift leads oil bulls to prefer Exxon Mobil. He might get more bothered if investors find rival Total’s green transition more compelling.

Aramco pipeline spinoff plan is born of necessity

14 Oct 2020

The $1.9 trln oil giant is echoing Abu Dhabi-based peer ADNOC by discussing a part-sale of its distribution network with BlackRock and others. Aramco’s foreign investors’ dividend is safe. But financing state payouts and other activities requires the $10 bln it could raise.

Corona Capital: Oil, Delta, Hunger

13 Oct 2020

Concise views on the pandemic’s corporate and financial fallout: OPEC and the International Energy Agency issue forecasts that bode ill for crude demand; the U.S. airline steers through turbulence; and a food crisis is exacerbating problems facing the most vulnerable in society.

Big Oil’s green rush needn’t inflate a big bubble

6 Oct 2020

Total has joined BP in promising more investment in renewable energy. The risk is that deep-pocketed interlopers push up prices of wind farms and solar parks, eroding returns. Luckily for transitioning oil majors, the scale of new capacity needed to replace fossil fuels is vast.

North Sea drillers find mutually acceptable Plan B

6 Oct 2020

Private equity-owned Chrysaor and listed Premier Oil are uniting in a $7 bln merger. Ideally, the former would have gone public via an IPO, not a reverse takeover, and the latter’s creditors would have avoided a haircut. But the oil price rout left both with second-best choices.

Utility mega-deal may create wrong kind of sparks

30 Sep 2020

NextEra’s tilt at rival Duke could create a $200 bln giant, spanning clean-energy generation and lighting homes across the American south. NextEra’s juiced-up shares give it a currency. But the need to please watchdogs suggests a deal has to be harmonious, and probably expensive.

Corona Capital: NYC

30 Sep 2020

Concise views on the pandemic’s corporate and financial fallout: New York City’s economic reboot comes up against a new outbreak.

China’s green goal could lead to a virtuous circle

29 Sep 2020

Beijing’s pledge to decarbonise before 2060 requires major electrification using renewable energy. The catch is that key parts of that strategy, like hydrogen power, remain too pricey. Yet if political focus helps make them cheaper, the benefits will not just be felt in China.

Corona Capital: Shale merger, Logistics startup

28 Sep 2020

Concise views on the pandemic’s corporate and financial fallout: Two Permian Basin oil drillers agree to merge to share their coronavirus demand-shock woes; and delivery upstart ShipBob gets some SoftBank cash to help it compete with Amazon.

BP limbers up for green transition high-wire act

14 Sep 2020

The UK group is the first oil major to pivot to wind and solar in a big way. To fund the shift, CEO Bernard Looney has cut the dividend and assumes higher oil prices. Even then, investors face years of relatively spartan payouts, and uncertain returns from green investments.

BHP selfishly brushes up green credentials

18 Aug 2020

Surging iron ore sales cushioned declines in other commodities as annual earnings fell 4% to $9 bln. Boss Mike Henry plans to ditch some high-polluting energy assets, albeit for economic, not environmental, motives. Regardless, a cleaner portfolio makes business sense.

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.

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.

Chevron snags Noble deal thanks to Anadarko miss

20 Jul 2020

The oil giant, which let Occidental impale itself on Anadarko last year, is lobbing a scant 7% premium for Houston’s $5 bln Noble Energy. While driller shares have rebounded, savings alone will account for half the bid’s value. Chevron can even afford to keep interlopers at bay.

Corona Capital: Uber, Tokyo Olympics

20 Jul 2020

Concise views on the pandemic’s corporate and financial fallout: Uber’s contact-tracing program could help stem Covid-19’s spread and mend relationships with municipalities; and Japan PM Shinzo Abe faces discontent over his handling of both the virus and the postponed Olympics.