Oil & Gas

Iran will decide if oil bulls outdo gold bugs

7 Jan 2020

Middle East tensions have boosted crude prices more than that of the precious metal. Tehran could yet attack Saudi oil fields or disrupt the vital Strait of Hormuz. Anything less than that would see gold, which was already in high demand, outperform.

Aramco’s war-risk snake trumps oil-price ladder

6 Jan 2020

The threat of U.S. sanctions on Iraq should boost the oil price, and the Saudi giant’s value. Yet its shares have slumped to their lowest level since trading commenced last month. That may be because the company’s operations are more likely to be a target for Iranian retaliation.

Middle East strife’s market toll is just beginning

3 Jan 2020

Oil prices rose more than 3% and global bourses fell after a U.S. air strike killed Iran’s top military leader, Qassem Soleimani. The Islamic republic may well follow up its rhetoric of revenge with action. Investors now have a real war, not just a trade one, to fret about.

M&A bankers will turn climate risk into clients

19 Dec 2019

The financial impact of global warming is one of the biggest strategic issues CEOs face, yet it plays a small role in dealmaking. That might change in 2020 as shifting regulation and consumer habits start to affect the bottom line, giving climate-conscious advisers an edge.

Aramco’s next stop will be bond, not stock, market

18 Dec 2019

Despite raising $25.6 bln from listing 1.5% of Saudi Aramco, Riyadh will want to flog more. But even if it can find a friendly foreign wealth fund, Saudi might still have to cut the price. An easier path would be to load Aramco up with debt and pay itself a fat special dividend.

Why didn’t Qatar support Saudi Aramco’s big deal?

16 Dec 2019

With Riyadh still blockading Doha, that may sound like a silly question. Yet joining Gulf neighbours in buying the oil giant’s shares could have helped to bury the hatchet. Qatar’s decision underlines a key issue with rapprochement: both sides want it, but Saudi needs it more.

Wait six months for Saudi Aramco’s true value

11 Dec 2019

The oil giant’s shares jumped 10% on its first day of trading. A $1.9 trln valuation reflects an oversubscribed book, likely helped by hedge funds looking for a quick buck and local investors who may be incentivised to buy. A less pumped-up price should emerge over time.

Chevron $10 bln pain will soon look like peanuts

11 Dec 2019

Low prices and rivals’ disposals may have prepared shareholders for the U.S. driller writing down its Appalachian and other gas assets. But CEO Michael Wirth’s focus on short-term, low-capital projects only gives a respite from the bigger valuation hit of climate change.

Tullow points to dark future for oil’s minnows

9 Dec 2019

The explorer’s shares more than halved after it cut production targets and suspended its dividend. With climate change hanging over the sector, investors have little tolerance for firms that can’t meet even near-term promises. Weaker players will get swallowed up or vanish.

Aramco: the IPO that succeeded and failed

9 Dec 2019

The kingdom has got its $26 bln oil giant IPO away. But with a lower valuation, a smaller stake sale and a limited foreign investor roster, it’s a chequered achievement. With a crazy price target and a sceptical audience, Aramco’s float was flawed from the start.

E-book: Aramco’s flawed IPO

9 Dec 2019

The Saudi oil giant has got its $25.6 bln initial public offering away, but not with the valuation or investor base it initially hoped for. Breakingviews’ new e-book, which contains columns stretching back to 2017, explains how the world’s largest ever flotation came up short.

OPEC insures Saudi Aramco against first-day blues

6 Dec 2019

The oil producers club and allies will hold back 0.9 million barrels per day on top of an existing 1.2 million barrel cut. While only for three months, it’s a coup of sorts for de facto leader Saudi Arabia. And it means newly listed Aramco will start trading on a firmer footing.

Aramco IPO has dug Saudi an even deeper hole

5 Dec 2019

The oil giant’s oversubscribed $25.6 billion listing was supposed to bring in foreign cash to diversify the kingdom away from oil. In the process, it has loaded up local investors with overvalued stock. Saudis have in one sense wound up more leveraged to crude prices, not less.

Aramco IPO could disappoint Saudi on a new front

26 Nov 2019

The oil giant has takers for most of its $25 bln offer. Yet its 1.5% listing is too small to give the local bourse a big bump up in MSCI’s key emerging-markets index. The gap between the 5% listing originally touted equates to tens of billions of dollars of foreign money inflows.

Canada’s Aussie gas station bid needs more fuel

26 Nov 2019

Quebec-based Couche-Tard has offered $7.3 bln including debt for Caltex to expand its filling station empire Down Under. At more than 9 times EBITDA the price looks good, while rival bidders are scarce. A mooted real estate IPO is Caltex’s best hope to squeeze out more value.

ConocoPhillips gives eco-investors an easy target

20 Nov 2019

The U.S. oil company plans to bulk up returns and dividends by 2029 on modest production increases. Whether that’s realistic depends on climate-risk assumptions that CEO Ryan Lance hasn’t disclosed. That’s low-hanging fruit for green-focused shareholder activists to go after.

Saudi bankers’ sweat will lubricate Aramco IPO

20 Nov 2019

The kingdom’s lenders are extending credit to domestic investors buying into the oil giant’s $25 billion float. That means locals could face hefty margin calls if Aramco shares slump. Bankers’ best sedative is that Riyadh has very strong incentives to prop up the price.

Cairn obstructs Delhi’s $100 bln energy target

20 Nov 2019

India’s oil minister says there is no better place to invest, as he courts foreign firms and a lofty investment goal. A long-running tax fight between the government and Cairn, however, undermines the promise of predictable policies. The sooner the case is resolved, the better.

Aramco’s $1.7 trln price tag pleases almost no one

17 Nov 2019

The Saudi oil giant will offer shares below the $2 trln valuation originally sought by the kingdom’s crown prince. But selling just a 1.5% slice implies the price range is still too rich for foreign investors. The mega-IPO is moving closer towards being a largely domestic affair.

Aramco has first-class seat on oil-tanker Titanic

11 Nov 2019

The Saudi giant’s IPO prospectus confirms it’s much more profitable than peers. Aramco also says a slump in oil demand could increase its market share. Yet the uncertain impact of such a shift ought to loom, iceberg-like, in investors’ minds as they weigh the company’s worth.