Oil & Gas

Corona Capital: Extended Stay, Victoria’s Secret

22 Apr 2020

Concise views on the pandemic’s corporate and financial fallout: Blackstone checks back into one of its favorite old haunts, hotel chain Extended Stay; while another private-equity shop, Sycamore, tries to dump its proposed investment in lingerie seller Victoria’s Secret.

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.

Spurned Caltex can do some refining on its own

21 Apr 2020

Canada’s Couche-Tard abandoned its $5.5 bln plan to buy and break up the petrol station operator because of the pandemic. The Australian company’s mooted property spinoff looks like a poor consolation prize. It would make more sense just to proceed with the suitor’s blueprint.

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.

Singapore oil trading mess creates a long slick

20 Apr 2020

The founder of Hin Leong Trading, O.K. Lim, fessed up to hiding $800 million in losses. That’s bad for auditors and the banks holding $3.9 bln of related debt. It’s also tricky for the city-state’s status as an energy hub, and perceptions of privately held commodities firms.

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.

Shell helps avoid net-zero focus on climate change

16 Apr 2020

The oil major has followed BP in toughening its long-term carbon reduction ambitions. As with those of peers, the new goals are still not much more than a start. Still, with Covid-19 forcing Big Oil into crisis mode, their main virtue is to keep global warming on the radar.

Buffett may end up Occidental’s owner-by-accident

15 Apr 2020

The Sage of Omaha struck a clever deal with the shale driller by investing $10 bln through preferred shares. Now the oil price has halved, and on paper Occidental’s regular equity may be almost worthless. The true price of Buffett’s help is becoming clear.

Flaky oil output cuts will favour Saudi Arabia

15 Apr 2020

Supply curbs brokered by the United States make President Donald Trump look like a big winner. But the deal isn’t robust and won’t lift crude prices enough to prevent some U.S. shale producers from going bust. Riyadh could end up with a bigger market share once the dust settles.

Corona Capital: Oil cheerleading, Mortgaging Ford

13 Apr 2020

Concise views on the pandemic’s corporate and financial fallout: U.S. and Saudi energy ministers agree on pumping up oil, Ford may use an old trick to raise new capital.

OPEC throws sand in wheels of oil’s runaway train

9 Apr 2020

The producer group and allies like Russia are set to knock one-tenth off global daily oil output. The cut, which could rise if other countries agree to join in, might start draining the epic glut holding down prices. But it won’t do much if the Covid-19 demand slump persists.

Saudis’ Warren Buffett impression looks skin-deep

9 Apr 2020

The kingdom’s wealth fund looks to be ditching diversification by snapping up stakes in big European oil groups. Unless MbS knows something that others don’t, buying stock on the open market is riskier than a classic Sage of Omaha swoop. Oil groups may also be cheap for a reason.

Oil producers face their moment of truth

9 Apr 2020

After sparking a destructive price war last month, Russia and Saudi will discuss output cuts. Failure to agree could see supply bust through storage limits, sending prices below $20 a barrel. But, as a Breakingviews calculator shows, the required reductions are unprecedented.

Corona Capital: Expressive earnings

9 Apr 2020

Concise views on the pandemic’s corporate and financial fallout: The U.S securities regulator encourages companies to ditch the boilerplates, ahead of what’s likely to be an unusual earnings season.

Brazen Trump oil claims may yet fire partial deal

2 Apr 2020

A day before meeting with beleaguered U.S. crude-industry execs, the American president predicted an epic supply cut by Saudi Arabia and Russia. Yet he may only need a chunk of the 10 mln barrels a day reduction he’s hoping for to keep the U.S. shale industry from total collapse.

Big Oil might be a weird stock market haven

2 Apr 2020

Shares in the world’s big five listed crude producers are down by over a third since January. Yet despite the global oil slump, their dividends look secure for now. Rock-bottom prices would have to last well into 2021 for credit ratings or payouts to be in serious doubt.

Corona Capital: Uncle Sam’s penchant for boutiques

2 Apr 2020

Concise views on the pandemic’s corporate and financial fallout. The U.S. government has given a boost to independent investment banks by hiring Moelis. Perella Weinberg and PJT are its bailout advisers. Megabanks like JPMorgan and Goldman Sachs, meanwhile, are left on the shelf.

Rosneft Venezuela exit is not as good as it looks

30 Mar 2020

The $41 bln oil giant is selling its operations in the country to the Russian state to avoid more sanctions. Moscow is making a generous share payment but in practice keeps voting control. It’s a cheap way for the government to protect a key asset and send a message to the U.S.

Corona Capital: Ackman’s hedge, Oil stockpiles

26 Mar 2020

Concise views on the pandemic’s corporate and financial fallout, including investor Bill Ackman’s surprise reversal of fortune, and the U.S. shale oil bailout that wasn’t.