Oil & Gas

Exxon Mobil running hard just to stand still

25 Apr 2013

The world’s biggest company is pumping just 3 pct more oil than it was 12 years ago. Yet Q1 results show capital spending rising fast. Only buybacks are making earnings per share growth look decent. Justifying Exxon’s valuation premium to peers is getting harder.

Oxy could take value-creation lessons from Conoco

24 Apr 2013

The move by Conoco to break in two a year ago is being vindicated. Shares in its two components have beaten peers by nearly 20 pct since the separation. Occidental, hit by rising costs and an executive feud, should take note. Matching Conoco’s lift would unlock a $12 bln gain.

New oil dynamics may challenge crude growth logic

19 Apr 2013

Fears for the wobbly world economy have pushed Brent below $100 a barrel. Cheaper energy helps industry. Better still, booming shale output, greater efficiency and the rise of natural gas as a rival transport fuel may keep the oil price subdued even as growth is stimulated.

Floating LNG offers good economics, tough politics

15 Apr 2013

Woodside Petroleum is the latest energy group to examine building a floating gas facility to salvage an otherwise uneconomic mega-project. The cost savings could be substantial. But the newfangled technology creates fewer jobs than onshore LNG. Host governments won’t like that.

Chavez successor unlikely to prove as durable

15 Apr 2013

Nicolas Maduro has won a six-year term as Venezuela’s president, if Sunday’s vote count stands. But with debt and subsidies eroding oil riches, inflation at 22 pct and two currency devaluations already this year, a crisis could undermine his narrow majority long before 2019.

Eike Batista might be too big to fail

11 Apr 2013

As the billionaire fights to shore up his embattled EBX empire, Brazil’s state-controlled oil giant Petrobras is considering a lifeline of sorts. It would probably be in the form of port deals. For the government to step in, even indirectly, shows how influential he has become.

More resource transparency welcome, warts and all

10 Apr 2013

Forthcoming rules will require EU oil and mining companies to publish details of project-by-project dealings with governments. It will create extra work and may disadvantage Western producers. Still, the benefits of extra transparency should far outweigh the costs.

Occidental shows why ex-CEOs don’t belong on board

9 Apr 2013

Reports suggest the oil company’s chairman and former chief executive is pushing to oust current boss Stephen Chazen. Tension between the two was predictable. Avon and others have shown no good comes from letting predecessors hang around. The board needs a better succession plan.

Is Exxon building Big Oil’s skyscraper equivalent?

5 Apr 2013

The oil giant is planning a $24 bln floating facility to process gas. By the time this monster island is finished, the world could be awash in cheaper energy. It may one day resemble the towering edifices constructed on land that heralded market plunges and economic downturns.

BP already facing test of new Russia strategy

2 Apr 2013

After the sale of TNK-BP, the UK major owns 20 percent of Rosneft. Now BP must avoid becoming just another trampled Russian minority shareholder. It could start by using its new clout on Rosneft’s board to push for fair treatment of TNK’s minority investors.

Latest oil spill blame games miss the point

1 Apr 2013

Environmentalists reckon an Arkansas leak bolsters their case against the Keystone pipeline. Proponents point to a recent train crash to show other ways of ferrying crude are accident-prone, too. What counts is keeping such risks to a minimum. On that score, Keystone looks sound.

Petrobras struggles even with baby steps

27 Mar 2013

Brazil’s state oil giant needs to find $15 bln to afford $50 bln of government-mandated capital spending. It’s already cut the dividend. Now it plans to sell its Nigerian wells. That may only raise a third of what’s needed. And Petrobras has a poor record of flogging assets.

U.S. energy sector activists not quite out of fuel

26 Mar 2013

Hedge fund Audley’s effort to inject fresh board blood into $1.8 bln coal miner Walter Energy suggests bigger targets with egregious governance like Chesapeake and Hess are growing scarce. But there are still a few, like Apache and Devon, where weak performance invites scrutiny.

Cyprus will struggle to make gas math work

22 Mar 2013

The struggling island is thinking about bundling future gas revenues into a fund to stave off financial collapse. But Breakingviews calculations suggest the recent discoveries off the country’s south coast won’t be enough to plug a 5.8 billion euro funding gap.

ETE’s $30 bln pipeline empire still too tangled

21 Mar 2013

Not since Chesapeake have energy investors had to wrap their heads around such a convoluted structure as the Energy Transfer family. A $3.75 bln deal eliminates one company from this four-headed beast. But the group still pays a high price for being too impenetrable.

Elusive future gas riches can’t help Cyprus now

20 Mar 2013

Even if early estimates of huge gas reserves prove right, recent finds off the Mediterranean island’s coast will take time and money to exploit. The dicey politics of exporting gas from Cyprus also poses risks to development. For now, Cyprus’ natural gas potential remains just that.

Icahn’s payout plan could put driller in a hole

19 Mar 2013

The billionaire activist is pushing Transocean for a $1.4 bln dividend. That’s nearly half the U.S. drilling outfit’s annual cash flow and could preclude upgrades to its aging rig fleet. The company’s counter of an $800 mln payout should appease investors while keeping operations humming.

Eni’s $4.2 bln gas deal has something for everyone

15 Mar 2013

Offloading 20 percent of a big Mozambique gas field to China’s CNPC cuts the Italian major’s development risk. China gets access to huge new energy supplies, at a price that vindicates Shell’s decision to pass up a more expensive deal last year. Mozambique wins, too.

Activists bring oil execs back down to size

14 Mar 2013

First they claimed the scalp of Chesapeake boss Aubrey McClendon for egregiously abusing his position. Now dissenting shareholders have all but ousted SandRidge’s Tom Ward and forced Nabors to cut pay. These are welcome victories in a sector notorious for big, mollycoddled egos.

Chevron stands to keep gaining on Exxon

12 Mar 2013

Over the last five years, shares of the second-largest U.S. oil company have vastly outperformed its larger rival’s, yet Chevron’s valuation still lags. As boss John Watson woos investors, there’s a good case that output growth and a focus on oil favor the gap closing even more.