Fossil Fuels

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.

OPEC maintains illusion of control over oil price

15 Jul 2020

The producer group and allies stuck to plans to hike output, after coordinating a huge cut in April. While that will soothe jittery oil traders, a second virus wave would ruin the calm. And the more prices rise, the harder it will be to stop members pumping what they like.

Corona Capital: Tesla, OPEC

2 Jul 2020

Concise views on the pandemic’s corporate and financial fallout: Tesla speeds past its traditional rivals, and OPEC’s next meeting shapes up to be a bruising encounter.

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.

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.

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.

BP’s greener credentials sharpen focus on dividend

15 Jun 2020

The energy giant is writing off up to $17.5 bln after slashing long-term oil price forecasts. BP’s green transition would get an extra boost if it cut dividends to spend more on low-carbon output. But as Royal Dutch Shell has found, that irks investors it needs to keep sweet.

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.