Australia’s Santos gets sweetened $10.8 bln bid from Harbour Energy
U.S.-based Harbour Energy raised its bid for Australia’s Santos Ltd to $10.8 billion on Monday, hiking its offer for a fifth time in nine months after a steep rise in oil prices and potentially deterring any rival bids. Shares in the oil and gas producer rose on the back of the sweetened bid but remain below the offer price amid uncertainty over whether the government will approve what would be the biggest takeover of an Australian resources company. “You’ve got to think the new bump is going to make it more likely the board will approve it…But there are risks,” said Andy Forster, senior investment officer at Argo Investments, a top 10 shareholder in Santos. Analysts have said the government might raise concerns that a takeover could dent gas supply on Australia’s east coast and could even raise questions about foreign companies not paying enough tax in Australia. A successful bid would give Harbour access to a recently revived company with a low cost of gas production and stakes in liquefied natural gas (LNG) in the Asia-Pacific, where demand is soaring. Harbour’s latest offer, raised twice over the past five days, is equivalent to A$6.95 a share at an exchange rate of 75 U.S. cents to 1 Australian dollar and is at an 11-percent premium to the last close of Santos shares on Friday. “The new higher bids underline Harbour’s desire to receive the board recommended it needs and in our view staves off any ambitions from an interloper,” Royal Bank of Canada analysts said in a note on Monday. Argo’s Forster said the prospect of receiving a special dividend with Australian tax credits attached as part of the bid was attractive. The special dividend would take the total bid value for local investors to around A$7.15 a share. The latest proposal, up 4.6 percent from an earlier offer, is conditional on Santos increasing its hedging of oil-linked production in 2018 and changing its hedges for 2019, Santos said in a statement. Harbour said the offer price would be increased slightly to a U.S. dollar amount equivalent to A$7.00 per share if Santos agreed to hedge 30 percent of oil-linked production in 2020, too. The requirement for Adelaide-based Santos to step up hedging on its oil-linked contracts is tied to securing funding for the deal, as Harbour will be taking on a lot of debt for the acquisition on top of Santos’ net debt, expected to be around $2 billion by the end of 2018. Hedging would lock in today’s higher oil prices and ensure cash flows needed to pay down debt. Harbour wants Santos to line up the hedges as the Australian company can do it more cheaply than Harbour can, which then gives Harbour the ability to make a higher offer, a person close to the transaction said. Oil prices have risen about 17 percent since Santos received Harbour’s $4.98 per share offer in April. Independent directors of Santos will consider the revised Harbour proposal, the company said. Marcus Cooper Authentic Jersey
BP back on its feet but CEO senses no respite
After the near collapse of his company following the 2010 Gulf of Mexico disaster and a three-year slump in oil prices, BP Chief Executive Officer Bob Dudley is hardly relaxed. “It doesn’t feel like we are in a serene time for any energy company,” Dudley told Reuters in an interview. BP is stronger today than at any other time since the 2010 Deepwater Horizon rig accident. With oil prices at their highest since late 2014 and BP shares back to levels not seen in more than 8 years, it is once again in a position to contemplate boosting dividends and acquiring, Dudley said. Sitting in his office in BP’s central London headquarters in St James Square, Dudley, 62, said he intends to carry on leading the company into 2020 and navigate it through a phase of expansion and new uncertainty following a tumultuous eight years at the helm. The oil and gas sector is looking to retain its relevance as economies battle climate change by weaning themselves from their dependence on fossil fuels, a major source of greenhouse gas emissions. For BP, it is a two-speed race. The 110-year old company is undergoing its fastest growth in recent history with new oil and gas fields from Egypt and Oman to the U.S. Gulf of Mexico, riding a tide of higher oil prices following the 2014 downturn. It is gradually paying off more than $65 billion in penalties and clean-up costs for the Deepwater Horizon accident which left 10 employees dead. Regarding the danger of the company going bankrupt at the time, Dudley said: “The worst moment was when I heard that our debt was untradable back in the summer of 2010… To me that was a moment of the unthinkable was possible.” Dudley says he no longer sees BP as an acquisition target after facing years of speculation it could be bought out. The company is focused on increasing production and cash flow while reducing its large debt pile, after which it will consider boosting shareholder returns such as dividends although “we’re not at that point yet”, Dudley said. Longer-term challenges also loom. Investors are increasingly pressing energy companies to find ways to adapt to the energy transition, and Dudley is looking to strike a balance between reducing a large carbon footprint while securing revenue. “This is the great dual challenge that the industry and BP faces: how to supply the world’s energy on multiple fronts of growing population and doing it with less emissions,” said Dudley, who was appointed to the helm of BP months after the April 2010 spill. BP, like rivals such as Royal Dutch Shell, is betting on natural gas, the least polluting hydrocarbon, to sustain an expected surge in demand for electricity as economies grow and transportation is electrified. Gas is also playing a key role as a back-up to renewable energy such as wind and solar in power generation. To that end, BP is expanding its gas production through new projects in Oman, Egypt and Trinidad and Tobago. Gas already accounts for over 55 percent of its production. “I am optimistic about the climate change if you can combine renewables wind and solar and natural gas. To me that’s part of the big answer,” Dudley said in an interview with Reuters. In the early 2000s BP introduced the slogan “Beyond Petroleum” and adopted a sunburst logo after launching an $8 billion expansion into renewables. The company was forced to write off its solar business 10 years later, but still retains a large U.S. onshore wind business and biofuels plants. Now, Dudley is taking a cautious approach, investing in smaller start-up companies in renewables, clean fuels and battery charging docks. “We have to go slow and pick the right low carbon fuels,” he said. BP “will be a broad-based company that supplies all forms of energy that are needed that can be done economically.” The company will invest $500 million per year in low-carbon energy and technology in the coming years out of a total spending of $15 to $17 billion, a range which Dudley said the company could stay within. “If a shareholder or someone else came to BP tomorrow and said here is $10 billion to invest in low carbon energies for us, we would not know how to do that yet.” BP is also expanding its vast global network of petrol stations and investing in convenience stores and charging spots, hoping to retain its dominant brand as electric vehicles become more popular. “I’m not worried about BP in this area. The most strategic thing we can do is to get our balance sheet strong so that when we have the firepower we can do anything in these areas.” LESSONS BP expects demand for oil to peak in the late 2030s, after which it will plateau and gradually decline. For BP, whose roots go back to 1908 with the discovery of Iran’s first oil field, the days of the black gold are far from dead. While oil prices in recent weeks have hit their highest levels since late 2014 at $80 a barrel, BP are working on an assumption that prices will remain at a range of $50-$65 per barrel due to surging U.S. shale output and OPEC’s ability to crank up output. Mega projects involving complex, multi-billion facilities such as huge offshore platforms that came to symbolise the technological prowess of the world’s top oil companies are most likely a thing of the past, Dudley said. Instead, BP is opting for phased developments that require less capital and less time to construct, which make them easier to control at a time of uncertainty over oil prices. “Many of the companies in the industry are remembering the lesson learnt during the $100 oil era (which) is take it in phases,” Dudley said. BP is applying this approach in many of its main production hubs such as Egypt and Gulf of Mexico, where it can continue raising production into the early 2020s, Dudley
IOC teams up with MCPI to set up Rs 10 billion polyester unit in Odisha
Indian Oil Corporation (IOC) is teaming up with Chatterjee group arm, MCPI to set up a Rs 10 billion polyester staple fibre (PSF) unit in Odisha. This is part of an overall investment drive taken up by the state government to attract big ticket investment in downstream units across industries in the state. The unit is scheduled to come up on 200 acres at Dhamnagar in the state’s Bhadrak district. It will source raw material from Haldia in West Bengal and have a 108 kta (kilo tonnes per annum) PSF capacity. It will also produce 180 kta of drawn texture yarn (DTY) and 36 kta of full drawn yarn (FDY) mainly used as technical textiles, which find wide use in industrial textile and in the garments trade. This is the second such downstream petrochem facility in the state, where IOC is also setting up a plastic park at Paradip close to its refinery. “We are reaching out to potential investors in West Bengal and across the country, offering them an opportunity to set up downstream units in these industrial parks,” Odisha’s principal secretary (industries department) Sanjeev Chopra said. The state government officials who are on a roadshow in the city, said they received good response from prospective investors. A similar roadshow is being planned to be held in Mumbai next month. Odisha, which is among the few states that allow private investors to set up industrial parks, has decided to provide all necessary infrastructure be it road, water and electricity connection right up to the gates. It is also providing 50 per cent subsidy on the infrastructure inside the park. Odisha officials also met Engineering Exports promotion Council (EEPC) officials and some 20-odd representatives of forging and casting units based in Howrah to attract them in setting up units in the state. As part of Odisha’s Vision Document 2030, the target is to achieve 50 per cent value addition of primary metal produced within the state from the current level of 10 per cent, Chopra said. “While metal majors like Hindalco, National Aluminium (Nalco), Jindal Stainless, JSPL, Tata Steel or Vedanta have a manufacturing presence in our state, we have till now not had much success with downstream units in metal based industries. We have now decided to address this issue and are aiming at a raising the level of conversion of this primary metal into value added products within the state,” Chopra said. In step, the state has initiated talks with the likes of Tata Steel to set up an industrial park at Kalinganagar. While Tata Steel will provide raw material and hand hold smaller units that choose to set up base in the industrial park. Vedanta is looking at a similar facility at Jharsuguda he added while Nalco which is setting up an aluminium park and Angul has already received proposals worth Rs 12-13 billion. Austin Czarnik Authentic Jersey
Reintroduce Administered Prices on Petro Products: CPI
The National Secretariat of the Communist Party of India today demanded reintroduction of administered price mechanism on petroleum products. In a statement here, S Sudhakar Reddy, General Secretary, said the prices of petrol and diesel since May 14, 2018 have been on the rise and will continue unabated unless the government reintroduces the administered price mechanism that was prevalent in our country for decades. In a country like ours, committed constitutionally to the welfare of the people, leaving everything concerning the daily life of the common people to the whims and fancies of market forces tantamount to sheer negligence of people’s problems and total surrender to the corporate houses. Half the price of oil is only tax. After Modi took over as prime minister, taxes are increased nine times on oil prices. The statement said that reports already warn of an impending increase of Rs 4 per litre in petrol and diesel prices, alleging that the Modi government was only waiting for the Karnataka polls to be over. Since May 14, petrol price has risen by 69 paisa a litre that took rate in Delhi to Rs 75.32, the highest in almost five years. Diesel prices have gone up by 86 paisa a litre, that took the rate to their highest ever of Rs 66.79 a litre in Delhi. OMCs returned to daily price revision from May 14. CPI demands withdrawal of all the increased tax from 2014, so that the people can afford the fuel that is essential. The party urges upon all the party units, sympathizers, supporters and friends of the party to come out on streets demanding reintroduction of administered price mechanism on all petro products and reduction of additionally levied taxes, the statement added. (NSS). Josh Wilson Authentic Jersey