Kevin's Feed
Sep 10, 2012
via Breakingviews

Xstrata should accept revised Glencore pitch

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By Kevin Allison

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

Xstrata should accept Glencore’s revised $35.5 billion offer for the mining giant. What was originally billed as a merger of equals is now, for all practical purposes, a takeover at a modest premium. Changes to the proposed governance arrangements make the business combination look riskier than before. Glencore may have to pay up to convince Xstrata’s top people to take orders from its boss, Ivan Glasenberg, after his Xstrata counterpart Mick Davis leaves. But for all the recent animosity, this is a recommendable proposal.

Sep 7, 2012
via Breakingviews

Glenstrata drama is no way to do M&A

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By Kevin Allison

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

Memo to Ivan Glasenberg: this is not the way to do big public company M&A. The boss of Glencore has lobbed a last-minute curveball to save the commodity trader’s proposed merger with miner Xstrata, seeking more time to discuss sweetened terms. The clumsiness of the move creates the impression that Glasenberg can’t suppress his trader instincts when he needs to play the statesman CEO. It also augers ill for any transaction that follows.

Sep 6, 2012
via Breakingviews

BP’s path to Macondo settlement just got harder

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By Kevin Allison

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

Macondo is back. After March’s $7.8 billion settlement with Gulf Coast fishermen and other private plaintiffs, a deal with the U.S. government over civil and potential criminal liability for the 2010 Gulf of Mexico disaster seemed to be in reach for BP. It probably still is – the two sides are still in talks ahead of a civil trial in January. But sharp rhetoric in new filings by U.S. government lawyers is a reminder that the UK oil major faces a tough path to securing a favourable outcome. The market’s reaction – wiping $5 billion off BP’s market value – looks appropriate.

Aug 6, 2012
via Breakingviews

‘Peak’ resource nationalism could get messy

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By Kevin Allison

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

Miners see a silver lining in the fading super-cycle: it lets them be pickier about working with grabby governments. Yet while that may be true when it comes to new investments, existing mines will remain vulnerable to profit-skimming, or worse. Populist pandering doesn’t necessarily wax and wane in lock-step with commodity prices. And if governments continue to pursue a bigger share of the resource pie, it will only aggravate downward pressure on miners’ returns.

Aug 3, 2012
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Shale writedown tarnishes BHP’s street cred

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By Kevin Allison

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

Marius Kloppers is right to take his lumps. The BHP Billiton chief executive has waived his 2012 bonus after the mining giant took a $2.8 billion writedown on some of its U.S. shale gas acreage. The hit looks small when compared with BHP’s $170 billion market cap, and wasn’t unexpected. But BHP paid almost $5 billion for the asset just 18 months ago. That’s embarrassing for a company that trades on its reputation as a canny operator.

Jul 23, 2012
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CNOOC pulls out stops to make Nexen bid palatable

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By Kevin Allison
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.CNOOC must be hoping it has struck a deal Ottawa can’t argue with. Seven years after U.S. protectionists effectively scuppered its $18 billion bid for Unocal, the Chinese offshore oil giant has agreed to pay $15.1 billion for Nexen, a Canadian producer. The all-cash deal is at an eye-watering 61 percent premium. Perhaps just as importantly, the purchase includes an array of sweeteners that could smooth the political path.

The hefty price tag – with few obvious synergies – along with a promise to establish a major base in Calgary and list its stock in Toronto may, for CNOOC, amount to an acceptable price to move up a few notches in the global big leagues. Nexen’s 207,000 barrels per day of 2011 production were more than double Hong Kong-listed CNOOC’s non-Chinese output in the same period. The acquisition would bring a big presence in Canadian oil sands and access to attractive projects in the U.S. Gulf of Mexico, the UK North Sea and Nigeria.

Jul 17, 2012

Whitehaven should give Tinkler cautious welcome

(Repeats item first published late on Tuesday; no change to
text)

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

By Kevin Allison

LONDON, July 17 (Reuters Breakingviews) – Nathan Tinkler
takes opportunities when he sees them. Eight months after
Whitehaven Coal (WHC.AX: Quote, Profile, Research) agreed to buy his Aston Resources and
Boardwalk Resources for $2.3 billion, the 36-year-old
electrician-turned-mining magnate is turning the tables and
offering to take the Australian coal producer private. Some
Whitehaven shareholders are joining his bid consortium, which
will offer the remaining investors $5.20 a share, a 50 percent
premium, to sell out. But Tinkler would fund the offer by
gearing up Whitehaven’s balance sheet. Leveraging into a fading
commodities boom looks ambitious even for a man who so far has
played the mining boom to perfection.

Jul 13, 2012

Mining investors at a critical juncture

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

By Kevin Allison

LONDON, July 13 (Reuters Breakingviews) – Mining investors
are at a critical juncture. The coming months should reveal just
what’s going on with the super-cycle, the collective term for
the multiple drivers of the now-fading commodity boom.

Jun 22, 2012
via Breakingviews

Xstrata price fears no reason to vote for “Glenstrata”

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By Kevin Allison

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

Xstrata’s share price could fall sharply if its $90 billion mega-merger with commodity trader Glencore falls apart. But that would have more to do with short-term market dynamics than permanent damage to Xstrata’s underlying business. What’s more, even if the merger completes, shares in the combined group could be vulnerable for different reasons.

Jun 19, 2012

Exxon’s Poland exit raises frackers’ PR challenge

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

By Kevin Allison

LONDON, June 19 (Reuters Breakingviews) – Exxon’s (XOM.N: Quote, Profile, Research)
withdrawal from shale gas exploration Poland is a double blow to
Europe’s would-be frackers. It suggests the economics of
unconventional gas in Poland – and potentially elsewhere in
Europe – don’t stack up. It also raises the public relations
stakes for drillers.