Oil & Gas

Fracking shale could cause global geo-tremors

1 May 2012

Shale gas accounts for less than 1 percent of worldwide energy use at present. But fracking is a growth business, and shale oil prospects are also altering the global hydrocarbon equation. The additional supply could change the geo-political and geo-financial landscape.

Sunoco owners get rewarded for patience

30 Apr 2012

The 23 pct premium from Energy Transfer Partners doesn’t at first sight look huge. But given Sunoco’s unfinished turnaround, the $5.3 bln sale at a higher price than shareholders have seen in years is evidence of a well-timed leap onto the industry’s partnership M&A bandwagon.

Fear factor could end calm in crude market

30 Apr 2012

Oil prices have slipped and supply looks adequate, but fundamentals don’t determine the price of crude. Easy money and trader angst could easily drive prices higher again. Current worries are Iran and thin Saudi spare capacity, but there are always reasons to expect the worst.

Chesapeake tangle goes far beyond CEO

26 Apr 2012

Aubrey McClendon’s dubious dealings have the $12 bln U.S. energy giant on the back foot. But investors should also question the company’s monstrous complexity. It has convoluted off-balance sheet liabilities, hedging gains have dwarfed profit, and cash flow is steadily negative.

Exxon playing catch-up with dividend hike

26 Apr 2012

The oil giant’s 21 pct higher payout is a step in the right direction. But Exxon’s Q1 earnings miss suggests the move was partly a sop for shareholders. The company still made $9.5 bln, but weak U.S. gas prices, declining output and surging capex will keep investors on edge.

Egypt-Israel energy ties look broken

24 Apr 2012

It is hard to believe that Egypt’s termination of a long-term contract to supply gas to Israel is a pure business dispute given the odd timing of the move. In the absence of a resolution Israel faces some difficult months. That’s bad for peace but doesn’t destroy it.

Conoco’s last pre-split report better than it looks

23 Apr 2012

A decline in first-quarter profit to $2.9 bln suggests the U.S. oil giant, soon to split in two, is going out with a whimper. But underlying growth trends in chemicals and U.S. oil could boost prospects at the slimmed-down Conoco and at Phillips 66, the new standalone refiner.

Oil majors can’t afford to shun Argentina

20 Apr 2012

Beyond the YPF asset grab, Cristina Fernandez may overhaul the entire energy sector. But Argentina’s shale is too important to ignore and Big Oil knows how to navigate tricky regimes, including Venezuela’s. Even with risks higher and returns lower, the long game could pay off.

UK gas bounty will be tricky to exploit

19 Apr 2012

Geologists think the UK may hold 1,000 trillion cubic feet of shale gas - good for decades of self-sufficiency. But high extraction costs mean much of it may stay buried unless prices move sharply higher. That makes UK shale more of an insurance policy than a game-changer.

Argentina’s oil-asset grab is both normal and odd

19 Apr 2012

The decision to take control of YPF puts Argentina in the oil industry mainstream - 75 percent of global production comes from government-controlled companies. What is odd, though, is the desire to micromanage the company and the willingness to annoy the rest of the world.

U.S. gas export advance heralds end of low prices

18 Apr 2012

Less than a week after rates slipped below $2 for the first time in a decade, America approved the nation’s first big liquefied natural gas plant in 50 years. Others will follow. That may signal a bottom for ultra-cheap supply - and should result in a more stable market.

Couche-Tard’s Scandinavian deal looks smart

18 Apr 2012

Though a 53 pct premium for Statoil Fuel and Retail is chunky, the Canadian convenience store chain has shown discipline in the past. It walked from a U.S. deal to avoid a bidding war. Couche-Tard’s new friendly purchase looks promising if it can manage things an ocean away.

Repsol nearly pricing in the worst

17 Apr 2012

The Spanish energy group has been hard hit by the expropriation of most of its shares in Argentina’s YPF. Investors are pricing in zero compensation and wipeout on a YPF-backed loan. But with the strategy upended and a long legal fight ahead, the market pessimism is justified.

Obama’s oil speculation plan is mercifully mild

17 Apr 2012

Under fire for high gas prices, the U.S. president has executed a masterful trade. Giving regulators extra leeway to clamp down on risk-taking investors won’t cut the cost of driving, which is up for other reasons anyway. But it should placate voters without hurting markets.

Total, Shell show need for re-think on oil risks

17 Apr 2012

Recent incidents at sea have sent the oil majors’ shares tumbling at the first whiff of trouble. In both cases, billions of dollars of lost market cap looks like an overreaction. Drilling in hard-to-reach places will always be risky. Investors need a new way of thinking about it.

Repsol has to fight Argentina’s oily expropriation

16 Apr 2012

Buenos Aires’ leftist government is taking control of YPF, the oil and gas company 57 percent owned by Repsol of Spain. Worse, it seems that the state may be nationalizing only Repsol’s shares. Argentina’s naked power play may be overwhelming, but the Spanish should not just roll over.

YPF seizure follows long, sad Argentine tradition

16 Apr 2012

One of the world’s first state-controlled oil firms is being reclaimed. Such nationalistic tendencies stretch back nearly a century. Juan Peron, founder of President Fernandez’s party, also grabbed many businesses in the 1940s. But commodity prices don’t stay high forever.

Big Oil chief payouts flow too freely

16 Apr 2012

Rex Tillerson and John Watson, the respective bosses of Exxon and Chevron, earned $60 mln between them last year after big pay hikes. But Exxon’s lead is shrinking and Chevron’s newish CEO can’t take credit for closing the gap. Rising oil prices don’t make such packages deserved.

Resource nationalism can have a bright side

13 Apr 2012

A rumored nationalisation of Argentina’s biggest oil firm still hasn’t materialised. Resource nationalism is a perennial problem, though not all of it is as counter-productive as Buenos Aires’ harassment of YPF. Shareholders suffer. Production and market stability don’t have to.

Green energy may yet survive poison of cheap gas

12 Apr 2012

The collapse of U.S. natural gas prices below $2 is a fresh blow to solar just as another industry IPO is pulled. But don’t write it off. Solar is getting cheaper, too, and providers can set costs for decades. Gas, which America may soon be exporting, offers no such guarantee.