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
Three of Europe’s biggest oil companies are set to vie for Anadarko Petroleum’s Brazilian business, valued at more than $3bn, the FT reports, citing people with knowledge of the talks. France’s Total, the Norwegian state-controlled energy group Statoil and Denmark’s Maersk Oil are expected to bid in the first round of the US independent oil explorer’s auction later this month. All three as well as Anadarko declined to comment. There had also initially been interest from Asian oil companies, one of the people said, but it is unclear whether any bids from that region will materialise. Bids are likely to value the Brazilian business at $3bn-$4bn.
Breaking pre-market news on Friday,
- Total says Q3 profits up 13 per cent – statement. Read more
Total, the French oil and gas group, is planning to merge its refining division with its chemical business, a move that risks provoking the wrath of the powerful French unions, the FT reports. The plan, which is due to be announced in October, is the second part of an attempt by Christophe de Margerie, chief executive, to stamp his mark on the company – one of the five oil “super-majors”. Last year he said Total would invest more money in the riskier type of oil and gas exploration typically associated with smaller companies such as Ireland’s Tullow Oil, marking a clear departure from its traditionally more cautious approach.
Christophe de Margerie, chief executive of Total, the French oil group, is to be questioned in court over allegations of corruption linked to the UN oil-for-food programme in Iraq, the FT reports. A French justice official said that a decision to refer Mr de Margerie and 18 other individuals to the Paris courts had been made by Serge Tournaire, a French judge, at the end of last week. The official said that the case would probably go to trial next year but a date could not yet be confirmed and it could be delayed. Total, which has repeatedly denied any wrongdoing during the long-running investigation into the oil-for-food affair, said that it was “confident about the outcome of any trial and that we will be cleared of any allegations”.
Breaking pre-market news on Friday,
- BSkyB says will launch £750m buyback, announces 20 per cent dividend hike – statement. Read more
The UK is mulling bringing in incentives to promote offshore gas exploration and production, a senior Total executive told Reuters on Tuesday. Patrice de Vivies, Total’s senior vice-president for northern Europe, told Reuters he and Total’s president had recently met Britain’s finance minister, George Osborne. ”They (the British government) have to come to understand that gas needs to be treated differently than oil, given that oil is twice as expensive as gas,” he said in an interview. ”They signalled to us that they would introduce specific incentives towards gas,” said De Vivies. “The details are not yet defined. They want to reduce the negative impact on gas via field allowances.”
Total, the French oil and gas group, has agreed to take a majority stake in SunPower, the California solar power company, for about $1.4bn, in one of the largest-ever single investments by an oil company in renewable energy, reports the FT. Total plans to buy up to 60% of SunPower’s A and B shares at a price of $23.25, a 46% premium to the A shares’ closing price on Wednesday. SunPower is the second-largest US solar panel supplier. By taking a majority stake but maintaining SunPower’s independence, Total hopes to use its financial strength and global reach while preserving SunPower’s culture and entrepreneurial tradition.
French oil group Total is to buy a 12 per cent stake in Novatek of Russia in a $4bn deal, the FT reports. The agreement, unveiled by chief executive Christophe de Margerie at Russian prime minister Vladimir Putin’s residence near Moscow on Wednesday night, will give Total an interest in the Russian group’s Arctic gas project. The French explorer plans to raise its holding to 19.4 per cent within three years. Global oil producers are looking at Russia to boost reserves. The world’s biggest energy producer needs foreign expertise to develop challenging projects in harsh, remote areas to maintain output. Russia wants to boost liquefied natural gas output to expand in growing Asian markets and compete in Europe. “It is a good deal that has great potential,” Mr Putin said. For more see FT Alphaville.
It looks like 2011 really is becoming the year of Russian strategic energy partnership deals.
The latest to join the ever-growing Arctic-focused club is French oil major Total. The firm announced on Wednesday that it will pay $4bn for a stake in Russia’s top independent gas company Novatek, a move which allow Total to join its Arctic gas project. As Reuters noted, the move follows similar Russia-focused deals by BP and ExxonMobil this year. Read more
Breaking pre-market news on Thursday,
- Secretary of State for Culture, Olympics, Media and Sport says he intends to approve News Corp bid for BSkyB — statement. Read more
Breaking pre-market news on Friday,
- Uralkali confirms talks over reverse takeover by Silvinit — statement. Read more
India’s largest oil group is considering acquiring ExxonMobil’s and Total’s oil assets in Angola, in a new push by the state-run group to secure overseas resources, reports the FT. RS Sharma, chairman of Oil and Natural Gas Corp, told the FT on Monday that he had met members of the Angolan government to discuss opportunities, including buying some assets of the US and French oil majors. But Sharma stressed that talks were at an early stage. However the Economic Times of India reports that ONGC is in talks with Exxon’s Angolan arm to buy its stake in an oil field for about $2bn. Besides Esso’s 25% stake, BP’s Angolan arm owns 26.67% of the local oil venture, the Angolan state owns one-third while Marathon Petroleum and a subsidiary of France’s Total have the remaining 15%.
India’s largest oil group is considering acquiring ExxonMobil’s and Total’s oil assets in Angola, in the latest effort by the state-run group to secure overseas resources to help the country achieve its double-digit growth aspirations, reports the FT. R.S. Sharma, chairman of Oil and Natural Gas Corp, told the Financial Times on Monday that he had met members of the Angolan government in New Delhi to discuss a number of opportunities, including buying the assets of the US and French oil majors. However, the Indian executive stressed that talks were at a very early stage and he did not specify how much ONGC would invest.
Some of the world’s biggest oil companies reported sharply higher third-quarter results on Thursday amid stronger crude prices and improved refining margins, the FT reports. ExxonMobil, the largest US oil company, beat analyst expectations with a 55% jump in 3Q earnings to $7.4bn from a year ago. Royal Dutch Shell, Europe’s biggest oil group, said 3Q profit rose 18% to $3.5bn. The underlying result, which strips out one-off items, was up an annual 88%. Italy’s Eni, meanwhile, saw a 47.5% rise in underlying 3Q net profit to €1.7bn ($2.36bn). The results are expected to set an industry trend, with analysts forecasting strong earnings from America’s Chevron and France’s Total on Friday. Despite the bumper profits, Lex notes, only one of the three oil giants raised its dividend: Exxon.
BP is seeking to sell its German petrol station chain Aral for around €2bn (£1.66bn) German magazine Wirtschaftswoche reported a the weekend, citing people familiar with BP’s plans, according to Reuters. BP last week unveiled plans to sell $30bn of assets – mainly upstream oil and gas fields – over the next 18 months to cover costs of its Gulf of Mexico oil spill disaster. France’s Total, Russia’s Rosneft and Avia, an independent chain of filling stations, were among the possible buyers, said Wirtschaftswoche, adding that Rosneft was also interested in BP’s two German refineries. The FT meanwhile says that BP’s plans to start drilling for oil and gas off Libya within weeks have prompted calls for a moratorium on deepwater operations while Mediterranean states assess the environmental impact.
French oil major Total on Wednesday said it had agreed to buy Canada’s UTS Energy for C$1.5bn ($1.42bn) in efforts to boost its Canadian oil-sands portfolio, reports the WSJ. UTS last year rejected two takeover bids from Total. Wednesday’s agreement improves Total’s offer to C$3.08 a share from C$1.75 in April 2009 and excludes some of UTS’s undeveloped Canadian oil-sands assets. UTS said its board of directors had approved the plan unanimously.
The world’s biggest oil companies are reviewing their current partnerships with BP and rethinking their willingness to agree new projects in which BP designs the oil well and runs the operations, the FT reports. ExxonMobil, Chevron, Total and Royal Dutch Shell have all willingly partnered BP over the years but have sought to distance themselves following revelations about BP’s well design and operational decisions at the Macondo well.
BP’s stock continued to take a battering late in London trading on Tuesday, closing down 13.1 per cent. Cue a fresh round of analysis of whether BP is in danger of a break-up, as well as discussions of just how much damage the oil spill is doing to BP’s bottom line. FT Alphaville has the details. Read more
The Wall Street Journal reports that companies like Shell, Total and BP are continuing to do brisk business with Iran, but are preferring to keep a low profile while doing so. Their efforts to disguise operations include hiding ships’ movements, even though the deals are perfectly legal. Spokesmen for Shell, BP and Total declined to comment to the paper.
Tullow Oil, the UK’s largest independent oil explorer, said China’s CNOOC and Total of France are expected to each take a one-third interest in its Ugandan oil assets in Uganda as part of a deal to satisfy Kampala over development of Tullow sites. The news came as Tullow on Wednesday reported a 93% yoy fall in pre-tax profit due to lower production volumes and energy prices. The Africa-focused explorer said the deals with the Ugandan government were likely to be signed in coming weeks. While no price details have been announced, the market is expecting a gross value of $2.5bn.
Here’s a story that’s currently topping the minds of most energy traders in Europe, via Bloomberg:
Feb. 22 (Bloomberg) — Total SA unions called for a refinery strike to spread to all French plants and said fuel shortages could be imminent. “The strike will be intensified and extended to all refineries,” Charles Foulard, a representative of the Confederation Generale du Travail union, said late yesterday after talks with Total management on ending the six-day walkout broke down without an agreement. He warned the labor disruption will create fuel shortages in France this week. Read more
Breaking pre-market news on Friday,
- Hershey said to be accelerating efforts to prepare Cadbury offer – Bloomberg. Read more
Total on Monday became the third big European energy company to buy into Chesapeake Energy’s US shale gas assets. The French oil producer will pay up to $2.25bn for 25% of Chesapeake’s assets in Texas Barnett Shale, $800m of it in cash and the rest by funding 60% of the project’s costs over the next 5-6 years. BP of the UK and Norway’s Statoil in the past 18 months signed similar deals with Chesapeake. Analysts said the deal’s price – $63,000 per barrel of current production – was in line with recent deals.
Santander has revived talks to sell its 32% stake in oil group Cepsa in what could lead to the divestment of the Spanish bank’s last remaining equity holding of importance. The bank, the eurozone’s biggest by market cap, told Spain’s securities regulator on Wednesday that it was “in negotiations” over its holding in Cepsa, in which Total, the French oil major, controls nearly 49%, but no agreement had been reached.
The Times was reporting on Wednesday afternoon that French oil group Total has decided against bidding for Nexen, the Canadian oil company. The decision follows a meeting of Total’s board in Paris yesterday, apparently.
We’re not 100 per cent sure whether that’s right. What we are sure of is that the briefings of analysts going on over the past 24 hours fall some way short of a full picture. Here’s our understanding: Read more
The board of Total is meeting to consider an offer of up to C$19.7bn for Nexen, the Canadian oil company, FT Alphaville has learnt.
It is understood the French oil company is prepared to offer up to C$38 a share for Nexen, which owns fields in the Gulf of Mexico and the North Sea. Read more
No so much FILTH, as failed in Washington, try Paris.
China’s attempts to get a stake in energy related assets (or indeed any other assets) in the US, have generally been met with dismay by policymakers and an knee-jerk outbreak of economic patriotism. Read more
The body that manages the bulk of China’s $1,650bn in forex reserves has bought a 1.6% stake in France’s Total, in a sign of its aggressive investment strategy. China’s State Administration of Foreign Exchange, or Safe, which operates under China’s central bank, began building its stake, valued at €1.8bn ($2.8bn), several months ago – and did so with Total’s full knowledge, said sources close to the company. The news is likely to revive debate over economic patriotism in France, while in China, it will heighten tensions between Safe and CIC, the SWF established last September. See also FT.com’s in-depth report on SWFs.
Three French energy companies are jointly bidding for the right to build a pair of nuclear power reactors in the United Arab Emirates, in France’s latest pitch to export its nuclear technology to countries throughout the Middle East and North Africa, reports the Wall Street Journal.
The UAE has yet to launch a formal tender for the reactors, but French state-controlled engineering and nuclear technology company Areva said Monday it would team up with oil group Total and energy-utility company Suez to supply the two reactors when the tender is officially announced. The reactors would cost an estimated €6bn ($8.87bn), says the Journal. Read more