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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
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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.

May 23, 2012
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Miners can live with a not-so-super cycle

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By Kevin Allison

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

The super cycle is turning and miners’ super returns are under threat. But they can probably avoid another period of value destruction like the one that preceded the decade-long materials boom.

May 18, 2012
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Debt markets may be good compromise for Dreyfus

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By Kevin Allison

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

Commodity traders are finding it harder to maintain their privacy. Louis Dreyfus is the latest to step out of the shadows. The venerable agricultural trader needs to invest if it wants to stay relevant in a consolidating and increasingly capital-intensive industry. But a float or merger would dilute family control. For now, plans to tap debt markets mark a sensible compromise.

May 17, 2012
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Tempting mining valuations aren’t hard to resist

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By Kevin Allison

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

It’s easy to see the temptation to pile into mining industry bellwethers BHP Billiton and Rio Tinto after the sector’s recent pummelling. The miners’ valuations looked depressed even before the market’s recent Greece-related sell-off. After a near-15 percent slide since May 1, the companies’ shares are trading close to forward enterprise multiples last seen during the dark days of 2008-2009. But any rally could be a way off.

May 14, 2012
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Jewellers needed to ease gold bugs’ pain

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By Kevin Allison

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

Gold has a dual personality. Many think it is the ultimate hard currency. Others like it because it looks pretty. And while its price climbed high as investors have sought shelter from the financial crisis, gold has behaved more like a risk asset recently.