Oil & Gas

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.

Exxon slow and steady in race back from gas to oil

31 Jan 2012

The energy giant went big on gas with a $31 bln acquisition in 2010. With oil now almost seven times more precious than U.S. gas in energy terms, the company has been slower than rivals to move back toward crude. But there may be method to Exxon’s avoidance of a dash to liquids.

Brazil’s oil plutocracy flexes its muscles

30 Jan 2012

A foreign offshore driller has put off its IPO to appease corporate concerns of state-owned giant Petrobras. Meantime, the country’s richest man, Eike Batista, is set to extract his first barrel after navigating the bureaucracy in record time. Brazil’s oil winners keep winning.

Apple’s cash is key to unlocking suppressed value

30 Jan 2012

Though it’s the world’s most valuable company, the iPhone maker doesn’t get full credit for its near-$100 bln cash hoard or its growth. A huge special dividend could be close to a free lunch. And regularly paying out half its earnings could show why Apple may be worth $1 trln.

Chevron still safest oil bet despite profit miss

27 Jan 2012

Knocking $6 bln off Chevron’s market value looks like an over-reaction. The hit makes the second-largest U.S. oil company even cheaper compared to rivals. The recent weakness in refining will pass, and the firm has strong finances and the sector’s lowest exposure to cheap gas.

Iran’s first move on oil ban would backfire

26 Jan 2012

Oil prices may shoot up if Tehran abruptly cuts off the EU ahead of a full embargo. This would likely trigger a release of emergency stocks, and increased production from Saudi Arabia. But Iran won’t win much from higher prices, and would be the first to lose from a glut.

Conoco must prove tortoise can win oil race

25 Jan 2012

In one of its last quarters as an integrated U.S. major, Conoco delivered 66 pct profit growth. But production fell ahead of a spin-off that will pit its exploration arm against a faster-growing peer set. Though it’s buying more dynamic assets, the valuation will depend on quality.

Indian economy could gain from Iran sanctions

24 Jan 2012

Beggars can’t be choosers. Iran would prefer to sell its oil for dollars, but sanctions mean it might have to take rupees from India, its second largest customer. Rupees are hard to spend outside of India, so New Delhi would get cheap oil and a captive buyer of its exports.

New Petrobras CEO has it all – except independence

23 Jan 2012

There’s plenty for shareholders to like about Maria das Graças Foster becoming the oil giant’s boss. A veteran engineer, she has the qualifications needed to help boost output. But her close friendship with Brazil’s president reinforces the company’s subordination to the state.

Chavez tests limits of resource nationalism

23 Jan 2012

The Venezuelan president nationalised foreign operators in 2007 and now threatens not to pay them as much as the international arbitrator orders. Such bravado might play well at home, but escape is almost impossible. Creditors can easily seize the state’s ample overseas assets.

Essar Energy’s risks outweigh any likely rewards

20 Jan 2012

A legal defeat has hammered shares of London-listed Essar Energy, deepening losses since the 2010 IPO of the India-focused power group. Though big risks were outlined in its prospectus, and are now more realistically priced by the market, the shares are still likely to struggle.

Dana Gas could let its bondholders burn

16 Jan 2012

With a $1 bln London-listed Islamic bond fast coming to maturity, the energy firm remains without a finance chief. Dana has good assets but cashflows are erratic and bondholders led by BlackRock have weak collateral. Short of a bailout, a painful restructuring is on the cards.

Gulf states will benefit from Iran sanctions

16 Jan 2012

Tehran has warned of dire consequences if regional producers replace its shut out oil. But Saudi Arabia and its allies have strong incentives to fill any sanctions-supply gap. They need to keep the United States on their side, and they have much to gain if Iran is weakened.