The amount of private equity moving into the US oil and gas sector has risen dramatically over the past year, drawn by a long-term bet on rising commodity prices and heightened demand for energy infrastructure. This is according to PwC, the consultancy, which put out a report on US energy sector deals on Tuesday.
Overall, there were eight private equity-backed transactions in the first quarter of this year, representing $4.8bn, or 9 per cent of total deal value, compared to just one during the same period last year, worth $767m, the report said.
Figures from PwC
While the lack of a coherent national energy policy is nothing new for the US, Standard & Poor’s ratings service says in a new report that Washington’s current inability to definitively establish long-lasting energy policies and regulations distinguishes today’s situation from earlier eras. I quote:
Making resource decisions and committing a utility’s balance sheet to support those decisions has never been more complicated or littered with more potential pitfalls, and diminishing credit quality is a result.
Clear policy direction and consistent application by all branches of government of the various policies, ideally with maximum flexibility and abundant time for implementation, would benefit utility bondholders by promoting credit stability.
Wikileaks has an impeccable sense of timing. As Hilary Clinton meets counterparts from Arctic nations in Greenland to talk about oil, the whistle blowing website publishes a raft of cables showing just how much international tension the country’s natural resources have provoked.
The cables make for fascinating reading, and tell a tale of US perceptions of Russian paranoia and aggression in the territory. They claim:
Oil and gas operators in the North Sea have ramped up their lobbying efforts to persuade the government to reverse, or at least dilute, its tax hike on those companies to pay for the cut in fuel duty.
Early on Wednesday Oil & Gas UK, the industry’s lobby group, produced figures showing confidence among producers in the area had slumped.
On a scale from 1 to 100, with 50 being neutral, overall confidence dropped 12 points to 51. For E&P companies, the fall was particularly pronounced, with a 25 points drop to 46, the lowest ever for the sector. Confidence among major producers, meanwhile, was 21 points lower at 39.
How much shale gas is there outside the US? It sounds like an impossibly large question, but it is one the US Energy Information Administration has attempted to answer in a new report, carried out by Advanced Resources International.
Their findings are impressive. There is a huge amount of recoverable shale gas out there, says the report – so much that it would add 40 per cent to total global gas supplies. Unsurprisingly the report is already being seized on by gas lobbyists as evidence that shale will change the energy world.
ConocoPhillips’ shrink-to-grow strategy is doing more than benefitting the company and its shareholders. It turns out the architect of the programme, Jim Mulva, Conoco’s chief executive (pictured), got a 25 per cent increase in total compensation to $17.9m in 2010.
While it is difficult for an outsider to put a dollar amount on Mr Mulva’s value, the turnround he has staged since the economic downturn exposed weaknesses in his acquisition spree is worth noting.
In early 2009, the US’ third biggest oil and gas company by production and market capitalisation, disclosed a 2008 fourth-quarter net loss of $31.8bn; a $34bn writedown; 1,300 in job losses; and a $2.8bn cut in capital spending.