Oil & Gas

India should hold its nerve on stock auctions

2 Mar 2012

New initiatives don’t always succeed first time. The Indian government’s auction of shares in ONGC, the oil and gas group, could have flopped had it not been for last-minute intervention. But as long as Delhi learns, auctions can still play a valuable role in privatisations.

Shell can afford to let Cove Energy go

29 Feb 2012

Gas-hungry Asian rivals are complicating the oil major’s attempt to buy 8.5 percent of a giant African gas field. Shell can probably justify paying more, but has no need to get into a bidding war. Even if Cove gets away, there should be other opportunities to participate in the field.

India’s auction tack bodes well for privatisation

29 Feb 2012

Questions remain about retail participation and whether New Delhi is genuinely convinced by the merits of privatisation. But the sale of shares in the state-controlled oil and gas company by auction is a new departure in India that promises to be effective and efficient.

Vedanta restructuring may need a rejig

28 Feb 2012

The India-focused FTSE 100 mining group is simplifying itself. There are sound commercial gains to be made in the process, but doubts linger about whether the assets are being transferred at equitable values. To get the deal done, Indian investors may need a bit more of the pie.

Investors ill-served by crude accounting standards

27 Feb 2012

Oil, that is. Divining how much explorers have discovered matters greatly to shareholders. Yet they must choose between two equally unreliable figures. Estimates based on SEC rules gyrate wildly with energy prices, while company data are too opaque. Shareholders deserve better.

Browne’s North Sea idea is more than nostalgic

27 Feb 2012

Buying into Fairfield Energy would befit the ex-BP boss, who managed a North Sea oil field in the 1980s. Yet there is sound commercial logic too. Oil prices, and opportunities to scoop up oil majors’ unwanted acreage, have increased since Fairfield pulled its IPO in 2010.

Apollo’s $7 bln bet won’t get gas from leverage

27 Feb 2012

The buyout firm and its partners are writing a chunky 40 pct equity check for El Paso’s E&P business. With energy prices volatile, lenders are rightly cautious. But without the usual debt juice, the best hope of a punchy investment return is a big upturn in gas prices.

Drilling alone won’t fulfil cheap U.S. oil dreams

24 Feb 2012

By expanding offshore drilling, GOP presidential contenders claim they can bring gasoline prices back to earth. With the US pumping only 9 pct of global oil, its leverage on supply is modest. But the biggest consumer can affect demand. That requires frank talk about conservation.

Shell pays up for a foothold in Mozambique gas

22 Feb 2012

The oil giant has offered $1.6 bln for gas explorer Cove Energy – a 70 pct premium but loose change for Shell. The assets are attractive and Shell has the know-how to exploit them. If Asian gas prices stay high and exploration projects deliver, the toppy price could be worth it.

BP’s Deepwater catharsis finally on the horizon

22 Feb 2012

A minority partner’s deal with the U.S. government is a promising sign ahead of a critical civil trial opening on Feb. 27. Extreme financial penalties look priced into BP stock whatever the verdict. So too is a big management discount. There’s lots of upside if BP isn’t thwacked, and its board restores credibility.

Higher oil price should burn itself out

20 Feb 2012

Robust demand – created by a reviving U.S. economy, loose money and vigorous Asian buying – is pushing Brent above $120 a barrel. Supply fears may keep trading volatile. But absent a serious dust-up with Iran, higher prices should be mostly self-correcting.

Iraq offers investors ultra-high risk-reward bet

20 Feb 2012

When war ends, investment opportunity begins. There has been enough peace in Iraq for the Baghdad bourse to rise 32 pct over two years, outperforming bigger Middle East rivals. The risks are huge, but reconstruction, demographics and oil make this frontier market tempting.

Deep-sea oil prize may spark Mexican energy reform

16 Feb 2012

Creaky state monopoly Pemex is taking on the trickiest drilling task of all - ultra-deepwater wells. After BP’s Macondo blunder, regulators are justly scared it’s not up to the job. With over half of Mexico’s oil offshore, this prize may spur the government to shake Pemex up.

Champagne and crude in the other Iraq

16 Feb 2012

Kurdistan’s growing clan of millionaires is undeterred by military checkpoints, Una Galani reports. Investors in the semi-autonomous Iraqi region could get rich too if disputes over oil are resolved with Baghdad. With Turkey holding the key, pressure is building for a solution.

Chesapeake’s debt diet lacks commitment

13 Feb 2012

A fresh plan for up to $12 bln of asset sales didn’t resonate with the gas firm’s investors. Previous such efforts haven’t lived up to expectations and much of the latest plan merely involves swapping obligations. More discipline and less financial engineering would go further.

New Petrobras CEO needs to flex political muscle

10 Feb 2012

A 52 pct drop in Q4 profit shows what Maria das Graças Foster is up against. The $200 bln Brazilian energy group’s refining losses, exploration bottlenecks and swollen capex budget are more political than operational problems. Foster’s engineering skills alone won’t solve them.

Pennsylvania sells out cheaply in fracking fight

9 Feb 2012

It’s poised to levy a gas tax, ostensibly to cover drilling damages. Pennsylvania has been the nucleus of opposition to fracking and the charge may soften opposition. But with a levy less than half that of other states, the industry still has the upper hand in the Keystone State.

Something has got to give on Iraqi oil

9 Feb 2012

Total is expected to join Exxon Mobil in risking investments in southern Iraq by signing deals with the semi-autonomous Kurds in defiance of Baghdad. Statoil wants out of Iraq altogether. The oil giants are right to test Iraq’s resolve.

Iranian oil-for-rupees poses diplomatic dilemma

9 Feb 2012

A clever plan to pay Iran in India’s own currency would leave Tehran with a mountain of illiquid rupees – like a gift card it can only spend in Indian shops. New Delhi may hope that the cash comes back through more trade or investment. Washington wouldn’t like that one bit.

Nabors chief’s pay surrender gives investors hope

6 Feb 2012

Eugene Isenberg surrendered a $100 mln severance payout. Cajoling the laggardly oil services firm to moderate its egregious compensation has been a hard, but useful, battle for shareholders. Their eventual victory should give heart to other investors fighting executive excess.