Power

Western oil drillers flirt with OPEC-style dilemma

25 Oct 2017

U.S.-focused producers may be targeting higher returns over pumping more crude. Majors like Exxon and Chevron know the trade-off, too. Selling less oil at a higher price is appealing if everyone joins in. But the cartel’s internal tensions show how easily self-interest prevails.

Trump “coal first” drive is blowing smoke

10 Oct 2017

His environment agency aims to reverse Obama-era pollution rules, while the energy department wants regulatory changes that favor nuclear and coal power generation. Even if both happen, the closure of a Texas power plant shows the economic and social forces pushing the other way.

GE needs Nelson Peltz’s help – and takes it

9 Oct 2017

The $200 bln U.S. industrial giant, now with a new CEO, still seems unable to get people excited about owning its shares. A board seat for the activist investor’s top lieutenant may help. It’s a contrast with P&G, which is resisting Peltz – potentially to shareholders’ detriment.

Ford is playing catch-up with General Motors

3 Oct 2017

GM’s stock hit a record high after the largest U.S. automaker detailed plans for robotaxis and 20 new electric cars. It raises the bar for Ford CEO Jim Hackett. His new strategy needs concrete goals, especially on driverless vehicles and cost controls, to protect its premium to GM.

U.S. electricity grid is a Category 5 problem

18 Sep 2017

Hurricane Irma left much of Florida without power after ripping down transmission lines. Burying cables is one fix, if time-consuming. But storms are just one catastrophe threatening the nation’s aging electricity infrastructure. Upgrading it could cost as much as $2 trillion.

Beware Brazilian promises to relinquish control

23 Aug 2017

The cash-and-corruption-challenged government dangled the idea of reducing its 51 pct voting stake in Eletrobras, the electric utility. While that sent the shares soaring by half, investors need only recall Brasilia's past stewardship at Petrobras and Vale to slow their samba.

Calpine $5.6 bln buyout puts chips on gas hegemony

18 Aug 2017

A consortium is taking the heavily indebted electricity company private at a 51 pct premium. It’s a bet natural gas will dominate the nation’s power grid. Problems with other sources justify that for now. Longer term, stagnant electricity prices and usage makes it a big risk.

Glencore’s debt purge creates enviable problems

10 Aug 2017

Surging commodity prices are helping Chief Executive Ivan Glasenberg to slash debt faster than planned and restore profitability. That gives the mining giant scope to hand more money back to investors or make bigger bets on growing demand for resource-hungry electric vehicles.

Malaysia power IPO will test 1MDB stain

19 Jul 2017

China Nuclear wants to float assets acquired for $2.3 bln from disgraced 1MDB. A Kuala Lumpur listing may smooth local misgivings over Chinese ownership. But it is unclear if investors are ready to look beyond the fund scandal. Recent listings also suggest it will be a hard sell.

Rare sense prevails in reworked U.S. utility deal

10 Jul 2017

Great Plains tried to buy next-door power provider Westar, but regulators nixed the plan. In a new roughly equal $14 bln merger, the target gets a lower headline price and the buyer less control. It's an unusually pragmatic compromise considering how often egos undermine M&A.

RWE can sparkle with a dirty energy merger

20 Jun 2017

The German utility risks turning into a mere holding company after spinning off clean power unit Innogy. It can avoid this fate by bulking up on coal and gas. An 8.4 billion euro bid for rival Uniper would create value even before synergies and fire up the group’s revival.

UK energy producer shows limits of futurology

15 Jun 2017

British utility Drax has stretched the definition of long-term targets with plans to triple its EBITDA by 2025. Though its business model is stable, much can go wrong in eight years. A less specific dividend promise exposes management’s limited belief in its own predictions.

Toshiba cash gives only half-life to nuclear plant

12 Jun 2017

The Japanese company’s $3.7 bln settlement shores up Southern’s finances but leaves a cloud over its troubled reactors. Construction continues for now yet the utility is still on the hook for overruns. It may yet decide to pull the plug on the plant, and nuclear’s U.S. future.

Tax windfall charges up RWE, E.ON recovery

7 Jun 2017

Germany’s battered utilities can get back more than 6 bln euros in past tax payments, the country’s top court decided. It’s the final stage in the sector’s rehabilitation, following big restructurings and settlements on nuclear liabilities – and sets the scene for M&A.

Finnish-German utility would make odd couple

1 Jun 2017

Shares in Uniper jumped on a report that Finland’s Fortum is considering buying E.ON’s 47 pct stake in the 6.3 bln euro power group. Yet Uniper’s big carbon footprint would tarnish the Finns’ clean energy strategy, and its lackluster earnings make the financial logic a stretch.

California dam trouble reveals flood of water woes

13 Feb 2017

The Oroville reservoir damage goes beyond a $200 mln repair bill and mass evacuations. It shows a lack of investment that has left U.S. infrastructure under-maintained. Trump's financing plans may not suit the likes of Oroville. Establishing a proper price for water would.

Climate change will unclog water’s pipes

4 Jan 2017

The $1 trln H2O sector is growing slower than hoped despite rising threats to cities and companies from drought, flooding and population growth. But efforts to cut greenhouse gases could boost demand in 2017. General Electric is quitting the business at the wrong time.

UK, even now, is a good bet for Li Ka-shing

23 Sep 2016

The Hong Kong tycoon is reportedly eyeing $14 bln of gas grids. Never mind Brexit uncertainties or the veto of Li's British mobile merger. UK infrastructure offers solid, stable returns, and this could be a good use of the $7 bln cash pile stranded at Li's Power Assets unit.

NextEra deal marks beginning of end of TXU saga

29 Jul 2016

The power producer is buying the bankrupt giant's stake in transmission group Oncor, valued at $18.4 bln. The $45 bln LBO of TXU, now Energy Future, hit trouble soon after its 2007 completion. Most creditors will have to be satisfied with a slice of the former TXU's other assets.

Tesla pressure clouds Elon Musk’s solar gambit

5 Jul 2016

The electric-car maker missed its delivery target again. That's bad news for a company aiming to quintuple production by 2018. A fatal crash also has invited scrutiny of Tesla's Autopilot feature. These concerns further undermine an already questionable effort to buy SolarCity.