Oil & Gas

Energy titans tap yet another dry well: inequality

5 Mar 2014

The industry’s grandees are gathered for their annual confab in Houston, celebrating shale and lamenting higher costs. Amid the hoopla, Chevron CEO John Watson said renewable policies hurt the poor while BHP boss Andrew Mackenzie claimed oil can help them. That’s all a bit rich.

Mexican oil cash cow could go dry absent tax fixes

3 Mar 2014

Pemex’s quarterly pre-tax profit dropped 30 pct to $10 bln, but the energy giant had to pay $16 bln in government levies. Investment and production predictably suffered. President Peña Nieto’s revenue-raising reforms and plans to let in foreign cash can’t be enacted too soon.

Citi’s Mexico fraud besmirches industry further

28 Feb 2014

The mega-bank has been cheated out of $400 mln by an oil services firm in one of the most basic businesses in banking – accounts receivable. Citi’s Banamex didn’t even spot it – Mexico’s government did. Missing such simple fraud is something that should worry Citi’s rivals, too.

Big Oil could use some venture capital mojo

28 Feb 2014

An unwillingness to tackle small wells meant oil majors missed out on the lucrative U.S. shale oil boom. Exxon and its ilk were too focused on mega-projects. Seeding a new generation of nimbler upstarts, a strategy that worked for Big Pharma, might renew verve and boost output.

Repsol makes the best out of bad YPF deal

26 Feb 2014

The Spanish oil group will get $5 bln from Argentina as compensation for the expropriation of its stake in YPF. It’s half what Repsol wanted and will be paid in government bonds. Still, the final deal enshrines that Repsol must ultimately receive the value Buenos Aires promises.

At least Venezuela’s unrest is simply economics

25 Feb 2014

Ukraine’s split is ethnic, Thailand’s regional and Syria’s religious. Venezuela is ethnically and religiously united and even has oil wealth. But income inequality and chaos bedevil the Latin nation. In theory, these problems can be alleviated even without political upheaval.

Exxon CEO’s Nimby-ism threatens his shareholders

24 Feb 2014

Rex Tillerson hands ammunition to anti-frackers by seeking to block a water tower to supply drillers near his opulent home. Buying $31 bln shale explorer XTO was the big bet of his tenure. Exxon may now struggle to convince the public to accept hydro-fracturing’s side effects.

Sinopec spinoff shows desire to pump valuation

24 Feb 2014

The Chinese oil giant plans to sell up to 30 percent of its marketing division, which operates 30,000 forecourts and brings in half the group’s revenue. Exposure to China’s consumer boom should lure investors. More importantly, it suggests Sinopec is serious about boosting value.

JPMorgan in awkward place in Essar Energy buyout

21 Feb 2014

The investment bank led the troubled Indian group’s London IPO, and remains a house broker. So it’s far from ideal that JPMorgan is now advising independent directors on a potential buyout by the majority owners. Board members urgently need a fresh outside perspective.

Nigeria’s oil scandal may yet help it emerge

20 Feb 2014

President Jonathan suspended the central bank chief after he pointed a finger at the state oil company. Local markets roiled, but Nigeria’s non-petroleum economy is actually growing smartly. With any luck, more attention on corruption will curb one of the country’s biggest drags.

Oxy’s restructuring plan just California dreamin’

18 Feb 2014

The oil and gas giant says it will spin off operations in the Golden State. That will raise cash and remove a lagging unit, but loading it with debt may deter buyers. Selling valuable chemical and pipeline assets instead could streamline the company and boost investor returns.

Hamm is latest case study in U.S. oil sector murk

11 Feb 2014

The Continental boss has overseen a sevenfold rise in its shares since 2007. But like some less successful energy patch CEOs, he has done oil deals on the side. A shareholder lawsuit isn’t really the point. It’s inviting trouble for Hamm to trade with the firm he runs.

Tech isn’t the only threat to Exxon’s S&P standing

10 Feb 2014

For the first time in a decade the oil giant isn’t one of the two largest U.S. firms. Google is now second only to Apple. But it’s not just the rise of technology that has eclipsed Exxon. Soaring capex and flat oil prices mean it may have to get used to even lower rankings. 

Ghana spoils good thing with poor policies

7 Feb 2014

When oil arrived, Ghana’s socialist government ramped up spending and subsidies and ran big budget deficits. Now growth has stalled and the government is installing FX controls. It needs to move in exactly the opposite direction, toward an affordable and more modest state.

Petrobras risks becoming Latin America’s Gazprom

6 Feb 2014

Brazil’s petro-giant increasingly resembles Russia’s gas monopoly as state meddling and rampant spending destroy value and crowd out more productive investment. Petrobras shares have fallen so low it’s like 2007’s “gift from God” never arrived. It’s not too late to change course.

BP starts to shine next to Shell

4 Feb 2014

It’s all relative: BP’s profit fell almost a third in the fourth quarter, but it was no worse than expected. Russia and mounting Gulf of Mexico spill costs make its earnings hard to predict. But, unlike Shell, it has set more concrete targets to back up its promises. 

Chevron looking cheap despite its big spending

31 Jan 2014

The oil giant’s Q4 profit slumped 32 pct as it splurged on capex at a pace that put bigger rivals to shame. The emphasis on mega-projects that have yet to produce is worrisome. But steely-nerved investors should eventually be rewarded with an output growth rate twice Exxon’s.

Exxon outlays should pump up 2014 after down year

30 Jan 2014

The oil giant’s quarterly profit slid 16 pct to $8.4 bln due to sluggish oil and gas production and record capital spending. But output should pick up as mega-projects stop guzzling funds and go online. With cash beginning to flow, investors can look forward to brighter times.

Forget WTI – Louisiana crude is the new spread bet

29 Jan 2014

With U.S. output surging, West Texas Intermediate oil costs less than global Brent crude by about $11 a barrel at present. Louisiana Light Sweet, though, still trades nearer the world price. With no sign of American production growth slowing, that discount will soon widen.

BG makes a habit of disappointing investors

27 Jan 2014

The UK gas company’s shares fell 15 pct after it predicted lower production this year and the next due to problems in Egypt and America. BG has traditionally enjoyed a premium valuation for its growth. But it clearly faces the same output and cost pressures as its peers.