Oil & Gas

Shell could win from bold $70 bln swoop on BG

8 Apr 2015

The oil major is offering a fat 50 pct premium for its UK rival. But the share price was depressed and the synergies are attractive. The deal could prove a smart and opportunistic way to boost growth via deepwater assets and liquid natural gas – provided Shell keeps costs down. 

Shell-BG highlights rise of the micro-boutiques

8 Apr 2015

The $70 bln deal needed just three advisers: Merrill, Goldman, and minnow Robey Warshaw. Rivals like Zaoui & Co have also won major mandates. For big M&A shops, two worrying trends are intersecting: CEOs seem ready to hire fewer banks per deal and to use much smaller outfits.

Royal Dutch Shell and BG open mega-deal pipeline

7 Apr 2015

The $200 bln energy giant is in advanced talks to buy its $46 bln gas rival. It could be an opportunistic move for Shell, whose vulnerable target has a new CEO. There could yet be other suitors for BG. Any deal is also bound to kick off other big transactions in the sector.

U.S. oil company drills to new depths – in markets

24 Mar 2015

Whiting Petroleum is raising up to $3.2 bln of new equity and bonds after failing to find a buyer. The deeply discounted share issue will slash debt added as part of the recent acquisition of rival Kodiak. The dilution stings, but getting ahead of the industry rush also is wise.

First stab at U.S. fracking rules strikes balance

20 Mar 2015

A long-awaited federal edict on hydraulic fracturing addresses big environmental worries while sparing oil and gas drillers heavy new costs. It applies only on government land and may evolve. But it’s a workable step toward replacing patchwork state rules with national standards.

Oil companies stare into the mining abyss

19 Mar 2015

Embattled iron ore producer Fortescue risks being frozen out of debt markets after balking at paying a high rate on a deal. Rivals that dallied at raising capital after metal prices tanked suffered worse fates. Oil servicers and drillers still have a chance to save themselves.

Oil collapse turns U.S export ban into jobs killer

16 Mar 2015

Overseas sales restrictions sent American crude prices below Brent in the shale boom. That was manageable. Now, with WTI hitting a six-year low, the ban threatens both workers and energy independence. Ending it, and the disparity, is fast becoming a job-saving necessity.

John Browne’s Russian truce points to oil M&A boom

2 Mar 2015

The former BP boss will head L1, a $10 bln energy fund owned by oligarch Mikhail Fridman. The duo once sparred over BP’s assets east of the Urals. Their alliance today highlights the deal opportunities created by oil’s rout - even if L1’s Russian roots are a problem.

Oil finally percolating toward a level price

26 Feb 2015

U.S. light crude has rallied 12 pct from last month’s six-year low but is still shy of where shale drillers can profit. Higher demand and less capital spending may push prices up while steady output from Saudi Arabia and others limits their rise. About $60 a barrel looks likely.

Iberdrola takes baby steps to grow U.S. business

26 Feb 2015

The Spanish utility is paying $3 billion mostly in shares to merge its U.S. assets with much smaller listed UIL. The U.S. has greater growth potential than Spain, and the price isn’t cheap. But the small cash outlay makes this a relatively low-risk, if not transformational, deal. 

Petrobras downgrade tests Rousseff’s fiscal faith

25 Feb 2015

The Moody’s decision to strip Brazil’s state oil giant of its investment-grade rating redoubles the need for the president to support her economic lieutenants, who are trying to repair Latin America’s biggest economy. To do so, Rousseff will have to face down rising resistance.

Maersk definitively casts off conglomerate past

25 Feb 2015

The shipping giant has already streamlined and grown more open. Now it is shedding 20 pct of Danske Bank, the clearest break yet with history. Shares rose 6 pct. Transforming conglomerates can be like reorienting a super-tanker. But with focus in fashion, it’s worth the slog.

Cheap oil highlights multifaceted resource curse

24 Feb 2015

Commodities-dependent nations got more bad news, as BHP warned on iron ore prices. To survive, many will need to turn their economies upside down. Resources prevent long-term strategies, dull the good and bad governance gap and ultimately cloud voters’ views of who’s responsible.

Crude rout lays bare Big Oil’s opportunity deficit

18 Feb 2015

State-owned companies hold the best fields, while Western producers are lumped with the leftovers. High prices subsidized ever-bolder engineering projects during the boom. If low prices linger, a lack of good alternatives may push oil majors into another round of consolidation.

Chesapeake extracts self from all but its founder

17 Feb 2015

The energy firm has cut costs and debt since ousting Aubrey McClendon. Earnings have been decent, too. But complex terms of the ex-CEO’s exit have led to charges he stole secrets. It’s a lesson for companies enmeshed with creators that, when the time comes, clean breaks are best.

Transocean helps case against activist myopia

17 Feb 2015

The offshore driller is parting ways with the CEO who reinstated a dividend under pressure from Carl Icahn, and slashing the payout. Plunging rig rates mean Transocean can’t both invest for the future and return cash now. As a result, cage-rattlers may encounter sterner defenses.

Brazil scares away investment with Petrobras pick

6 Feb 2015

Dilma Rousseff tapped a party favorite from another state company, Banco do Brasil, to run the scandalized energy giant. Aldemir Bendine lacks oil industry experience and has been called a “puppet” of Brasilia. Brazilian assets deserve to trade at a steep discount.

Shell oils gears for climate-activist investors

3 Feb 2015

The Anglo-Dutch major is backing a shareholder resolution for more disclosure about how climate change might affect its business. The demands are hardly taxing, so a refusal might look defensive. But the episode highlights the growing power of environmentally focused investors.

BP hunkers down for prolonged oil slump

3 Feb 2015

The UK oil and gas major is cutting capital spending by 20 pct. That’s a robust response to cheaper oil for a company with a strong balance sheet, but BP has more problems than most. If such spending cuts keep coming from the industry, the oil price might rebound further. 

Shareholders give Exxon the benefit of the doubt

2 Feb 2015

The oil major is keeping mum on spending plans even as rivals cut back. And it only beat Q4 estimates thanks to tax and legal breaks. Unlike Chevron, though, Exxon is still buying back stock, if less than before. Such relative resilience appeals to investors, but might not last.