Oil & Gas

Intrade sheds light on gray markets going dark

11 Mar 2013

The site, which took bets on everything from elections to oil, closed abruptly and mysteriously. Intrade’s predictive record was good, but didn’t foresee the rising controversy over under-regulated speculation. It’s a cautionary tale for the likes of SecondMarket and StarStreet.

Big Oil finds a new rallying cry: we’re green too

6 Mar 2013

ConocoPhillips boss Ryan Lance told colleagues at the industry’s annual CERA conference in Houston that they should take more credit for U.S. carbon emissions dropping by 13 pct. He has a point. Not everyone will care, but it’s a handy point to make when lobbying Washington.

Venezuelan oil gets a slightly new sheen

6 Mar 2013

Under Hugo Chavez, state-controlled PDVSA spent twice as much on welfare as it invested in production. Reversing the ratio would better exploit the world’s largest reserves. Whoever succeeds Chavez, however, probably will follow his model - at least until the price of oil falls.

Hess rejects activist push – by caving to it

4 Mar 2013

The $24 bln oil company’s inefficient sprawl and cozy board made it a ripe target for Elliott Management. Hess claims the hedge fund’s prescriptions are wrongheaded, but is selling assets, nominating new directors and returning capital. That’s much of what Elliott was pushing for.

SEC goes where Chesapeake board feared to tread

1 Mar 2013

The watchdog has launched an investigation into the gas company’s disgraced CEO Aubrey McClendon. Shareholders suing the company will welcome the news. But Chesapeake’s directors should have set up a more impartial inquiry themselves. That oversight could prove costly.

Big oil’s novel problem: fifty shades of gray

27 Feb 2013

Nearly half of petroleum engineers will hit retirement age in the next decade, leaving a skill shortage because of a 1980s hiring hiatus. Based on the last such occurrence, the lack of experience may lead to a $120 bln productivity drain. It’s a hidden risk in the price of crude.

A $4.3 bln oil deal parlays financial engineering

21 Feb 2013

Linn Energy’s purchase of Berry Petroleum is the first time an oil master limited partnership has swallowed a whole exploration company. The bold move leans on the tax advantages of such structures and raises the sector’s risk profile. Linn’s 8 pct yield is a necessary buffer.

Weakened Gazprom still packs a punch

19 Feb 2013

Gazprom’s grip on European markets is weakening, and it may soon face more competition from fellow Russian producers. But the gas exporter’s customers and rivals can’t get complacent. Gazprom may be a hegemon in retreat, but it’s not a spent force yet.

SandRidge board needs more reasons, fewer excuses

11 Feb 2013

Activist fund TPG-Axon wants to replace directors. A response that’s big on scare tactics doesn’t cut the mustard. One rebuttal - that such an overthrow could trigger a $97 mln payout to the CEO - only betrays the board’s weak governance record. Shareholders deserve better.

Canada-U.S. oil pipe beats shipping options

8 Feb 2013

Washington is stalling on the Keystone pipeline, so Canada is exploring alternatives for its oil-sands crude. But exporting it on tankers would be more polluting and riskier. American NIMBY opposition to Keystone is bad for the planet as well as for the nation’s energy supplies.

Eni crisis is a buying opportunity

8 Feb 2013

Days after the Italian oil major was hit by a profit warning at engineering subsidiary Saipem, a probe into alleged bribes has thwacked the shares again. Eni deserves a discount, and there’s plenty of uncertainty. Still, the 6 bln euro hit to its market cap looks excessive.

Nigeria’s oil mess hides solid African growth bet

8 Feb 2013

The state oil company is fighting the government, and production has stagnated. But at long last Nigeria’s non-oil economy, led by telecoms and construction and perhaps worth $200 bln, is growing fast enough to compensate, and then some. It’s a frontier market worth a close look.

Law of haste makes waste should govern M&A suits

7 Feb 2013

Delaware judges often warn attorneys to do their homework before suing. Now one group of legal eagles is being grounded for doing just that. This undermines efforts to curb deal litigation. Courts are right to want to punish a rush to the courthouse. But they must be consistent.

Chesapeake may have shot itself in foot on CEO pay

6 Feb 2013

Departing boss Aubrey McClendon is getting a $47 mln golden handshake. But the under-fire executive is retiring. That should allow the gas driller to claw back up to $30 mln rather than lavishing more largesse on McClendon. That gives investors a good case to sue.

Big majors yet to master oil game’s new landscape

5 Feb 2013

In spite of record Brent prices in 2012, the industry’s results are unimpressive. A foggy production outlook shows oil majors are struggling to make ever more complicated projects work. Better cashflows should materialise in the future, but for now low valuations look justified.

Petrobras proving better at finance than oil

5 Feb 2013

Brazil’s state oil giant generated a 53 pct gain in quarterly profit by selling government bonds. The company’s costs are soaring, production is falling and debt is growing. Financial dealings couldn’t preserve the dividend - and suggest Petrobras is running short of ideas.

Apple and Exxon may not be so different, after all

4 Feb 2013

The tech and oil giants share more than nearly identical U.S. market-leading values of about $400 bln. Both are threatened by shrinking margins and a struggle to replace their precious wares. Exxon has survived four times longer than Apple, but appears to be just as vulnerable.

2012 may be as good as it gets for Exxon

1 Feb 2013

The oil giant pumped out a near-record profit and its best earnings per share ever. But Exxon, like Chevron, is spending huge sums – almost $40 bln last year - to find and extract reserves. Holding output steady is tough enough. Unless oil prices jump, Exxon may have peaked.

Record crude not enough to fuel oil giants’ profit

31 Jan 2013

ConocoPhillips and Occidental both reported 2012 core profit down more than 15 pct from 2011. That’s despite a record price for Brent crude of $112 a barrel during the year. High production costs are a worry for investors and suggest the floor under oil prices is rising.

Shell shows the flip side of shale nirvana

31 Jan 2013

Full-year results show the oil major broadly on track to meet medium-term production targets and grow cash flows. But its North American business remains a drag, as the lack of export capacity holds down prices. Shell is a relative loser from the much-hyped shale revolution.