Oil & Gas

Oxy’s quest for value looks half-cocked

17 Sep 2013

The oil giant is considering selling a stake in its Middle East wells. Not only does CEO Stephen Chazen appear to have put a cheap price on the asset. It also means he’s eschewing a better way to boost returns for shareholders: offloading products like chemicals and pipelines.

Eike Batista’s blame game is depressingly familiar

16 Sep 2013

The collapse of the Brazilian tycoon’s $60 bln empire seems to be everyone’s fault but his own. He claims no “special knowledge.” Chiefs at firms like Lehman, Bear Stearns and Enron all passed the buck, too. Bruised investors can take a Batista comeback at his word, and avoid it.

Repsol’s Gas Natural sale shows Caixa the exit

13 Sep 2013

Repsol might shed its 30 percent holding in Gas Natural, the Spanish utility. The stake never made much sense. The sale would dilute the oil group’s relationship with its largest shareholder, Caixabank. Parting ways makes sense for all involved.

Big Oil’s growth addiction is counterproductive

11 Sep 2013

The industry pours billions into projects with marginal returns to keep production rising. Yet the oil majors’ huge size means big new finds barely move the needle. Oil bosses should ditch their fixation with growing output. The sector’s best option may be to shrink.

Batista’s bravado hastening his own death spiral

10 Sep 2013

Sinking oil firm OGX has every right to insist founder Eike Batista honor a pledge to inject $1 bln. But Brazil’s one-time richest man no longer has the cash. Even a down payment would require stock sales in his other plunging firms, hastening the demise of his empire.

Kazakh deal shows China’s enduring thirst for oil

9 Sep 2013

Buying into the Kashagan oilfield gives China’s national oil producer access to one of the world’s last great finds. The $5 bln cost of the stake - plus $3 bln to help Kazakhstan fund a tricky expansion - shows that, for China, resources are still scarcer than capital.

Middle East turmoil perpetuates OPEC charade

5 Sep 2013

Increasing energy supply from North America might have caused a global glut. But a steady stream of crises - in Iran, Iraq and Libya - has restrained OPEC’s output, and spared the cartel the difficulty of enforcing strict quotas on its more unruly members.

Petrobras biggest loser of Brazil’s currency blues

3 Sep 2013

With the bulk of revenue in reais, the state oil giant will find servicing its $70 bln of U.S. dollar-denominated debt a painful affair. While a default looks unlikely, the currency mismatch will make it harder for Petrobras to fund its $236 bln capital expenditure plan.

Botched Batista bankruptcy another risk for Brazil

30 Aug 2013

Having to restructure Eike Batista’s collapsing empire is embarrassing enough for Brazil. But Latin America’s most chaotic bankruptcy regime now threatens further harm to the country’s reputation. A high-profile fleecing of foreign creditors would imperil future investment.

Fracking may change U.S. foreign policy for good

28 Aug 2013

The abundant supply of hydrocarbons made accessible by hydraulic fracturing has brought America much closer to energy independence and created a buffer for the global oil price. The shift gives Uncle Sam new latitude in handling problems in Syria and throughout the Middle East.

UK fracking furore reflects skewed view of risk

23 Aug 2013

If protests against the drilling technique keep up, they could scupper the country’s shale ambitions. Opponents cite risks which look manageable and often gloss over the problems of other sources of energy. Such fearful and narrow analysis is an invitation to bad policy.

Markets are poor judge of Egyptian violence

15 Aug 2013

A bloody crackdown on protesters has intensified the political crisis in the Middle East’s most populous country. Oil prices and Egyptian CDS are up. The ramifications may be far wider than the initial reaction suggests. For now, the market response can be only backward-looking.

Eni’s credit rating shows shifting oil sands

2 Aug 2013

The Africa-focused oil major’s debt sits three notches above Italy’s after S&P’s recent downgrade of the country. If the gap closes, it would probably be due more to Eni’s exposure to its home base’s weak economy than to risky operations in Nigeria and North Africa.

Exxon buyback cut deserves two cheers at best

1 Aug 2013

The oil giant is slashing its favorite method of returning cash to investors. That’s smart considering a 19 pct drop in Q2 profit and rising capex. But Exxon’s habit of buying back stock at peak prices suggests this is temporary. It’s an irrational policy the company should drop.

Shell faces reality: it’s not about the barrels

1 Aug 2013

Disappointing results at the Anglo-Dutch energy giant partly reflect an outdated way of thinking. Oil majors have long obsessed simultaneously over reserve replacement, production growth and profit. Shell’s decision to ditch medium-term production targets shows it’s wising up.

BP lacks leverage over share-price discount

30 Jul 2013

Higher taxes, a lower-than-expected contribution from Russian partner Rosneft and mounting Gulf of Mexico spill costs marred the UK major’s latest quarter. As long as BP remains at the mercy of forces outside its direct control, the derisory valuation will be hard to correct.

Shale trailblazer leaves a world awash with crude

29 Jul 2013

The fracking technique pioneered by George Mitchell, who died at 94, unleashed a torrent of U.S. oil and gas output and an environmental backlash. Controversy aside, Mitchell’s 17-year struggle to develop fracking offers a lesson in escaping the tyranny of quarterly reporting.

Opening oil sector could spur other Mexico reforms

25 Jul 2013

The nation’s ban on foreign investment in crude is almost a sacred cow. Overturning it might boost output while creating momentum for fundamental change in the telecom and power industries as well. That could lead to faster economic growth and attract big money from abroad.

Crazy ethanol policy heads for clash with reality

24 Jul 2013

U.S. rules force refiners to mix more of the stuff with gasoline – or pay not to. That has quickly become expensive and is likely to get worse, crimping gasoline and diesel supplies, jacking up prices and burning $160 bln in consumers’ wallets. It’s time for Congress to act.

U.S. oil price rise should fuel export ban’s fall

22 Jul 2013

Pipeline and railway improvements have allowed American drillers to close the gap between their product and pricier, globally traded Brent. Next should come permission to ship crude overseas. With supplies surging, producers will quickly outgrow the limits of a domestic market.