Oil & Gas

Did Chesapeake miss Enron lessons?

22 May 2012

There have been no allegations of fraud. But the embattled U.S. natural gas producer’s vast trading operation, fondness for complicated holdings and relationships, and corporate generosity are among the traits that call to mind some of the defunct energy giant’s flaws.

India’s slipping on oil as well as Greece

17 May 2012

It’s easy to blame the EU for India’s woes. But politicians shouldn’t fall into the Greek trap of knowing what’s good for them but failing to act. The currency’s decline should be a trigger for government action. Popular but expensive fuel subsidies are the place to start.

Exxon attacks straw man to defend CEO’s pay

16 May 2012

The oil giant is trying to calm shareholder anger over Rex Tillerson’s $35 mln bonanza before the say-on-pay vote at its AGM. Exxon argues that its long-term goals obviate the need for annual targets. But that just sounds like an excuse for C-suite largesse.

Goldman extracts pound of flesh from Chesapeake

15 May 2012

The troubled U.S. gas company has received the Wall Street firm’s expensive imprimatur as a lender on its now upsized $4 bln loan. At an onerous rate of interest, the cash buys Chesapeake time to finish asset sales. Barring an outright default, Goldman has the best of the deal.

China has strongest hand in Philippine stand-off

15 May 2012

Manila protests China’s claims on disputed islands, but its economic position is weak. China is a big export customer, and has the money and tourists Manila needs to dig mines and fill new casinos. Whoever owns the South China Sea’s energy riches, China will be the biggest buyer.

Chesapeake’s evasive tactics compound crisis

14 May 2012

After securing $3 bln of emergency funds, the gas producer’s CFO couldn’t say how much of its credit line had been drawn. Chesapeake was also vague with investors about the loan’s net proceeds and terms. Such guile doesn’t inspire confidence that a cash crunch has been avoided.

Petrobras earnings delay excuse is cause for worry

11 May 2012

It’s bad enough the Brazilian oil giant was going to report crummy results on Friday. Delaying them until next week over a “scheduling problem” is unnerving. Investors know Petrobras is grappling with production issues. Adding shambolic governance to the mix is most unwelcome.

Qatar takes Shell friendship to next level

11 May 2012

Adding a stake in the UK oil major to holdings in Total, Xstrata and European Goldfields adds a degree of diversification to the emirate’s resource exposure. But strategic ties are strong. Qatar is home to two Shell projects. Formalising the relationship is a natural next step.

Oil price band of comfort is precariously narrow

10 May 2012

It only takes a $20-a-barrel swing to move markets from fretting about the release of emergency reserves to worrying about top producers falling into fiscal deficits. Hard-to-cut higher spending by a growing number of big exporters may make the concerns permanent.

Iran’s yuan oil payments won’t catch on, yet

9 May 2012

Sanctions have pushed the Islamic Republic to accept part-payment in the Chinese currency. While the yuan may play a big role in crude settlements by the end of the decade, trading restrictions and Gulf politics suggest Iran’s shift won’t be the catalyst for broader acceptance.

Chesapeake and partner wobble together

7 May 2012

The troubled gas firm needs cash. But its woes make it harder to tap one of its favorite sources, Chesapeake Midstream, a partnership it controls. Last year it bought $900 mln of its parent’s assets. Chesapeake’s governance and liquidity concerns may limit its ability to help.

India and U.S. try for uneasy alliance over Iran

7 May 2012

A visit from Hillary Clinton on the same day as a trade mission from Tehran highlights the diplomatic tightrope that New Delhi is on. While good U.S. relations are important, India’s trade deficit makes Iran’s cheap oil too attractive to pass up. A compromise looks likely.

Review: Exxon’s shareholder fetish, good and bad

4 May 2012

A single-minded devotion to shareholders has helped the oil giant earn high returns. But Steve Coll’s “Private Empire” shows how this obsession also made it easy to make some bad decisions: cozying up to nasty regimes and a crusade against global warming science.

Repsol still not a tempting takeover target

4 May 2012

The YPF fiasco has knocked a third off the Spanish oil major’s shares, sparking bid speculation. But even if rivals felt acquisitive, refining exposure and lingering YPF risks are deterrents to an offer. The new Repsol isn’t without prospects. But it’s cheap for a reason.

Earnings surge only superficial relief for Pemex

3 May 2012

A 20-fold jump in Q1 paper profit obscures the fact that little has changed at Mexico’s oil monopoly. Production continues to slide and its profit potential is crushed by the government’s tax take. Only election season talk of oil industry openness offers a glimmer of hope.

BG investors right to be nervous about cost creep

3 May 2012

Profits are up, production is the envy of peers and a $5 bln disposal plan is on track with the $1.8 bln sale of Comgas. But the dip in BG’s shares after the gas giant raised capex guidance shows that even the best aren’t immune to the spiraling cost of big petroleum projects.

Qatar’s cash cow can ride out a global gas glut

3 May 2012

The emirate’s grip on gas markets will weaken by the second half of the decade due to oversupply. That might knock some of the swagger out of the energy-dependent state. But Qatar’s low production cost, long-term contracts and significant market share should limit the fallout.

Analysts fiddle while CEO burns Chesapeake

2 May 2012

Wall Street’s finest barely acknowledged the stunning governance lapses surrounding the U.S. energy firm’s boss, Aubrey McClendon - or his contradictory answers. With shares falling, debt and costs rising and oil production forecasts dropping, investors should cut their losses.

Oil majors can only admire Colombia’s titan

1 May 2012

Ecopetrol may not be well known outside Latin America. But the state-controlled company just posted an enviable 50 pct EBITDA margin. At $135 bln, it’s now worth as much as BP. Replacing reserves won’t be easy. But such a well-run firm looks like the best oil play in the region.

Chesapeake board does too little, too late

1 May 2012

Stripping CEO Aubrey McClendon of the chairmanship and ending his personal investments in the firm’s wells are obvious, if belated, moves. But McClendon’s deal-making and borrowing have accompanied lagging returns. Shareholders deserve more radical changes in the boardroom.