Fossil Fuels

Exxon climate activists can call in reinforcements

28 May 2020

Environment-linked resolutions won less backing at the $193 bln energy firm’s annual meeting on Wednesday than at rivals’. Replacing directors is the next logical step. It’s a task traditional activists are more used to – and Exxon’s poor financial record could pull them in.

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.

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.

Mukesh Ambani gives Saudis a run for their money

4 May 2020

A $7 bln rights issue backstopped by the Reliance Industries boss will help keep his promise to cut debt. Although smaller than a delayed deal with Aramco, the discounted stock sale is a record for India. The symbolic significance should instil more confidence amid the pandemic.

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.

Chevron is M&A-ready. Exxon, not so much.

30 Apr 2020

The oil-price rout has left small and mid-tier U.S. drillers in pain and ripe for takeovers. Major players are hurting too, but Chevron, though not as big as Exxon, has been more prudent with cash and debt, and its stock has held up better. Occidental may even be in its sights.

Shell’s dividend surrender is a necessary evil

30 Apr 2020

Given it hadn’t reduced shareholder payouts since WW2, the Anglo-Dutch major’s two-thirds cut hurts its pride. But amid an epic price crash boss Ben van Beurden couldn’t have kept Shell’s rating and paid to transition from oil. Stubbornly clinging on would have been even worse.

U.S. oil bailout should pay to still the drill

28 Apr 2020

The White House is mulling how to keep the fossil-fuel industry afloat. Emergency loans or equity stakes have many drawbacks. Compensating companies for keeping black gold in the ground has risks, too. But it would give Uncle Sam a semblance of control over demand and price.

BP’s dividend sangfroid may not last long

28 Apr 2020

The oil giant held its payout steady in the first quarter, despite crude prices falling off a cliff. CEO Bernard Looney has enough cash to keep it up this year. But debt has spiked and oil is now even cheaper. At the very least BP should let investors take dividends in shares.

Oil market inferno claims victims of all sizes

24 Apr 2020

This week’s price crash in U.S. crude looks an age-old example of small retail investors getting burned while savvy institutional players supply the matches. That does seem to have been part of the story. But some professional money managers probably also got singed.

Corona Capital: Primed debt, Lysol

24 Apr 2020

Concise views on the pandemic’s corporate and financial fallout: Senior creditors get “primed”; Reckitt Benckiser warns customers not to inject Lysol.

Russia’s oil-and-virus airbag is robust but finite

24 Apr 2020

The double whammy of a crude price collapse and Covid-19 could cause a hefty budget deficit. Moscow’s $170 bln wealth fund can plug a hole worth 5% of GDP if need be. The issue is more the optics of raiding the piggy bank while looking relatively stingy on subsidising wages.

Viewsroom: The F’d up oil market

23 Apr 2020

Breakingviews columnists in London, Mumbai and Brooklyn discuss what’s going on in the global energy markets amid the coronavirus crisis, as well as Facebook’s big Indian deal and the U.S. government’s attempt to prop up small businesses with the Paycheck Protection Program.

Corona Capital: Merger bans, Moelis, Domino’s Pizza

23 Apr 2020

Concise views on the pandemic’s corporate and financial fallout: U.S. politicians plan a curb on opportunistic M&A, advisory boutique Moelis cuts its dividend, and Domino's delivers.

SEC puts small plug in oil ETF loss gusher

21 Apr 2020

The U.S. agency has stopped USO, a popular exchange-traded fund used by investors to bet on oil, from creating new shares. Stemming the fund’s growth may help trading in a futures market wracked by negative prices. But it won’t stop its investors facing huge losses.

Sub-zero oil trauma rips off investors’ blinkers

21 Apr 2020

A day after the cost of U.S. crude for delivery in May turned negative, the price of June contracts for both West Texas Intermediate and Brent fell by a fifth. Investors are having to face up to a supply glut that is outstripping storage capacity. Prices may fall to zero again.

Oil’s big crash is more rational than it looks

20 Apr 2020

U.S. one-month crude futures went below zero for the first time ever on Monday. With the May contract about to expire, the slump is partly driven by technical factors. But the wider panic – that recent output cuts won’t stop storage being filled – couldn’t be any more real.

Dividend cuts are the new shareholder-value trade

17 Apr 2020

Schlumberger’s stock surged after the company slashed its payout by 75%. Granted, it’s because investors are now more comfortable with the $19 bln oil-services firm’s balance sheet. But as virus pain spreads across industries, ditching dividends’ sacrosanct status is a must.