Breakingviews

BHP Billiton plays catch-up with $7 bln shale hit

January 15, 2016

Plunging energy prices forced the miner to write down its U.S. oil and gas assets again. The non-cash charge is large but just brings BHP’s balance sheet closer to the outside world’s estimation. A bigger step would be to follow the market’s lead once more and slash the dividend.

Oil flirting with the $20s gives OPEC cause to cut

January 12, 2016

That bleak outlook for oil is gaining traction among analysts. Such bearish predictions may prove correct unless bickering OPEC puts aside its differences and agrees to deep cuts. But for that to happen, Russia and other producers outside the cartel will have to play ball.

Saudi Aramco IPO could herald a Riyadh garage sale

January 12, 2016

The IPO of a strategic stake in Saudi Aramco could be the start of a kingdom-wide selloff of state assets. The government owns stakes in locally listed firms worth $170 billion. By spinning these off to compensate for lower oil revenue, it could fund years of budget deficits.

Saudi Aramco IPO carries big investor risks

January 8, 2016

Saudi Arabia has whetted the appetite of potential shareholders with the prospect of listing shares in its state oil company. A sale would give investors access to 18 pct of the world’s oil reserves but little say in how the company is run. The risks could outweigh the rewards.

Arab sovereign wealth fund exodus just beginning

December 29, 2015

Oil-dependent Gulf sheikhdoms need money to shore up their budgets. They’ll hold on to trophy assets like stakes in VW or Barclays for as long as possible. But if the price of crude keeps sliding to $20, the region’s rulers might need to liquidate their rainy-day funds by 2020.

Big Oil morphs into Big Gas

December 22, 2015

Energy giants like Total are already pumping more gas than oil. Companies are making a virtue out of a necessity, since gas supplies are more accessible than oil. Demand is also growing. But returns are dogged by high capital spending and cost overruns.

OPEC indecision could engulf big oil majors

December 4, 2015

Instead of cutting output, the oil cartel has cleared the way for its members to keep flooding the market with more crude. For investors in oil companies this means a year of deeper spending cuts. Lower earnings are almost guaranteed to follow.

Venezuela’s populist revolution runs out of gas

December 4, 2015

The Andean nation has the world’s biggest oil reserves but can’t get basic goods like milk and medicine into stores. Voters will punish the inept heirs of leftist caudillo Hugo Chavez in Sunday’s legislative elections, but no quick turnaround is coming. Default is a risk in 2016.

Saudi has chance to teach hedge funds a lesson

December 3, 2015

The largest OPEC producer has long complained that the biggest risk to a stable oil market is hedge funds who bet on falling prices. A deal to cut production in Vienna on Dec. 4, while a drop in the bucket for Saudi, could push up oil prices and leave speculators with big losses.

Essar buyout exposes Indian stock market weirdness

December 2, 2015

Minority investors approved the delisting of Essar Oil last year. Now the controlling Ruia brothers are planning to sell half the $4.5 bln company to Russia’s Rosneft. The regulator has ordered Essar to compensate investors later. It’s a bizarre outcome in which no one looks good.