How much of the oil and gas sector’s asset valuations could be at risk from climate mitigation policy?
The International Energy Agency’s latest annual World Energy Outlook, released in November, followed the popular practice in long-term forecasts of using several scenarios. One involves global policymakers moving to limit atmospheric CO2 concentration to 450 parts per million, in order to limit to 50 per cent the probability of average temperatures rising 2 degrees or more.
The problem for fossil fuel companies is that could limit their ability to utilise all their reserves. Read more
Six months ago, the FT’s analysis of BP’s latest numbers began, Bob Dudley stated that the company had reached a “definite turning point”. How right he was. Unfortunately, the turning was down rather than up. The shares are not quite plumbing the ocean floor of the panic which followed the Macondo well disaster, but despite higher oil prices, the slowly clearing fog of litigation and the continuing sales of assets at prices well beyond book values, they have still managed to plunge by 13 percent in the last two months.
The fall neatly reflects this week’s news of a 13 percent decline in first-quarter profits, while the other oil majors were cleaning up, so to speak. The most charitable description of BP is that it is a company in recovery mode, while us long-suffering shareholders (sic) wait for Dr Dudley’s medicine to take effect. A less charitable conclusion would be that the patient has such a chronic sickness that only major surgery will cure it. Read more
BG, the oil and gas producer, has lined up Citigroup to advise on a potential sale of its stake in Gujarat Gas in a deal that could raise about $600m, reports the FT, citing people familiar with the matter. It comes as the explorer looks to raise capital and as part of a review of its global portfolio amid speculation of plans to divest a stake in its Brazilian operations. The market value of BG’s 65.12 per cent stake in India’s largest natural gas distributor by sales is about $600m. Gujarat is listed in India and the stake sale is likely to attract the attention of GAIL, the gas transmission company, and Gujarat State Petroleum Company, an industry specialist said.
Breaking pre-market news on Monday,
- Total income at Barclays Capital (excluding own credit) down 22 per cent in Q3 — statement. Read more
India’s Oil and Natural Gas Corp is in talks with foreign oil majors BG, Eni and Shell to sell stakes in deepwater developments off the country’s resource-rich eastern coast, as it seeks to replicate the lucrative $7.2bn deal struck between BP and Reliance Industries. The FT reports AK Hazarika, the chairman of India’s biggest oil and gas group, told the Financial Times that the state-owned group was looking for a partner with the technological expertise to exploit its vast but untapped deepwater oil and gas reserves. ONGC, which has a market capitalisation of $55bn, has already been collaborating with the British, Italian and Anglo-Dutch explorers but it is looking to deepen ties with foreign groups to boost the development of its 85 deepwater blocks in the Indian Ocean, according to Mr Hazarika.
There’s been an outbreak of fantasy M&A this Wednesday morning.
Credit Suisse reckons Anheuser-Busch InBev should respond to the continuing ills of the US domestic beer market by making a blockbuster bid for SABMiller: Read more
Breaking pre-market news on Wednesday,
- Heritage Oil makes major gas discovery in Kurdistan — statement. Read more
Breaking pre-market news on Tuesday,
- BP returns to profit; to review dividend policy alongside FY results in early 2011 — statement and results. Read more
Breaking pre-market news on Friday,
- Betfair prices IPO toward the top end of the range; values business at almost £1.4bn — statement. Read more
The Australian government has not given up insisting that pigs fly that a planned 40 per cent tax on “super” profits generated by all resources operating on its soil is a Really Great Thing.
Even senior bureaucrats are now weighing in, with Ken Henry, chief of the Australian Treasury, claiming on Thursday that the tax will “boost” the mining industry and the economy. Read more
Breaking pre-market news on Wednesday,
- Centrica to invest ₤725m to build offshore wind farms – statement. Read more
Brazil’s prospects of becoming a top oil producer increased on Wednesday when it emerged that an offshore field being developed by BG could be twice the size of a discovery reported by BP last week in the Gulf of Mexico. Petrobras, the national oil company, reported that the Guará field contained the equivalent of 1.1bn-2bn barrels of recoverable oil and gas. BP’s Tiber field, which BP called a “giant” discovery last week, is thought to contain 500m-1bn recoverable barrels. The news from Petrobras boosted shares in BG by 4% and in its partner in the Guara develpment, Repsol of Spain.
BG Group aims to compete against Royal Dutch Shell by deepening its presence in Australia’s fledgling coal seam gas industry, after launching a A$796m (£363m) takeover bid for Pure Energy Resources. The cash bid trumps a rival offer for Pure Energy from Australia’s Arrow Energy, which last year joined Shell to co-develop projects. BG’s bid comes after the UK oil and gas group agreed last October to buy Queensland Gas Company for A$5.6bn. BG has made repeated attempts to become a leader in Australian coal seam methane – gas found in coal deposits – and earlier last year abandoned a A$13.8bn takeover offer for Origin Energy, an Australian group, after being rejected at the 11th hour. Read FT Alphaville’s take here.
Bernstein Research thinks 2009 could be the year ExxonMobil changes the competitive landscape of the oil industry forever.
How is it likely to do this? Read more
Not before time, in the view of some investors, has UK gas producer BG Group abandoned its hostile A$13.8bn ($11.2bn) bid for Australia’s Origin Energy.
BG said on Tuesday it would not extend or increase its offer, due to expire Sept 26. Read more
The latest on Friday,
- Bradford and Bingley forecast to open down as much as 10% – Reuters Read more
Origin Energy, the Australian energy producer and retailer, advised shareholders on Thursday to reject a $13.1bn bid from British gas company BG Group, saying it undervalued its coal seam gas (CSG) reserves, reports Reuters. BG’s bid was launched on June 24 after an earlier attempt at an agreed deal was rejected by Origin at the last minute. Origin’s chairman Kevin McCann said the company still saw better value in making separate deals to either sell its CSG assets or jointly develop them. Origin set a deadline of 7pm local time (0900 GMT) on Friday for expressions of interest on the CSG assets, and said it would update shareholders on the process soon. Separately, Origin said it had agreed to buy Babcock and Brown Power’s gas-fired Uranquinty Power Station for an enterprise value of A$700m ($673m).
BG Group made a A$13.8bn ($13.1bn) hostile offer to buy Origin Energy, Australia’s biggest producer of gas from coal seams, after an earlier attempt at an agreed transaction was rejected, reports Bloomberg. BG, the UK’s third-largest oil and natural gas producer, will bid A$15.50 a share in cash for all of Origin’s stock, it said Tuesday. Origin turned down BG’s approach at the same price per share on May 30, saying it undervalued its coal-seam gas reserves. The shares rose to a record in Sydney trading. BG is betting Origin shareholders will be tempted to take up the cash offer at a time of market volatility. The WSJ adds that BG – which is being advised by Goldman Sachs, Gresham Advisory Partners, Deutsche Bank and Morgan Stanley – expects its offer to be open for two months, but that may be extended.
Origin Energy, Australia’s biggest producer of natural gas from coal seams, rejected an improved, A$13.6bn ($13bn) takeover offer from BG Group, citing the increased value of its reserves, reports Bloomberg. BG, the UK’s third-biggest natural gas company, raised its cash offer to A$15.50 a share, from an original bid of A$14.70, Origin said Friday. Origin shares advanced as much as 11% to a record A$16.15 in Sydney trading. Origin managing director Grant King said earlier this month BG’s offer represents valuation multiples that are “not at all challenging’” when assessed against Origin’s coal seam gas resources, raising speculation the target may seek a higher offer.
In case you missed these stories:
Citi announces shakeup plans
Citigroup on Friday announced it would shed up to $500bn of unwanted assets and slash some $15bn off its cost base, including plans to sell or wind down more than $400bn of its non-core assets by 2010. More background here. Read more
Have BG overcooked their offer? The market gave the gas group’s $12bn approach to Australia’s Origin Energy the thumbs down on Wednesday marking BG’s shares down almost 3.4 per cent.
The move was unexpected. But the strategic basis for a tie-up looks sound. Origin’s large undeveloped coal seam gas operations in Queensland would plug an acknowledged hole in BG’s assets. BG has already teamed up with Queensland Gas Company to develop an A$8bn LNG project, based on coal seam gas, taking a 9.9 stake in the group and a 20 per cent interest in coal seam assets in south-west Queensland. Origin would help in boosting BG’s Asian presence – and redirecting its coal seam gas into higher value LNG projects is attractive. Read more
British utility BG Group has offered A$13bn ($12bn) for Origin Energy, Australia’s second-largest power retailer, as it looks to establish itself as a major player in the Pacific region, sending Origin’s shares up nearly 40% in Monday trading, reports Reuters. Origin said that BG’s proposed offer, which it had yet to consider, was at A$14.70 per Origin share, representing a 40.4% premium to Origin’s Tuesday close of A$10.47.