Big Oil keeps brakes on spending even with crude rally windfall

Big Oil keeps brakes on spending even with crude rally windfall
US shale producers have promised investors they will keep a tight rein on spending in 2021. (AP)
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Updated 12 July 2021

Big Oil keeps brakes on spending even with crude rally windfall

Big Oil keeps brakes on spending even with crude rally windfall
  • Benchmark crude oil prices more than doubled in the second quarter of 2021 from a year earlier and have risen further in recent weeks to close to $78 a barrel

LONDON: Leading international energy companies are resisting the temptation to rush and spend an unexpected windfall from rallying oil and natural gas prices as they focus on longer-term energy transition challenges, executives and analysts said.
Benchmark crude oil prices more than doubled in the second quarter of 2021 from a year earlier and have risen further in recent weeks to close to $78 a barrel, their highest in almost three years as OPEC and other major producers failed to strike an agreement to lift output.
That, along with higher global natural gas prices because of supply issues, will boost the coffers of oil companies after firms like Exxon Mobil, Royal Dutch Shell and BP sharply cut costs in the wake of the coronavirus pandemic last year.
“The cash flow for majors is looking very strong, they’re certainly firing on the oil and natural gas cylinders,” Redburn analyst Stuart Joyner said, adding that things could improve further once demand for refined products fully recovers.
The companies are expected to provide updates on their spending plans in second quarter earnings reports over coming weeks, but are unlikely to significantly shift tack with investors laser-focused on securing higher returns from the sector after a disappointing decade.
While the heads of top energy companies said last month $100-a-barrel oil was achievable again in coming years, they added prices would be volatile, meaning there is little incentive, at least for now, to commit billions to projects that could take a decade or more to show a return on investment.
Also dampening the bullish mood is huge uncertainty over near-term energy demand due to the resurgence of COVID-19 in parts of the world and longer-term with the shift to lower carbon fuels to fight climate change.
“The international oil companies are still rebuilding their balance sheets,” Brian Gilvary, CEO of INEOS’ oil and gas division INEOS Energy and a former BP chief financial officer told Reuters.
Shell said last week it will increase returns to shareholders earlier than expected thanks to higher revenue, holding its annual capital expenditure at no more than $22 billion.
For companies such as BP and Shell, France’s TotalEnergies and Spain’s Repsol, the coronavirus crisis has already accelerated the roll-out of new strategies aimed at lowering carbon emissions and growing renewables businesses.
So, unlike previous cycles when rising oil prices loosened purse strings, executives will likely stick to their spending discipline and focus on their energy transition strategies.
“Higher oil prices allow us to extract more value from our existing businesses, which in turn will generate more resources for our spending on transformation in line with our energy transition roadmap,” Repsol Chief Executive Josu Jon Imaz told Reuters in a statement.
BP will stick to its plan to reduce oil output by 40 percent, or roughly 1 million barrels per day, by 2030, including through the sale of oil and gas assets, CEO Bernard Looney said at the Reuters Energy Transition conference last month.
“Strong oil prices are very positive for our strategy,” Looney said. “Those assets that we sell, will be selling in a much higher price environment, potentially, and therefore will generate more proceeds.”
A commodity price rally in the late 2000s drove oil prices to record highs above $140 a barrel and sparked a wave of investments including in huge, complex deepwater oilfields, giant gas liquefaction plants and a US shale drilling boom that upended oil supplies.
Capital spending by the majors is likely to edge up from next year as companies pay down debt and fully recover from the pandemic, Redburn’s Joyner said.
“There will be more capex, but not much of the increase will go into upstream (oil and gas production), it’s going to go into renewables.”
US shale producers have also promised investors they will keep a tight rein on spending in 2021.
In contrast, smaller international oil and gas drillers are expected to slowly ramp up spending in response to the higher prices, INEOS Energy’s Gilvary said.
“Smaller exploration and production companies will increase spending but in a more measured way because they tend to be more focused on the short- to medium-term.”


Fashion firm Rent the Runway aims for nearly $1.3bn valuation in U.S. IPO

Fashion firm Rent the Runway aims for nearly $1.3bn valuation in U.S. IPO
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Updated 7 sec ago

Fashion firm Rent the Runway aims for nearly $1.3bn valuation in U.S. IPO

Fashion firm Rent the Runway aims for nearly $1.3bn valuation in U.S. IPO
  • Rent the Runway plans to sell 15 million shares priced between $18.00 and $21.00 apiece in its IPO

Rent the Runway is aiming for a valuation of nearly $1.3 billion in its U.S. initial public offering, as the fashion rental company looks to cash in on the rising interest in pre-owned clothing.


The company, founded in 2009, lets users rent and shop second-hand clothes and accessories such as handbags and jewelry in over 18,000 styles from more than 750 designer brands. It also allows customers to rent and shop home goods.


Rent the Runway plans to sell 15 million shares priced between $18.00 and $21.00 apiece in its IPO, raising $315 million, according to a filing.


Earlier this month, the Brooklyn, New York-based company disclosed a near 39 percent drop in revenue for the fiscal year 2020. Its top line also took a hit in the first half of this fiscal year, with revenue down 9 percent for the period ended July 31.


Rent the Runway said its active subscribers more than doubled to 111,732 in the first nine months of 2021.


Demand for second-hand clothes has jumped in recent months as customers become increasingly conscious about their carbon footprint, boosting revenues at styling service Stitch Fix and online resale shop ThredUp.


Goldman Sachs & Co, Morgan Stanley and Barclays are the lead underwriters for the offering. Rent the Runway will list its stock on the Nasdaq under the symbol "RENT".


Bitcoin nears record high ahead of futures ETF listing

Bitcoin nears record high ahead of futures ETF listing
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Updated 22 min 45 sec ago

Bitcoin nears record high ahead of futures ETF listing

Bitcoin nears record high ahead of futures ETF listing
  • ProShares' Bitcoin Strategy ETF is expected to list on Tuesday under the ticker BITO

Bitcoin hit a six-month high and was within striking distance of a record on Tuesday as traders bet an anticipated listing of a futures-based U.S. exchange traded fund could herald investment flows into bitcoin and cryptocurrency assets.


Bitcoin, the world's biggest cryptocurrency by market value, rose as far as 1.5 percent during the Asia session to $62,991, its strongest level since the record peak of $64,895 in April.


It is up some 40 percent in October on hopes that the advent of bitcoin exchange traded funds (ETF), of which several are in the works, will allow billions of dollars managed by pension funds and other institutional investors to flow into the sector.


ProShares' Bitcoin Strategy ETF is expected to list on Tuesday under the ticker BITO, provided the U.S. regulator, the Securities and Exchange Commission, does not object.


Analysts cautioned that the fund will not invest directly in bitcoin - rather in Chicago-traded futures - and so may not have any immediate implications for flows. But speculators have been wagering its launch is a positive signal for spot prices anyway.


Bitcoin futures rose on Tuesday, last trading at $62,690, and spot prices could rise if cash keeps flowing in, said cryptocurrency analysts at Arcane Research.


"This could lead to more constant buying pressure on CME, causing the open interest to rise. This will attract more cash and carry opportunities, leading to buying pressure in the spot market," they said in a note.


Crypto ETFs have launched this year in Canada and Europe amid surging interest in digital assets. VanEck and Valkyrie are among fund managers pursuing U.S.-listed ETF products, although Invesco on Monday dropped its plans for a futures-based ETF.


The Nasdaq on Friday approved the listing of the Valkyrie Bitcoin Strategy ETF and Grayscale, the world's largest digital currency manager, is planning to convert its Grayscale Bitcoin Trust into a spot bitcoin ETF, CNBC has reported.


ProShares ETF is set to begin trade on Tuesday after a 75-day period during which the SEC could object to its listing elapsed on Monday.


Ether the second-largest cryptocurrency, has tracked bitcoin's rise and also traded firmly on Tuesday. It was last up 1.2 percent at $3,790.
 


ACWA Power among bidders of 1,200 MW Saudi renewable energy projects 

ACWA Power among bidders of 1,200 MW Saudi renewable energy projects 
Updated 19 October 2021

ACWA Power among bidders of 1,200 MW Saudi renewable energy projects 

ACWA Power among bidders of 1,200 MW Saudi renewable energy projects 

RIYADH: The Saudi Ministry of Energy announced the list of candidates for bids received from developers, participating in the third phase of renewable energy projects in the Kingdom, consisting of four independent generation projects (IPP) for solar photovoltaic energy with a total capacity of 1200 MW.

French Total Solar and ACWA Power are both candidates for the Wadi Al-Dawasir project with a capacity of 120 MW, while ACWA Power and AlFanar Energy Company are candidates for the Laila project with a capacity of 80 MW, under Category A.


What is the future of food? Dubai forum talks answers

What is the future of food? Dubai forum talks answers
Updated 19 October 2021

What is the future of food? Dubai forum talks answers

What is the future of food? Dubai forum talks answers
  • The UAE’s Minister of Climate Change and Environment Mariam bint Al-Mheiri is opening the first day of the 2-day forum

DUBAI: High-profile personalities in the food and beverage sector gathered at the Dubai Exhibition Center on Tuesday to talk about the future of food. 

The UAE’s Minister of Climate Change and Environment Mariam bint Al-Mheiri is opening the first day of the 2-day forum addressing government efforts in supporting manufacturers. 

Other top executives — from organizations such as Pepsico, Kellogs, and Agthia — will also take the stage to answer questions in food sustainability, supply chain challenges, and other crucial topics in the region’s F&B scene. 


Saudi holdings of US treasury bills fell to lowest in 14 months

Saudi holdings of US treasury bills fell to lowest in 14 months
Updated 19 October 2021

Saudi holdings of US treasury bills fell to lowest in 14 months

Saudi holdings of US treasury bills fell to lowest in 14 months

RIYADH: Saudi Arabia's holding of US Treasury securities decreased by the end of August to $124.1 billion, the lowest since May 2020, according to new data from the US government.

The Saudi holdings in August were down by 3.1 percent or $4 billion compared to the previous month.

The holdings declined by 4.5 percent equivalent to $5.9 billion on an annual basis, compared to August 2020, the data showed.