Oil & Gas

Oligarchs and BP would both score in Rosneft deal

17 Oct 2012

Rosneft has agreed to pay four billionaires $28 bln for half of TNK-BP, Russia’s third-biggest oil producer. It’s a good price, although the mix of cash and shares on offer is unclear. And the state giant would be doing a big favour for the oligarchs’ joint-venture partner BP too.

Murphy’s law means something new for Big Oil

17 Oct 2012

The U.S. energy company’s value jumped 8 pct after executives said they would split off its retail business. Sure, they only acted after pressure from activist investors. But if larger players like Marathon follow suit, it could unlock billions of value for shareholders.

Gas and electricity may put UK QE on back burner

16 Oct 2012

UK inflation is down to 2.2 percent but is going to head back up. The energy companies have announced large gas and electricity price rises. That’s bad for UK consumers and growth. But it should also make the Bank of England wary of printing still more money in November.

BP’s Russian partners threaten shaky plan B

9 Oct 2012

The UK oil major’s oligarch partners say they want to list or sell 50 pct of TNK-BP if they can’t buy BP’s other half. But a float would mean a hefty governance discount, and there isn’t an obvious alternative bidder for the Russians’ stake. Full value isn’t around that corner.

Oil price benchmarks left at risk of Libor moment

8 Oct 2012

Soft proposals from those who oversee influential oil price yardsticks may leave the likes of Brent open to insider manipulation. Braver reform - along the lines followed by the UK financial watchdog fixing the scandal-hit Libor interest rate - is merited.

Oil industry steals page from pharma M&A playbook

3 Oct 2012

Honeywell’s purchase of Thomas Russell was the ninth oil services deal in as many days. Scavenging the deep sea and icy climes requires exploration DNA. Specialized technology is becoming to energy giants what biotech is to the drugs sector. Smaller firms are in big demand.

Shale gas-led U.S. boom is lesson for wary Europe

25 Sep 2012

In five years, the price of natural gas has halved in the U.S. and doubled in the UK. One result is an industrial renaissance in America. Europe could do with the economic and political benefits of plentiful gas, too. EU governments, reluctant to allow fracking, need to rethink.

Mexican oil giant can take lessons from Brazil

21 Sep 2012

President-elect Enrique Peña Nieto is eyeing Latin American lessons for revamping downtrodden state-owned Pemex. Mexican law bars private investment in oil, but related businesses are less constrained. Cutting taxes on Pemex is another option. Reform may have to start small.

Exxon picks right place at wrong time for U.S. oil

20 Sep 2012

A $1.6 bln purchase of North Dakota assets could herald more deals to come for the energy titan. The state is America’s fastest-growing producer, but its low jobless rate means oil production costs are soaring. Exxon’s renewed if belated interest in domestic crude cuts both ways.

New look U.S. MLPs riskier, but may be worth it

20 Sep 2012

The $350 bln tax-privileged master limited partnership sector mostly involves safe, fee-based energy assets like pipelines. Newcomers like Texas-based Susser Petroleum, a fuel distributor, aren’t so predictable. But high yields - 8.5 pct for Susser - can make up for the dangers.

Uncontrollable gas troubles U.S. energy firms

14 Sep 2012

U.S. production keeps rising even though companies like Chesapeake promise to cut it. Blame efficient techniques and bad luck. But failure to curb supply means low prices, depriving large producers of cash to drill for more profitable oil and leaving smaller players vulnerable.

New Delhi must stand its ground on subsidy cuts

14 Sep 2012

The government has announced a bold 14 percent hike in the price of diesel. Now it needs to stay the course, embrace the decision rather than apologise for it, and move fast to get even more done. A shift in public spending from consumption to investment is the ultimate goal.

Banks big winners from Chesapeake $6.9 bln sale

12 Sep 2012

Selling another batch of family silver helps close the gas group’s cash gap. That makes a liquidity meltdown less likely. But the broadest smiles ought to be at Goldman Sachs, which continues to get fat fees from Chesapeake’s rolling sales and will be repaid on a $4 bln loan.

U.S. shale pioneers won’t reap Chinese gas riches

11 Sep 2012

For the first time, Beijing is cracking open the door for foreign frackers. Smaller, specialist companies have blazed the trail in America, but to profit in the Middle Kingdom will take time and resources they don’t have. Instead, it’ll be the usual suspects like Shell and Exxon.

PXP’s $6.1 bln BP/Shell deal quacks like an LBO

10 Sep 2012

The $4.7 bln U.S. oil minnow is leveraging up to buy Gulf oil fields from the two majors. Asset sales and cash flow should cut debt within a few years. But shareholders will come second until lenders are happy - and there are operational risks too. No wonder PXP’s stock tanked.

Chavez’s cash pump PDVSA runs on empty

6 Sep 2012

Venezuela’s troubled oil group may now pay suppliers with IOUs instead of cash. That’s not surprising because Hugo Chavez is using PDVSA to finance social spending ahead of elections. Harder to imagine is what happens when oil prices decline from today’s lofty heights.

BP’s path to Macondo settlement just got harder

5 Sep 2012

U.S. lawyers say they’ve got emails showing gross negligence in the 2010 oil spill disaster. There’s still scope to settle before a trial, but the aggressive tack complicates BP’s effort to get a favourable deal. The market reaction - wiping $5 bln off BP’s value - looks right.

Oil spike doesn’t require emergency response

4 Sep 2012

Brent crude is up 30 pct since June, with WTI close behind. That’s sparked talk of rich countries tapping emergency oil reserves. The panic is premature. Short-term pressures are pushing crude higher. As these fade, so should the threat of a sustained, economy-wrecking oil price.

Argentina’s new YPF out to prove it’s no PDVSA

31 Aug 2012

Repsol’s old stake in the energy company was snatched by the government. But now YPF is touting itself as a well run, commercial operation. It wants to borrow in international markets and needs partners like Exxon and Chevron. They have a chance to strike decent deals.

Angola’s rare oil success isn’t fixing governance

30 Aug 2012

Unlike, say, Venezuela or Mexico, the African nation has doubled oil output since 2001. That has boosted GDP per capita, but corruption and human rights abuses are holding the economy back. Sadly for Angolans, the likely re-election of the 33-year president won’t change that.