Oil & Gas

Even Petrobras can’t hold Brazil back forever

12 Nov 2013

The dysfunctional energy giant has been slow and inefficient in developing huge oil and gas reserves. But the nation could still triple crude output by 2035, the IEA reckons. That should mean the eventual return of lost economic momentum despite the shortcomings of Petrobras.

Oil majors struggle to make ends meet

12 Nov 2013

The big integrated firms have put billions of dollars’ worth of assets up for sale to fund expensive projects and return cash to shareholders. But it’s a one-sided market. After the recent acquisition binge, the universe of buyers is shrinking. Something will have to give.

Carl Icahn pushes Transocean to dig too deep

11 Nov 2013

The billionaire notched a win with a $1.1 bln dividend after he was rebuffed in May. The offshore driller isn’t that flush, though, and the payout could erode its competitive position. It’s hardly comparable to Apple, another Icahn target, where there’s plainly too much cash.

Review: Frackers needed long view to make history

8 Nov 2013

The revolution in U.S. energy came from an unlikely source, “The Frackers” shows. While deep-pocketed giants like Chevron gave up on shale, tiny drillers like George Mitchell and Harold Hamm persisted. True leadership triumphed over short-term shareholder value.

Canadian driller bares false economy of cheap gas

5 Nov 2013

Struggling Encana is slashing its workforce, capital spending and dividend. Such cutbacks, welcomed by investors, probably will make gas prices more volatile. The situation should pique the interest of policymakers who have been slow to embrace North American exports.

Chevron deserves a bit of investor patience

1 Nov 2013

The oil giant’s Q3 earnings missed estimates due to lagging output and a 27 pct jump in capital spending. Yet these huge outlays are designed to boost output over the next four years and grow at twice Exxon’s pace. What’s more, Chevron’s stock trades at a discount to its rival’s.

Gazprom can’t shake shareholder-unfriendly habits

1 Nov 2013

Better volumes and pricing have helped the Russian gas giant outperform the main Moscow index since the summer. Investors should be cautious. Swollen capex and a fresh row with Ukraine are reminders that Gazprom works more like an arm of the Kremlin than a normal listed company.

Conoco shows rivals splitting up is great to do

31 Oct 2013

The driller had a bumper Q3 thanks to hiving off refining and pipelines 18 months ago. Shares in Conoco and its two spinoffs have also bested its full-service brethren, despite similar overall performance. The benefit of a breakup is getting harder for Exxon and Shell to ignore.

BP’s memo to the market: we are cheap

29 Oct 2013

The UK oil major has bumped its dividend and is buying back stock despite falling profit and hefty capex. BP is trying to show strength to a market that values its shares at a discount to peers. To be convincing, BP may have to show it can also generate sturdy earnings growth.

Brasilia sends Petrobras toward crash with reality

28 Oct 2013

Blame government policies like buying local for the 39 pct slide in the oil giant’s Q3 profit. Rising debt, with more investment needed, makes Petrobras look like a not-for-profit arm of President Dilma Rousseff’s administration. Even next year’s election might not change that.

Dow Chemical can’t embrace shale gas fast enough

24 Oct 2013

Volatile oil prices led the U.S. chemicals giant to miss on earnings. Meanwhile, products based on cheap natural gas boomed. No wonder Dow is shedding crude-linked assets at a faster clip to invest in a gassier future. It’s another example of shale transforming American industry.

Brazilian auction shows the price of oil populism

22 Oct 2013

Roping Shell and Total into the development of a giant offshore oilfield qualifies as a partial win for Brasilia. Unfriendly policies scared off others, who might have given Brazil a bigger share of profits. President Dilma Rousseff is lucky her pandering didn’t do more damage.

It’s time to throw good money after Batista

18 Oct 2013

Liquidating Brazil’s OGX probably would bring creditors just 10 cents on the dollar for their $3.6 bln of bonds. A $150 mln injection, while ousting founding tycoon Eike Batista, may buy enough time to get production going at its main field. In this case, it’s the least bad plan.

OPEC’s past 40 years suggest less powerful future

17 Oct 2013

The cartel proved in 1973 it could shake the richest economies of the world. But the club’s member nations failed to use oil wealth to create diverse economies or solid democracies. Meanwhile profligate spending left OPEC states reliant on high oil prices, inviting competition.

Brazil faces a "lose, lose" in bailing out Batista

15 Oct 2013

Giving the fallen entrepreneur extra time to pay his debts puts Brazil’s government in a dilemma. Letting his OSX shipyard collapse makes it hard for drillers to obey “buy local” rules. Yet rescuing the unpopular tycoon is politically pricey for President Dilma Rousseff.

Solvay pays up to tap into fracking market

7 Oct 2013

The Belgian chemicals group is paying $1.3 bln for Chemlogics, a privately owned U.S. specialist in compounds used in the oil industry. The deal, Solvay’s biggest since 2011, looks pricey. But there should be tax savings, a sales boost, and a chance to ride the global shale boom.

Brazil’s oil emperor models a worrisome suit

4 Oct 2013

The 7 bln barrels of oil Eike Batista’s OGX once touted is now more like 88 mln. For investors who bought into the hype, it’s yet another gut-punch. The lack of oversight on such claims also raises questions about the credibility of a 12 bln-barrel find Brazil is auctioning.

Breakups are one oil spill welcome to spread

26 Sep 2013

The spinoff of Conoco’s refinery arm last year fueled a trend that has created plenty of value among energy giants. Now oil service firms like Noble and National Oilwell are putting similar moves in the pipeline. It’s time for investment laggards like Transocean to catch up.

Only PDVSA can make Petrobras look commercial

24 Sep 2013

The unreliable Venezuelan state oil firm isn’t paying its way, so the Brazilian giant is taking over a joint $17 billion refinery project. It shows how political deals can go astray. Brasilia should take note. The more it interferes, the more Petrobras looks like another PDVSA.

Failed petrostates threatened by new oil bounty

20 Sep 2013

Oil majors are becoming less tolerant of the political risks and corruption they’ve coped with in the past. That’s bad news for the likes of Nigeria or violence-prone Libya. With safer crude on offer in the U.S. and elsewhere, troubled states risk an exodus of expertise.