ExxonMobil’s TMI issue

With $12bn raised in a recent debt offering and more than $300bn of its own shares held in treasury, ExxonMobil has the dry powder to purchase just about any oil and gas company in the world.  From Anadarko to Devon to even BP, the regular rumblings of an acquisition bid are rarely dismissed completely for one reason – ExxonMobil has the resources to do it.

But chief executive Rex Tillerson told analysts in New York City last week the company is in no hurry when it comes to M&As, and that most potential takeover targets are either overburdened with debt or their stock price diluted by repeated equity sales to raise funds.  Continue reading

What´s in a name?

Two of the world´s largest known oil deposits boast the names of late Venezuelan president Hugo Chavez and former Brazilian president Luiz Inacio “Lula” da Silva. The thinking goes, these are the towering figures who showered the wealth of their countries´ abundant natural resources on the people. Their deteriorating economic and political legacies now speak otherwise.

The rechristening of the Faja del Orinoco last year as the Hugo Chavez Frías Orinoco Oil Belt has not been accompanied by the massive investment needed to tap the vast extra-heavy crude belt that forms the backbone of the Opec country´s ambitious production growth plans. Even before oil prices started tumbling in 2014, state-owned oil company PdV didn´t have enough capital to pay for its share of the development. The naphtha and light crude needed to move the viscous resource to market renders the Faja a costly and complicated endeavor. Continue reading

Terror in the nursery — Goldilocks cut in half

In December 2014, with Brent at around $50/bl, Opec secretary-general Abdullah al-Badri said: “We do not want a very high price because there will be less demand and consumption. We do not want a low price because there will be less investment and supply.”

When the price was $110/bl, or $100/bl, or $90/bl everyone was happy, he added. Well, US shale oil and Canadian oil sands producers certainly were.

Continue reading