Christopher's Feed
Jun 14, 2012
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OPEC can’t afford to give residents cheap oil

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By Christopher Swann

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Bargain price oil is a standard perk for residents of crude-exporting nations. To the governments which set the low domestic price, such subsidies look like a way to buy popularity without any cash outflow. But the practice is expensive for members of the Organization of the Petroleum Exporting Countries, which meets in Vienna this week. It’s well past time for a change.

Jun 6, 2012

Booming U.S. oil is rare advert for big capitalism

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)

By Christopher Swann

NEW YORK, June 6 (Reuters Breakingviews) – The United States
now boasts the world’s fastest-rising oil production outside the
Organization of the Petroleum Exporting Countries. That leaves
Brazil’s growth trailing, while output in Mexico is falling.
With big banks in particular in the political doghouse,
America’s oil prowess is a reminder that private enterprises
seize opportunities better than governments.

May 30, 2012
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Exxon’s fracking gag makes Chesapeake look good

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By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Exxon Mobil’s reticence to come clean about fracking makes Chesapeake Energy look good. That’s a rare feat – and hardly one to brag about. The troubled gas firm is infamously opaque. But its openness on the risks of fracking puts larger rivals like Exxon Mobil and Chevron to shame. After another large minority vote from investors for more information on this controversial practice, Big Oil should follow its troubled cousin’s lead.

May 24, 2012
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Goldman renewable energy dash more than greenwash

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By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Goldman Sachs is making a dash to invest in renewable energy projects. It says it will invest $40 billion of its own and clients’ money over a decade. The Wall Street firm isn’t above self-serving spin, but it’s also never far from the money. With solar and wind power nearing cost levels that are competitive with fossil fuels, clean energy could burnish Goldman’s bottom line as well as its green credentials.

May 23, 2012
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Did Chesapeake miss Enron lessons?

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By Christopher Swann and Robert Cyran
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Chesapeake Energy, the embattled U.S. natural gas producer, seems to have missed some of the lessons of Enron’s demise. There have been no allegations of fraud. But the U.S. gas firm’s vast trading operation, fondness for complicated holdings and relationships, and corporate generosity are among the traits that, in hindsight, should have invited greater scrutiny of Enron’s edifice.

Chesapeake is a force in the U.S. gas market. It owns real assets, and it is the second-largest producer in the United States, accounting for about 9 percent of gross domestic gas supply according to a recent company presentation. It is the most active driller of new U.S. wells, and has substantial proven and unproven reserves. Meanwhile, joint-venture partners including Total of France and Norway’s Statoil attest to the substance of the projects they are involved in.

May 16, 2012

Exxon attacks straw man to defend CEO’s pay

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)

By Christopher Swann

NEW YORK, May 16 (Reuters Breakingviews) – Exxon Mobil
(XOM.N: Quote, Profile, Research) is attacking a straw man in its attempts to defend Chief
Executive Rex Tillerson’s bumper $35 million 2011 pay package.
Hoping to calm shareholders angry at the bonanza, the oil giant
held an investor call on Wednesday afternoon to explain its
argument that the company’s long-term goals obviate the need for
annual targets when setting executive pay. But that just sounds
like an excuse for C-suite largesse.

May 12, 2012
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Pricey Chesapeake medicine highlights its sickness

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By Christopher Swann and Robert Cyran

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Pricey medicine can help. But in Chesapeake Energy’s case, it shows how sick the company is. The embattled energy firm is borrowing $3 billion at 8.5 percent to repay a loan whose terms might otherwise prevent asset sales. This buys time. But it makes even more obvious Chesapeake’s unsustainable reliance on selling assets to fund its persistent cash drain.

May 4, 2012
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Review: Exxon’s shareholder fetish, good and bad

By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Exxon Mobil shareholders may feel a warm glow when reading Steve Coll’s history of their firm. “Private Empire” reveals the company’s single-minded devotion to investors and shows that it has helped the oil giant earn world-beating returns. But other readers will be struck by the downside of this obsession.

May 1, 2012
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Chesapeake board does too little, too late

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By Christopher Swann and Robert Cyran
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Chesapeake Energy’s decision to do the right thing shouldn’t impress investors. Its directors are only doing so under duress. Stripping Chief Executive Aubrey McClendon of the chairmanship and ending his personal investments in the firm’s wells are obvious and very belated moves. But McClendon’s deal-making and borrowing have accompanied lagging returns. Shareholders deserve more radical changes in the boardroom.

Many of Chesapeake’s woes may have been exacerbated by allowing McClendon to take a slice of each of the company’s wells. Sure, he shared the costs of drilling but the way he borrowed reduced his personal risk, giving him an incentive to push Chesapeake into a perpetual spending spree. Furthermore, as a risk-taker by nature, McClendon pushed the firm to take on far too much debt – close to half of which resides off the balance sheet. The firm’s monstrous complexity, thanks to dozens of side deals, also looks to have been driven partly by a desire to fund this empire-building.

Apr 26, 2012
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Chesapeake tangle goes far beyond CEO

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By Christopher Swann and Robert Cyran
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.Questions about Chesapeake Energy go beyond its chief executive’s dubious dealings. Aubrey McClendon’s personal stakes in oil and gas projects and the extent of related disclosure have put the $12 billion U.S. energy giant on the back foot and tied its board in knots. But investors should also be wary of the company’s monstrous complexity. It has convoluted off-balance sheet liabilities thanks to convoluted partnerships; hedging gains have dwarfed profit since 2006; and cash flow is consistently negative.

Chesapeake, the nation’s second-largest gas producer, has become its own worst enemy. Revelations that McClendon, the company’s flamboyant co-founder, failed to disclose $1.1 billion of personal borrowing to co-invest in wells with the company have raised the specter of serious conflicts of interest and shaken investors. The company originally said its board was “fully” aware of the CEO’s financing transactions, but on Thursday said the directors were only “generally” aware and moved to end the co-investment program – which U.S. regulators are now scrutinizing.

    • About Christopher

      "I am a columnist at Thomson Reuters focusing on the energy industry and hedge funds. Prior to this I worked at Bloomberg and the Financial Times."
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