SGX-listc, Rex International Holdings, an oil and gas exploration company leads the FT’s 2023ranking of 500 high-growth Asia-Pacific companies with an impressive 630.17 per cent compound annual growth in revenue over the three years to 2022, Energy prices helped
But it’s a stock market dog over the last three years. LOl
Oil prices are tanking
Gas (and oil) and grain prices back to pre “Special Military Operation” levels.
But not interest rates
Shareholders are just being rewarded for keeping the faith,
But they should give thanks to Putin’s special military operation.
Shareholders are unhappy.
BP loves renewables and wanted to cut oil and gas production by 40% by 2030.. It’s share price is far behind those of US rivals ExxonMobil and Chevron, which are a lot less green.
It’s now repenting and planning to pump out more oil, something foreshadowed in Oil: Who is right?.
OK, OK, China dominates solar pv manufacturing capacity.
China controls 79% of the production of polysilicon used for solar panels, 97% of the production of solar wafers, 85% of solar cells and 75% of the manufacturing process to assemble cells in modules, according to an International Energy Agency report published in July 2022.
https://www.reuters.com/breakingviews/china-ban-would-slow-not-halt-western-solar-push-2023-02-03/
Who is likely to be more correct, Exxon or BP? These are very different views of the future of crude coming from within the small crop of western oil supermajors — and underscores the companies’ very different strategies.
Exxon (and other US energy cos are continuing to focus on oil and gas) while BP (and other European energy cos are hedging their bets by going into renewables.)
But
BP Chief Executive Bernard Looney plans to dial back elements of the oil giant’s high-profile push into renewable energy, people familiar with recent discussions said to the Wall Street Journal in an article published on Feb. 1. Looney has said he is disappointed in the returns from some of the company’s renewable investments and plans to pursue a narrower green energy strategy, the people said.
Breakingviews
I’m betting (via my shares in penny stock Sembcorp Marine) that Exxon is right about oil demand.
Investing ain’t easy
When everybody is digging for gold, it’s good to be in the pick and shovel business.
Attributed to various famous people
Ain’t that easy. There’s a rush to invest in hydrogen related activities because of its green energy credentials.
But investors in this maker of electrolysers that separate hydrogen from water have lost $. It’s no start-up (founded in 2001) and it has strong backers: German industrial gas group Linde and British construction equipment manufacturer JCB
ITM Power has issued a third profit warning in eight months maker of electrolysers that separate hydrogen from water
Most probably one of these guesses will be wrong.
My guess is that if demand increases (think China) prices will be around US$100. One reason why I’m holding onto my SembCorp Marine shares: Tempting fate but thanks again Ho Ching
Further to Tempting fate but thanks again Ho Ching and Thank you Ho Ching, Temasek is hopefully playing Santa Claus.
In 2020 when markets were crashing, Temasek bot a 25% stake in CSE at around 46 cents. It’s a software provider and manager for mining and energy companies. Temasek’s the largest shareholder. I had the opportunity to pick-up the shares at around the same level.
I expected another Temasek special (deeply discounted and massive rights issue). I had to wait almost two years. But it pays a good dividend.
The shares traded up to 51 cents. Two brokers were bullish but the stock did bugger all trading between 46 – 51 cents (mostly closer to 46) until a few months ago. The brokers then became “neutral” on the shares and the shares broke below 46 cents (their TP was now about 44 cents). Looks like they suspected what was coming: a Temasek special.
1 for 5 rights at 33 cents raising $33.5m. The theoretical ex-price according to the co was about 40 cents. Funnily enough, taking into account the dividends Temasek and I got, that was our cost price. Btw, the rights issue was not underwritten. Temasek was playing croupier or chung kee.
Market didn’t like the rights and sold the shares down to 33.5 – 34 cents.
I applied for excess rights, got a lot (but not my full application) and my cost is now about 38 cents. Temasek’s cost is closer to 40 cents because it didn’t get excess shares. Greedy plebs like me got priority.
The shares are now trading at 34 cents.
All to play for.
And bottom fishers can come in at below Temasek’s entry price of 40 cents.
And there’s another Temasek Special on the cards: check out SATS: Temasek gives away another free lunch? More on SATS from the archives: SATS — More Dividends or a Rights Issue?
Of course things can go badly wrong: Sembcorp Marine’s right issue of 2020.
“This is not a problem that just the oil and gas industry has” Vicki Hollub, chief executive of US company Occidental Petroleum, told a corporate leadership and net zero panel at COP27 on Friday, according to the Guardian. “Everybody that uses a product that was generated from oil and gas has a part in this and is also responsible. Your iPhone, you are responsible for that. If you flew over here, you are responsible for what you used here. The nice clothes you are wearing right now, you are responsible. If we don’t all step up and take accountability, this doesn’t happen.”
From the latest edition of the FT’s Moral Money
This reminded me that I forgot (Thank you Ho Ching) to also thank her for another Temasek special (massive rights issue at a huge discount to the existing price) that’s looking good.
Sembcorp Marine announces change in terms of Keppel O&M transaction
https://www.theedgesingapore.com/news/ma/sembcorp-marine-announces-change-terms-keppel-om-transaction
The share price tanked last year (It was already sick because of a previous Temasek special in 2020, followed by a really bad results) when Temasek did another special.
As I wanted good quality TLC penny stock exposure to the offshore marine and energy sectors, I bot a few shares and then applied for lots of rights shares at $0.08. I got filled to the gills.
The shares have been on a wild run: up to $0.138 and then back down to -$0.11 recently. I regretted not selling out at +$0.13. But I was going for $0.16 or more. After the above announcement, they are back to +$0.13. Riding the tornado like Pecos Bill: GameStop in charts: Riding the tornado
Usually when Temasek does a special, shareholders or new investors who participate make $. It’s money for jam. The downside is finding the cash to fund it. Not like Temasek. Need $, make a call to MoF and PMO if dividend income not enough.
Not always, Sembcorp Marine did an earlier rights issue at $0.20 in 2020. Everyone lost $ when it had a really bad set of results. Hence the 2021 rights issue. At that time I didn’t want exposure to the offshore marine and energy sectors, so I missed a bullet. Praise the Supreme Being. And yes, I made a charitable donation.
But I really shouldn’t be counting my chickens, tempting fate or the gods. Not taken profits. And no immediate plans to. I’ll ride the whirlwind on this ($0.19 says a broker) and hope to come out alive or belter still smiling. Why Wall St is a cowboy town.
Minority shareholders (those who participated in 2020 Temasek special) might reject the deal (one reason why the terms were changed).
And pray that I remain lucky. I’ll be getting more SembCorp Marine shares via Keppel distribution. Might sell these.
Investing tip: back Temasek’s corporate moves. More on this soon. Meanwhile think SATS: SATS: Temasek gives away another free lunch?
More on SATS from the archives: SATS — More Dividends or a Rights Issue?
Related post: Renewables thrashed Revenge of the old economy
I didn’t realise that Shell and BP are such big energy traders. I tot Trafigura and Vitol were the tua kees.
Gunvor has under a quarter of Shell and BP’s volumes.
Btw, Exxon and Chevron don’t do trading. The Brits are different
Shows that Putin is a lousy chess player.
Brent last night rose 2.5% to US$117.98 a barrel. OPEC is meeting later today.
But bearish energy analysts, such as Citi, expect Brent to fall towards US$75.
Oil chart before today’s spike up.
Head and shoulders pattern emerging? Hence bearish?
Mr Biden will soon visit Saudi Arabia, several news outlets reported, three years after he vowed to isolate the kingdom over the murder of Jamal Khashoggi. The rapprochement comes amid Mr Biden’s campaign to boost oil output and reduce prices. On Thursday the Organisation of the Petroleum Exporting Countries and its allies, which include Russia, agreed to raise production by almost 650,000 barrels per day in July, and by a similar amount in August.
Economist’s World in brief
But the price of oil recovered from the previousw day’s fall.
Fyi, Saudi Arabia’s day-to-day ruler, crown prince Mohammed bin Salman, was fingered by the CIA in the murder.
Europe’s biggest oil companies reported record profits for the first quarter of the year. That has put them in the crosshairs of politicians, many of whom advocate windfall taxes on a bounty which they deem indecent at a time of economic pain. That would harm the planet, energy firms retort: we are recycling our extra cash into low-carbon projects.
Not quite. European majors are indeed refraining from splashing out on fossil fuel. Rather than going into low-carbon ventures, however, the bulk of their enormous profits is being handed to investors. BP, for example, has allocated 60% of its surplus cash this year to buying back shares. The sums that they are investing in green projects remain puny. Shell aims to spend $3bn on low-carbon investments in 2022—out of a capital-spending budget of $23bn-27bn. Last year BP spent less than 10% of its budget on green ventures. Hardly a taxing amount.
The world in Brief (Economist)
Fat cat thinking
the boss of one of the UK’s biggest investors in renewables said his profits from renewable energy generation were in the low hundreds of millions for a whole year, compared to the £7bn made by Shell and the £5bn made by BP in the first three months of this year alone.
https://www.bbc.com/news/business-61566083
and so his investments shouldn’t be taxed for “the extraordinary profits” made from producing electricity.
Since the fat cat said this, a windfall tax on North Sea oil and gas companies (Think Shell and BP) which could raise £5bn this year has been announced. But the renewal energy sector is not yet in the clear. They could be taxed as part of a planned shakedown to get £3bn-£4bn from “the extraordinary profits” of electricity generators.
Oil price because of weak Chinese economic numbers.
This reminded me that recently, the International Energy Agency cut its global oil demand forecast from 99.7mn barrels a day this year to 99.4mn, but it said the market would avoid a “sharp” deficit as emergency reserves and slower demand from China offset lower production from Russia.
Or do Indians feel entitled?
China’s independent refiners have been buying Russian oil at steep discounts as western companies and Chinese state-owned traders have shied away FT reports.
But the Indians who buy Russian oil are the state-owned entities, int’l media reports.
Maybe the Indian govt thinks that being anti-China, and being a democracy that persecutes Muslims, will give it a free pass from the West?
This year’s El Nino is ensuring that we don’t need our aircons for the time being. Last year El Nino’s brought the second highest amount rainfall since 1980, but that didn’t prevent me from switching on my aircon in March. But this year, the air still hasn’t been switched on in the afternoons, let alone in the evenings.
Pretty cool weather: I’m having to wear a tee shirt in the house. Hope this persists given the price of electricity.
Our millionaire ministers must have prayed hard to the 9th Immortal o tensure that we S’poreans don’t have another reason to Pay And Pay.
(Update on 10th March 2022 at 8.47am: The European Commission pledged €1bn to a €9.1bn fund to support Ukraine and other states hosting refugees from the war. Another chicken wing.)
EU’s fuel payments to Russia outweigh military aid to Ukraine
The European Union has spent €35bn on Russian fuel since the start of the war, compared to an outlay of just €1bn to Ukraine in arms and weapons, the EU’s foreign policy chief has said.
“We have to help [the Ukrainians] defend themselves… We have given Ukraine €1bn. It might seem a lot but €1bn is what we pay Putin every day for the energy he provides us,” he told the European Parliament.
BBC report
The speaker was Josep Borrell, the EU’s chief diplomat. Since then, the amount has been raised by 50% to €1.5bn. To be fair, the NATO countries in the EU are also contributing separately
Btw, an EU official denied that purchases of Russian oil was helping to fund the invasion of Ukraine. This argument made by US secretary of state Antony Blinken and Ukraine foreign minister Dmytro Kuleba this week.
A quarter of the EU’s oil imports come from Russia. 60% of Russia’s oil exports go to Europe: Energy: ‘Double double toil and trouble’.
No not being ironic because SP Group’s electricity tariff for households to rise by almost 10% for April to June period, but because we don’t have a 54% rise in prices from April 1 that UK gas and electricity retail consumers face.
This means higher bills for around 22m of Britain’s 28m households.
Many will struggle. The Resolution Foundation, a think-tank, estimates that 6.3m families in England will face “fuel stress” as they spend more than 10% of their budget on energy, up from around 2m now.
Economist
Vote wisely. LOL.
The US president is close to announcing another big release of US oil reserves, int’l media reports. Brent crude dropped 3.7% to US$109.30. Bit will bounce back as it has on recent days. It fell because of China’s expected slowdown because of Covid-19.
Analysts said the impact of any release of US oil reserves might prove limited
Despite Xi saying China’s friendship with Russia has no limits, it’s the mamas who are buying Russian oil. Related post: Mamas love a cheap sale/ Xi scared of US?
Contrary to Cheap Russian oil for China, it’s the Indians who are buying cheap Russian oil,
not the Chinese.
Russian oil exports to India have quadrupled this month in a sign of the vast reshaping of global energy flows since the invasion of Ukraine. Russia has exported 360,000 barrels a day of oil to India in March so far, nearly four times the 2021 average. Historically, Russian crude oil has constituted below 5% of India’s total imports.
As For China, Chinese banks and companies do not want to risk losing much more valuable business elsewhere by flouting sanctions or doing unsanctioned business with the Russians that the West doesn’t like. The energy trade is not sanctioned but Western cos are avoiding it, hence the discounts in oil.
Time to remind the ang mohs about the racist ethnic Chinese story about whether to kill the Indian or the snake?
‘Fire burn and cauldron bubble’.
The turmoil in energy markets explained in three charts
Oil at US$300? Taz what the Russians say if they cannot or don’t export oil to the rest of the world. Opec’s sectary general says ,“no capacity in the world at the moment that can replace 7mn barrels [a day] of exports” from Russia.”. For Germany, Russian petrol makes up 30% of imports. A quarter of the EU’s oil imports come from Russia. 60% of Russia’s oil exports go to Europe.
Russia has EU by the balls (Related article: (Why Russia has the EU by the balls). Moscow said it could cut natural gas supplies to Europe via the Nord Stream 1 pipeline in response to western sanctions.
See the gap between US and EU prices. US LNG producers are shipping all they can. And if Moscow cuts gas to Europe, prices will really fly.
Russian oil is cheap, really cheap.
The int’l media reports that two-thirds of crude buyers appear to be avoiding buying Russian oil partly because many western banks, refineries and shipowners don’t want to finance, refine or ship Russian oil. The West has avoided sanctioning the oil and gas trade but traders are afraid that this will change.
Meanwhile, the Chinese are Russia’s “no limits” strategic partner and can avoid using the dollar to pay for the oil. They have Chinese-owned tankers and refineries to tpt and refine the crude.
In addition to higher oil prices (Why most of our gas supply, piped from Indonesia, is tied to the price of oil: Rising electricity prices: Tell us the truth. Note since 2012, when article was published, the trade in LNG has grown exponentially.), with Brent crude rising as much as 9% to an eight year high of above $113 a barrel before trading at US$112.93. (Related post: Oil prices aren’t all that high),
gas prices have flown
Given Europe’s reliance on Russian gas (Why Russia has the EU by the balls), European natural gas prices surged 50% on Wednesday to an all-time high of €185 a megawatt hour. They traded at around €15 a year ago. Asian LNG prices are being dragged upwards, as Europeans try to source gas from traditional Asian suppliers (Oz and Qatar) by offering more money.
Seriously, PAP govt still wants to make us Pay And Pay via higher GST? The Wankers and TCB’s gang are right to oppose GST rises even if the prices are delayed.
Chill out: go have a Kitcat.
Seriously, PAP govt still wants to make us Pay And Pay? The Wankers and TCB’s gang are right to oppose GST rises even if they are delayed.
(Updated on 24 February 2024 at 6.20am with two charts on EU energy dependency.)
Many EU countries import most of their natural gas from Russia. The EU as a whole import around 38% of its gas from Russia. Germany around 67% of its gas from Russia.
That’s not all.
So says Gary Nagle, the CEO of Glencore, the London-listed miner and commodity trader. Of course, he’s talking his book but that doesn’t mean he’s lying or wrong.
Buy oil and gas stocks.
The issue is how much value the oil and gas sector can recapture in a greening investment landscape?
The sector has gone to sleep as fossil fuel stocks cheong.
Must ask Chris K waz a good UK renewable investment trust, or a good renewable passive ETF?
Woke, hipster investors are banging their balls. Nice to see contrarians fleece the sheep.
How will the recent surge in global natural gas prices, with benchmarks in Europe and the US up nearly 300 per cent and 100 per cent in recent months affect us?
The u/m useful info was stuck at the end of a long CNA article that talked about the global situation. Really bad editing as I bet you most readers would not have bothered to finish reading the piece.
This is a shame so I decided to copy and paste what the constructive, nation-building CNA should have told us up front. Not at the end.
Btw, the effect on us in the short term is “peanuts” but read for yourself:
For Singapore, experts told CNA that surging gas prices will unlikely result in a direct hit to economic activity.
… an uptick in electricity prices may be on the cards if the shortfall in gas supplies pushes global oil prices up.
While about 95 per cent of Singapore’s electricity is generated from imported natural gas, the prices of natural gas are indexed to oil prices, according to the Energy Market Authority which described this as the “market practice” in Asia for natural gas contracts. As such, experts said movements in oil prices, instead of gas, tend to have a bigger impact on electricity prices here.
Ms Eileen Yan, Deloitte Singapore’s infrastructure and capital projects advisory partner, said: “If global energy – oil and gas – prices continue to increase, especially if natural gas prices spike further in the winter season due to increased heating needs, the electricity prices in Singapore would follow the trend as fuel costs are passed through to electricity prices.”
This … will be felt more acutely by industries such as refinery, petrochemical, and transport and transportation, which use oil or natural gas as feedstocks or fuel. Businesses that are big electricity users, like data centres and shopping malls, may also expect more costly utility bills, said Ms Yan.
… any price increase in the cost of electricity will be gradual, according to Dr Ngin Hoon Tong, programme director at the Energy Research Institute of Nanyang Technological University.
… electricity tariffs here are calculated using the preceding quarter’s average fuel price, meaning lesser price volatility and a trickle-down effect that will likely kick in three months later.
SP Group said on Thursday (Sep 30) that the electricity tariff for households in Singapore will increase by an average of 3.1 per cent for the October to December period this year, compared with the previous quarter. This is due to the higher cost of fuel for producing electricity by the power generation companies, it said in a press release.
… Barclays Bank economist Brian Tan said higher energy prices may have “some modest negative spillover effects on the Singapore economy, but these are unlikely to be large”.
Mr Livermore from Oxford Economics Middle East agreed that negative growth spillover will be limited given the small share of gas in Singapore’s trade.
“But should the gas prices translate into higher oil prices, it could have a more material impact as Singapore has one of the largest oil refinery industries globally.”
Mr Tan said while higher gas prices may push up Singapore’s core inflation gauge, which includes energy costs such as electricity and gas tariffs, it is unlikely to be a substantial increase.
“We doubt the Monetary Authority of Singapore will respond to an increase in core inflation that is largely driven by gas prices, especially as such commodity-driven inflation may prove to be transitory,” he said.
https://www.channelnewsasia.com/business/gas-price-rise-europe-us-singapore-economy-2209591
CNA should done a quick summary of the global situation, then tell us the impact on us. And then provide more int’l background info. It can be done.
I bot into some Sembcorp Marine cum rights at 0.083. And I applied for excess shares, lots of them at 0.08. Got filled.
Now sitting back at cost of 0.082 with Temasek’s backstop of a mandatory bid at 0.08. Temasek’s stake was raised to 46.6% from 42.2% due to its rights issue.
But stock’s not moving: down to 0.081. SAD.
Even if the International Energy Agency, an intergovernmental energy forecaster, thinks it can.
World is still spending too little on renewable energy capacity.
The IEA predicts that 630 gigawatts of solar power and 390GW of wind power would have to be added to the world’s supply each year until 2030. By comparison, just 280GW of renewable energy capacity of all types was added in 2020. Such a dramatic energy transition would require $5trn of investment annually, versus just over $2trn today.
Economist
IEA says that among other things, there must be an an immediate halt to all new oil and gas exploration projects. But at the same time it says that “continued investment in existing sources of oil production are needed”.
Buy Chevron and Exxon?
If OPEC is not careful, oil prices will crash again. A full global revival in oil consumption won’t come until jet fuel demand also recovers.
Meanwhile, American wildcatters are shouting “Drill baby drill”.
Coming back to aviation oil usage
UOBKH downgrades SIA to ‘sell’ as it is ‘less optimistic’ of a traffic recovery by 3Q21
https://www.theedgesingapore.com/capital/brokers-calls/uobkh-downgrades-sia-sell-it-less-optimistic-traffic-recovery-3q21
Brent crude has fallen from a 14-month high above US$71 a barrel on March 8 to a low of $60.50 on Tuesday, when prices tumbled 6%{ up 2% yesterday. Prices had rallied 84% from November to the recent peak.
But JPMorgan, Goldman Sachs and Barclays, among others, have in recent days either reiterated their long-term bull case for oil or even increased their forecasts for prices.
Chart as of Tuesday.
But first, Brent crude rose 1.4% to US$64.18 a barrel, having dropped by 7% on Thursday.
But longer term chart as of Thursday
The IEA is not buying the supercycle hype. Wall Street has grown increasingly convinced that oil is heading into another supercycle as supply lags demand growth, which has helped fuel oil’s rally towards $70 a barrel this year. But the IEA argues “there is more than enough oil in tanks and under the ground to keep global oil markets adequately supplied”.
Oil demand has not peaked, but growth is set to slow. The group sees a sharp rebound in demand this year after last year’s collapse, but growth quickly fizzles from 2022. Forecasted global consumption of 104.1m barrels a day by 2026 is up more than 4m b/d from 2019. Yet the 2025 demand outlook is 2.5m b/d lower than the group’s last forecast, reflecting a rise in electric vehicles and more efficient petrol engines. Although oil consumption growth has been dented, it remains far too robust for the world to hit long-term net-zero emissions targets, the group said. Serious policy and consumer behaviour changes are needed to bend the trajectory lower.
FT
Commodities are having a great run
But commodities are cheap, if one compares them with the cost of US equities.
Oil prices continued their ascent, with international benchmark Brent crude settling 1.6% higher at US$64.34 a barrel. A lot of this has to do with the cold snap in Texas that is causing production problems.
But JP Morgan thinks a supercycle is on the way.
It could be a really bad place.
Prices of oil and battery metals (In the the electricity age, post oil world, we need batteries to store electricity) are flying. Both are in demand at the same time as we supposedly transiting from oil into electricity. Adds to inflation pressures (Non existent today) in a world awashed with stimulus money.
Add probable food riots (There’ll be food riots in 2021), and the post Covid-19 world is shaping up to be a pretty dismal place for developing countries. SAD.
The environmental kay pohs KPKB that banks are complicit in global warming by financing fossil fuel companies.
Interestingly, Dutch bank ABN Amro says its mortgage book causes more greenhouse gas emissions than its lending to mining or industrial companies.
Part of an on-going series that ESG investing in marketing BS.
Remember this chart?
Clean energy group NextEra surpassing ExxonMobil in market capitalisation: The World Turned Upside Down
Well Exxon’s shares have risen by a third since then, and the market now judges it to be worth $40bn more than NextEra.
2nd Minister for Trade and Industry, Dr. Tan See Leng rightly encouraged households to consider switching to fixed-price plans offered by electricity retailers under the Open Electricity Market (OEM), as fuel price fluctuations are expected to continue into the months ahead.
From the comments online and the fact that the majority (53%) of households have not switched out of Singapore Power (SP), it is apparent that many people are still skeptical, ignorant, or confused about the benefits of switching to a retailer under the OEM.
One of the chief complaints is why SP can’t just match the pricing of OEM retailers. There are good reasons why SP is not in a position to match the pricing of OEM retailers but I’ll not go into the matter because it’s a very technical and dry subject, involving boring stuff like competition, price discovery and SP’s role.
Whatever, these comments 53% remind me that presidential candidate TKL (Remember he lost his deposit and KPKBed about the loss) a few yrs, KPKBed that he was confused about choosing an OEM retailers and he wondered SP couldn’t just match the pricing of OEM retailers.
As an educated man (OK, OK he only finished sec4 in RI and has an actuarial qualification) TKL was soapboxing. As I said above, there are good reasons why SP can’t do this.
To save the 53% households and in particular TLK from their stupidity, these households should be assigned a retailer other than SP to get the better rates. Who they get is the luck of the draw and they’ll be given six months to move to another retailer without penalty. Actually all the rates are pretty close,
Btw, what some really smart S’poreans did: Some householders laughing all the way to the bank. Even with the recent price rise, they are ahead.
Related post on the rates juz before Covid-19 when MSM was spreading fake new: Why MSM no kanna POFMA for spreading fake news?
Finally, thinking about it TKL and his campaign manager, one Goh Meng Seng, are really dumb. If 53% of households are as stupid as he is, he should have been elected president. Happily he and Meng Seng can’t organise as orgy in a brothel.
No not Trump getting the Kung Flu.
But clean energy group NextEra surpassing ExxonMobil in market capitalisation on Friday.
“The World Turned Upside Down” is an English ballad. It was first published on a broadside in the middle of the 1640s as a protest against the policies of Parliament relating to the celebration of Christmas.
…
According to American legend, the British army band under Lord Cornwallis played this tune when they surrendered after the Siege of Yorktown (1781)
https://en.wikipedia.org/wiki/The_World_Turned_Upside_Down
Dabbling in oil-related lending yet again and losing money. (Previous fiasco: see end of article.)
Honourable exception is UOB where I got economic interest via Haw Par: Haw Par: Rediscovered yet again. Btw, during the recent market falls, the Wee family co was buying Haw Par shares.
Local banks’ exposure (ex UOB) not as tiny as what our constructive, nation-buildng media try to picture it by emphasising HSBC’s exposure.
Here’s the truth, thanks to Seedly
S$411 million (US$290 million) owed to DBS — 0.11% of DBS’ loan book
S$354 million (US$250 million) owed to OCBC — 0.12% of OCBC’s loan book
S$209.7 million (US$148 million) owed to UOB — 0.05% of UOB’s loan book
S$850.7 million (US$600 million) owed to HSBC — 0.0005% of of HSBC’s loan book
https://blog.seedly.sg/hin-leong-scandal/?fbclid=IwAR39LRL8OX_kZLbm1qj201_2GuDl9R2A4zgLF-etv4L-y2BhOyNii1FNnZE
Good work Seedly. Go to the above cited link for a great blow-to-blow account of what happened to Hin Leong.
Here’s another schematic showing OCBC’s and DBS’s in exposure in perspective to other banks. Interestingly, only one US bank has a tiny exposure, and its not Citi.
The last time oil prices tanked a few yrs ago, DBS and OCBC were caught swimming naked with big exposures to the offshore marine sector (Think Swiber).
BCA Research says cheong when gains in the CRB index outpace those of gold as Chinese “stimulus seeps through to the real economy”.
Those (like me) who signed up for floating rates pegged to the regulator’s price are smiling.
Looking forward to really low bills so long as oil is below US$30. So long as oil price is below US$55, those who signed up for floating rates can sneer at those with fixed tariffs. Most tariffs were fixed when oil was in US$55 – US$65.
Actually, I signed up for the floating rate scheme because it’s possible to break contract without penalties, unlike the fixed tariff contracts.
Related post: Wuhan virus: Why electricity prices sure to collapse
Whatever, the smaller bills will help make up for the mark-to-market losses in the stock market: Markets: Easy collapse, easy rebound.
Vote wisely.
BP chief financial officer Brian Gilvary said that he believed the latest virus could slash oil demand growth globally by 40% his year. The slowdown in economic activity due to coronavirus could take out 5-7% of China’s LNG demand in February, according to S&P Global Platts.
This prediction will come thru
Electricity tariffs will drop because oil prices have fallen from around US$65 to below US$55. China is not buying oil. Related post: Why MSM no kanna POFMA for spreading fake news?
Every now and then, when the anti-PAP paper warriors are so short of ideas to KPKB about, they raise the possibility of S’pore building a nuclear power station.
Many yrs ago I wrote
In 2008, I attended a seminar where a very senior Shell analyst dismissed the possibility of nuclear energy as an option for S’pore. He said that if a nuclear plant was sited on the NE side of S’pore, the safety or protection zone would stretch somewhere to the SW side of S’pore, in Jurong.
Well things have changed
Mini nuclear reactors could be generating power in the UK by the end of the decade.
Manufacturer Rolls-Royce has told the BBC’s Today programme that it plans to install and operate factory-built power stations by 2029.
Mini nuclear stations can be mass manufactured and delivered in chunks on the back of a lorry, which makes costs more predictable.
So whenever a cybernut or one of Terry’s M’sian Indian goons KPKB about S’pore going nuclear, they don’t know anything small modular reactors (SMRs)
They are about 1.5 acres in size – sitting in a 10-acre space …
SMRs are so small that theoretically every [UK] town could have its own reactor
Imagine Ang Moh Kio, Tampines, Jurong, woodlands and Marine Parade each having their own SMR.
You heard this first here: in next yr’s National Day Rally Speech, PM will talk of SMRs.
My track record in predicting PM’s tots:
PM’s speech: Not juz a change of format
Ever wondered why PM wants to build polders?
No, not fake news
New shipping fuel rules push specialised oil towards $100 a barrel
Regulations are dripping with good intentions but come at a costRecent FT headline
Changes to shipping fuel rules mean that a few select grades of crude have risen back towards US$100.
Pyrenees, an Australian crude produced by the BHP Group was selling for almost US$95 a barrel, with refiners happy to pay up because its a heavy thick oil that is also low in sulphur. Tackling climate change and pollution are the reasons given for changing fuel roles.
Consumers will ultimately pay because shipping cos will pass on the cost.
Trump has signed a deal with Xi (OK, OK thier sidekicks signed it) on US China trade.
In it, among other things, China has to meet a US$200bn import target in the next two years. If it fails, Trump will restart tweeting bad things about China, raise tariffs etc.
The US Chamber of Commerce estimates that increased Chinese purchases of US agriculture products will account for only about U$32bn of the U$200bn target. This means implying that will have to import huge amounts of energy, manufactured goods and services to make up the difference.
The chief cock of the People’s Voice Party, Mr Lim Tean via his FB post, criticised the recent increase in electricity tariffs by 3.5% despite natural gas prices collapsing. Mr Lim concluded his post by saying that “Singaporeans have every right to demand explanations from the SP group, Temasek, EMA and Mr ‘New Taxes’ Heng!”
He obviously doesn’t have a clue about anything, given that as far back as 2012, I explained the situation. Below is a piece that I’ve had to update because when it was first written, the LNG gas terminal had yet to open.
—
Unlike the oil market*, the natural gas market, is not a global, nor an efficient one (outside of the US). (I’ll explain this in detail later using S’pore and Qatar as examples).There is only a limited global trade in gas (the S’pore government is trying to encourage such trade building a gas terminal that is now operational), which can be transported in tankers, but mostly gas must move in pipelines over land in Europe and North America, the biggest users of energy. Example: natural gas prices have been rising in Britain this year even as they have been falling in the US.
Supply has soared in the US because of increased production from hydraulic fracturing, but demand in the US cannot change rapidly. Power plants that can burn gas or oil were shifted to gas long ago.
S’pore, as readers, should know gets its supply of gas from gas fields in Indonesia and Malaysia. The energy MNCs who developed these kind of fields did not develop these fields until they were assured that there were assured long-term buyers of the gas (This is still true today). There are a lot of upfront costs and the lead period from the time the fields are being developed to the first shipment of gas to the customer are measured in decades. Example: gas was discovered in Qatar in large quantities in the 1980s. It became a major exporter only in the early to mid-noughties. It took that long to build the facilities to ship the gas to places like Japan and South Korea, taking into account the time to negotiate the contracts.
Then there is the issue of pricing. Until very recently, natural gas contracts were priced off the price of oil because they were often found together, and both were scarce.
When the gas contracts for S’pore were negotiated all those many years, the price of the gas that S’pore pays was priced off the price of oil. Hence one reason of the paradox of us paying higher prices for gas when the price of gas is at a 10-year low. Another reason is that S’pore is locked into long-term contracts.
Now S’poreans are not the only people who got “screwed” by the breakdown between the price of gas and oil. KKR and TPG, giant and successful US private equity investors invested billions of their investors’ funds in TXU. One of the things they were betting on was that gas prices would be priced-off oil prices for the foreeable future. Err even Buffett has lost money buying TXU bonds.
But what about the gas terminal which now accounts for 38% of imported gas, shouldn’t this mean that its gas is cheaper?
Sadly
In Asia, purchased gas imports are typically pegged to oil price changes by pre-determined formulas due to the lack of an established pricing benchmark for gas trade. This nexus between oil and gas prices could weaken though, as more gas is being traded with greater flexibility in the future.
Constructive, nation-building media
And Lim Tean wants to be PM? But then as I wrote
Look at Lim Tean’s record. Still no jobs rally after collecting money in 2017 for rally, and no picture, no sound after collecting money to sue CPF yrs ago: Finally Lim Tean called to account on a “broken promise”. To be fair, he did deliver on defamation video two years late. But it was BS.).
Can he be trusted to do anything but grab the money?
But then
[M]aybe he’s not a money face but has dementia making him forget that he took money from the public.
Lim Tean: talk cock king / Does he have dementia?
From our constructive, nation-building media recently
Electricity tariff to rise 3.5% in January-March to hit 5-year high
Read more at https://www.todayonline.com/world/electricity-tariff-rise-35-january-march-hit-5-year-high
Electricity tariffs to rise 3.5% in first quarter of 2020; gas prices to fall
Electricity tariff to rise 3.5% in January-March to hit 5-year high
Fake news because (emphasis mine)
From January 1 to March 31, Singapore households using SP Group’s services can expect to pay a higher electricity tariff of around 3.5 per cent on average (before 7 per cent GST), the company said on Monday (Dec 30). This 0.81 cent per kilowatt hour (kwh) increase from the last quarter is due to higher energy cost.
At least 40% of residential consumers will not be affected because they are using other electric retailers. These offer fixed or floating* rates, way below SP’s rate. The Energy Market Authority (EMA) had said on Oct 15 2019 that about 40% of residential consumers have switched from SP Group to new electricity retailer as of end-August. Only 60% of residential consumers including Tan Kin Lian are still on SP rates. They are affected but its their fault for not switching to cheaper providers.
I presume TKL is still with SP because he KPKBed late last yr, that he found the packages on offer from other electric retailers confusing. He one blur sotong.
Amended on 3 January at 5.20 am to clarify that the other retailers also provide floating rates.
Much of the deterioration in finances and credit ratings in developing countries state-owned enterprises are
due to the predominance of oil and gas companies among SOEs, Cnooc and Sinopec of China, Gazprom of Russia, Petrobras of Brazil and Malaysia’s Petronas as well as Pemex, which have been hurt by the fall in oil prices since 2007.
FT
Emphasis mine.
Want Tun to run S’pore?
What is this Oz man smoking?
‘Just a matter of when’: the $20bn plan to power Singapore with Australian solar
The desert outside Tennant Creek, deep in the Northern Territory, is not the most obvious place to build and transmit Singapore’s future electricity supply … The developers say it will be able to provide one-fifth of the island city-state’s electricity needs, replacing its increasingly expensive gas-fired power …
Sun Cable’s chief executive, David Griffin, is bullish about the possibility of his company helping power Singapore from the outback in less than a decade.
He says the project will use prefabricated solar cells to capture “one of the best solar radiance reserves on the planet”. But he says the major transformation that makes the farm possible is the advent of high-voltage, direct-current submarine cable, which he describes as the “greatest unsung technology development”. Sun Cable’s underwater link to Singapore will run 3,800km.
“It is extraordinary technology that is going to change the flow of energy between countries. It is going to have profound implications and the extent of those implications hasn’t been widely identified,” Griffin says.
“If you have the transmission of electricity over very large distances between countries, then the flow of energy changes from liquid fuels – oil and LNG – to electrons. Ultimately, that’s a vastly more efficient way to transport energy. The incumbents just won’t be able to compete.”
Sun Cable’s backers believe Singapore, as a well-regulated electricity market that runs mostly on gas piped from Malaysia and Indonesia and shipped as LNG, is ripe for competition.
Coming back to “What is this Oz man smoking?” He’s smoking what TRE’s Oz-based funder and grave dancer, and his fellow anti-PAP cybernuts are smoking. Oxygen and the other cybernuts are shouting themselves hoarse that the Spastics’ League will defeat the PAP at the next GE.
But there’s still hope for Oxygen and his fellow cybernuts. After the PAP wins the next GE convincing: Sci-fi story predicts S’pore after next GE?.
I’ll end with this which helps explain why cybernuts are the way they are:
Change blindness refers to the phenomenon in which viewers fail to detect (sometimes surprisingly dramatic) changes to a visual scene. One way of demonstrating this effect is through a procedure called a “flicker paradigm” in which two very similar scenes alternate, with a few discrepancies between them. Detecting changes in a flicker paradigm is such a surprisingly difficult task that when a team of psychologists led by Ronald Rensink first tried to publish research on the topic in the mid-90s, their results were initially rejected by peer reviewers as impossible. In other words, the fact people could be change blind was so counterintuitive that even visual scientists were inclined to doubt the reality of the phenomenon.
Today, change blindness is an established part of cognitive psychology. Scientists have even introduced the term change blindness blindness to refer to the fact that people tend to be ignorant of their change blindness.
https://atans1.wordpress.com/wp-admin/post.php?post=47371&action=edit
In cities, that means millions of units – including those on cars and buses and trains – constantly pushing out heat into the atmosphere. Studies have found the extra heat from air-conditioning can raise temperatures by as much as 2C. And when it gets hotter, our thermostats turn lower and the cycle continues.
Because M’sia’s the world’s third biggest exporter of gas. Never realised this until yesterday.
In the US more than 100 cities have recently pledged to run on 100% renewable energy, signing onto the Sierra Club’s “Ready For 100” campaign.
One of the cities is Atlanta, a place that uses lots of air conditioning
So, how exactly will the folks in Atlanta increase the city’s green energy supply from 8% to 100% by 2035? They’re going to start by trying to use less energy.
“There’s an awful lot of low-hanging fruit left,” said Matt Cox, CEO of the Greenlink Group, who helped craft Atlanta’s new plan.
Mr Cox says you start with the basics: insulating old homes and installing energy-efficient lights and better cooling and heating systems.
“We identified an opportunity to reduce the consumption in the city 25% to 30%, just through the energy-efficiency side alone.”
And Mr Cox says studies found there’s another benefit to investing in efficiency: “They were showing an internal rate of return of over 60%. That’s six-zero percent. That kind of a return on an investment is a tremendous opportunity that you don’t see hardly anywhere.
“You look at the stock market, you’re going to be happy to get 7% or 10% out of that.”
But efficiency is just a start. Atlanta’s plan also relies on putting up a lot more solar panels – on homes, commercial buildings and at utility scale solar farms. It banks on things like improved battery storage for solar energy as well as renewable-energy credits from outside the state to offset coal and gas power still coming from the local grid.
If Atlanta is aspiring to be so green, so should we: https://sbr.com.sg/utilities/more-news/singapore-takes-lead-in-embracing-green-energy-across-asean-report
But I forget that we want to be a major LNG centre and so our power generators are paid to use LNG: http://singaporepowerdesk.com/vesting-contracts-made-singapore-consumers-pay-2-7-billion-sgd-last-4-years/
And screwing Hyflux and its investors:
When Hyflux was first awarded the Tuaspring project in 2011, based on the financial model which modeled the cashflow projections from the project, the power plant was expected to generate profits from day one. This financial model was audited by an external financial model auditor and furnished to the offtaker. In 2013 when Tuaspring was able to secure a non-recourse project financing loan, the lender commissioned an independent market study of the project which arrived at similar conclusions supporting the book value of approximately SGD1.4 billion.
But to be fair to the PAP govt:
Hyflux decided to build its power plant after the LNG vesting contracts were awarded to the other gencos. When Hyflux made this decision, information on the plans by other gencos to increase their generation capacity was publicly available. Hyflux’s present financial situation is a result of its own commercial decisions, with full knowledge of the gas supply situation and electricity generation market. It is incorrect for Mr Leong to claim that Hyflux’s financial problems were caused by “an unexpected domestic policy change”.
https://www.ema.gov.sg/reply_to_forum_letter.aspx?news_sid=20190403hDf4R8s5Rwna
Related post written before EMA set the record straight: Will Oliver Lum and other Hyflux investors still vote for the PAP?
These might interest:
Hyflux: Don’t cry for the investors
Hyflux directors, mgt & auditors kooning from 2016 onwards?
Hyflux on investor losses: “Not our fault, banksters at work”
Thank Texas, New Mexico and geology. And America’s God?
By 2024 Exxon and Chevron now expect to be pumping almost 2m barrels a day combined from the Permian, which straddles Texas and New Mexico. That is 60 per cent more than previously forecast.
The Permian as a whole will already produce about 4m b/d this year, meaning that this one region — if it were an Opec country — would be the third-largest producer in the cartel, behind only Saudi Arabia and Iraq.
FT report
One in the eye for Allah and his prophet Mohammed?
Mammon of America got a lot more power.
What a f *** moron:
The US exported more petroleum than it imported for the first time in decades last week, marking an astonishing if momentary reversal from its longtime status as the world’s largest oil importer.
FT last week
Announcing OPEC’s production cuts, the Saudi oil minister alluded to US exports by saying that US shale producers also benefit from an OPEC production cut.
Stable genius? What stable genius?
Because given the abolition of GST, Tun has a problem: shortage of $ to fund his promises. Until recently, the problem looked containable because of oil prices above US$70.
In Oct, Tun said the government was estimating the 2019 Budget allocation based on an average crude oil price of USD70 per barrel, although the benchmark Brent crude oil is nearing USD80 per barrel currently.
Now it’s below US$60, actually around U$S58.
So what does he do? Try to distract the Bumi Malays by threatening S’pore. (Related post: One reason Tun wants to cause trouble with us on HSR)
Let’s ram and sink their vessels. They can’t afford to replace them.
Notice the silence of TOC and other Tun’s fans who were cheering him on when he wanted to cancel HSR without compensation? They said he was right and S’pore should appease him: Anti-PAP S’poreans sucking up to Tun and Two-face Tun/ Why vote PAP.
One of them has gone back to posting about gd food in Johor and S’pore on FB. Doubtless he’s spending the 30 pieces of silver paid by M’sia’s Special Branch.
And do remember that TOC queried why we needed an air force when RMAF’s planes were grounded because of failure to maintain. A gd reason to raid TOC’s Terry in my view.
And do also remember that Mad Dog thinks we must be nice to people like Tun. And remember this too: Jolovan Wham: Nothing wrong in asking Tun M to intervene in S’porean affairs.
Our anti-PAP types sure love to help the PAP retain power by repeatedly shooting themselves in the ass.
Update at 1.29pm: Let’s ram and sink this ship: https://www.channelnewsasia.com/news/singapore/malaysian-port-limits-vessel-polaris-buoy-singapore-waters-11007250
And dare Tun escalate hostilities or sit down and shut up. Btw sounds like P(olitican) Ravi has joined the appeasers. Recent FB posts:
The trouble with having so many Generals in the Cabinet, is that it may choose a more aggressive approach in solving a crisis over choosing a more diplomatic solution.
Yes, time to stand united against threats to sovereignty, but cooler heads should prevail.
How we deal with Malaysia over the encroachment issue, should be no different from how we dealt with the Chinese when they seized our infantry fighting vehicles.
and
The principle of approach to resolving the crisis should be the same. What do you suggest? We go to war?
Monday WCS was just US$17.78 a barrel, compared to US$58.91 for US West Texas Intermediate. But buyers have bring their own pipelines, rail-wagons or trucks to Alberta. That’s the problem.
The existing pipelines etc are working at full capacity.
Last night Brent touched US$75.88 a barrel — the lowest since early September — before settling at US$76.44 in NY. In early October it was above US$86.
Phew that was a really quick sharp retracement after a very sharp spik in October: Tua kee traders take opposing views on price of oil.
The PAP govt must be relieved oil is now trading below US$80.
A US$ oil price of closer to US$100 than US$60 will pose problems for an early GE in late 2019 esp with the promised rise in GST(See below for GST related posts) after GE: Akan datang: GE in late 2019
According to Citi’s Johanna Chua, Asian countries suffer the most when oil prices rise because, aside from Malaysia, most are net oil importers. Singapore runs a sizable 6.5% oil and gas deficit,
In New York, the S&P 500 fell 1.4% to 2,768, while earlier in the day China’s CSI 300 lost 2.4%. Techs look sickly.
But oil’s below US$80 having been at US%86 a week ago. So PAP should be pleased: HoHoHo: Why oil price rises are not gd for PAP
Phew that was a quick sharp retracement after a very sharp spik: Tua kee traders take opposing views on price of oil. The PAP govt must be relieved oil is now trading around US$82 (minutes ago) than above US$86 (middle of last week).
A US$ oil price of closer to US$100 will not only make Tun M (M’sia exports oil) more willingly to cut off our water supply but will pose problems for an early GE in late 2019 esp with the promised rise in GST(See below for GST related posts) after GE: Akan datang: GE in late 2019
According to Citi’s Johanna Chua, Asian countries suffer the most when oil prices rise because, aside from Malaysia, most are net oil importers. Singapore runs a sizable 6.5% oil and gas deficit, followed closely by Pakistan, Thailand, Sri Lanka and Taiwan. Indonesia and Vietnam manage slightly smaller deficits of roughly 1%.
So many of these economies see the largest inflation swings when oil prices rise. Chua’s chart ranking the sensitivity regionally over the past six years. See where we stand.
The ** explained that the spike in inflation here is caused by some one-off stats adjustment of data base. So not really comparable to other countries. But try telling that to cybernuts like Oxygen or Phillip Ang.
But rational readers should get the message. Voters really get hurt by oil price rises. And the promised GST price increase is not going to impress the 10 points of voters that voted for the PAP in last GE, bring the total votes for the PAP to 70%: a great result for the PM and the PAP after the failure of only 60% in 2011.
GST-related posts
GST rise: Anti-PAP activists should take note
Countering PAP’s BS that taxes must go up
Phew that was a quick sharp retracement to around US$81 after a sudden sharp spike to US$86. I’ll be blogging soon on why the PAP govt must be relieved oil is now trading around US$81 than around US$86.
But interestingly last week as the price spiked to over US$86 and then fell sharply two major oil traders had opposite views.
Ian Taylor of Vitol, chairman of the world’s largest independent energy trader, told the Oil & Money conference on Wednesday he expected prices to eventually fall towards $65 a barrel, arguing he saw no shortage of crude in the market and the early signs of weaker demand.
FT
But
In the opposite corner is Jeremy Weir of Trafigura, Vitol’s long time rival, who said at the same London event he expects to see “three figure” prices before the recent rally is tempered, which has already seen Brent crude gain 50 per cent in the past 12 months to near $85 a barrel.
FT
Btw, fyi, the hedgies are long oil because of the US Iran embargo. And two major oil cos CEOs say that there’s adequate supply for the bear term future.
Not if u only read our constructive nation building (OK, OK, I don’t read BT) or TOC and other anti PAP publications.
What this means
A sharp and sustained rise in oil is one of the nastiest taxes on growth you can get.
FT columnist
So expect GDP growth here and elsewhere to slow down if oil doesn’t fall back to below US$80 (Top of trading range for this yr until late Sept).
Buy Keppel, and SembCorp listcos. And take a punt on the penny stocks in O&M sector?
Whatever, shows Trump is “stable genius”. His much criticised tax cuts earlier this yr, will help cushion the US consumer (and hence the world) againsat this oil price oil if it persists.
Rig drilling Transocean has bid US$2.7bn deal for deepwater rival Ocean Rig.
Remember oil is now close to US$80, so oil drilling and services industry expects it will soon be able to raise the prices
Btw, Shell said last month that deepwater drillingwas making a comeback after the 2014 oil crash as falling costs and higher crude prices was making it competitive again.
Phillip Ang (Cybernuts go to financial expert who raised money for CPF lawsuit CPF class action: Phillip Ang’s “reply’ to fellow cybernut then no picture, no sound*: like his buddy Lim Tean: A disgraceful chamber of horrors?,)TRELand and TOCLand and allied cyberspace and social media allies are shouting that since S’pore uses natural gas to generate electricity and LNG prices are weak, there’s no need for electricity prices to rise when oil prices rises as per the automatic formula.
What they don’t know or not telling us, if they, do is that most of our natural gas supply is not in form of LNG but in the form of gas from nearby Indon and M’sian fields that come here via pipes (like water). This gas is priced off the oil price because the fields would not have been developed otherwise all those years ago. Why don’t the cybernuts blame PAP for not having foresight to wait for LNG?
In those days, only after long-term contracts priced off oil from users were signed, were fields developed. These contracts are still in place. Why don’t the cybernuts blame PAP for not negotiating shorter contracts or ensuring that the price of gas be priced in a different way?
Until very recently, major gas fields were not developed until long-term contracts priced off oil were in place. This is changing surely but slowly. Whatever, a lot of global LNG are still priced off the price of oil because the contracts were signed a long time ago. Surely but slowly, there’ll come a day when the spot price for LNG sets the price for deals, but don’t hold yr breath.
With enemies like the cybernuts who peddle rubbish analysis eg on water and electricity, the PAP doesn’t need friends.
===================================
*Will Lim Tean & Phillip Ang help out fellow cybernut?
They didn’t
Oil fell last night to around US$76 when it was announced that Opec and Russia are set to boost oil output after Trump pressure.
Opec’s secretary-general Mohammed Barkindo said Mr Trump’s tweet last month had prompted the cartel to respond as “we pride ourselves as friends of the US”.
I’ve been taking a keen interest in the once Noble House because I tot it might look interesting post restructuring even if it would have a very high debt burden after swapping debt for equity.
Well its warning of bigger losses (now confirmed*) put paid to my interest because the latest losses were coming from coal trading the business it was going to focus on post restructuring, and which was the basis of it being nubbed “Noble House”
I’ll let the FT do the talking:
One of Noble Group’s biggest shareholders has said senior management has yet to show it can turn round the commodity trader after it reported a $5bn annual loss, one of the largest ever in Singapore.
Goldilocks Investment, which took an 8.1 per cent stake in the crisis-hit company last year, said the fact the core business of coal trading continued to lose “millions every month” raised doubts about a rescue plan involving a massive debt-for-equity swap.
*https://www.reuters.com/article/us-noble-grp-results/noble-group-plunges-to-4-9-billion-loss-in-talks-to-wrap-up-debt-deal-idUSKCN1GC172
The reasom why the share price collapsed further yesterday was because Noble’s
main banks are locked in last-ditch talks over whether to give the crisis-hit commodity trader more time to find a white knight investor or force the company into a restructuring or liquidation, according to people with knowledge of the discussions.
FT
HSBC, Soc Gen, ABN Amro, Citigroup and ING are its main banks.
Or dear, so Noble’s fell another third and the shares were suspended on Tuesday after S&P lowered its rating by three grades to triple C plus on Monday. The rating remains on a negative outlook.
Well things got even cheaper ,“Noble trades at less than a third of book value and its bonds below half their par value.”, if auditors can be trusted.
It needs to roll over US2bn in credit facilities by the end of May. And next yr, it has another US$1.5bn to refinance: US$700m in cash and US$400m of unused credit lines and some of this is now collateral for hedges.
But how to refinance when there’s a lack of hard assets that can serve as collateral and when it’s difficult to independently value its portfolio of contracts to source and supply commodities?
Time to call in the knackers? After all Paul Brough, a former partner at accounting firm KPMG, is now the chairman and has started a “strategic review”.
When a billionaire is US Commerce Sec, there’s out of the box thinking
Commerce Secretary Wilbur Ross suggested the White House would aim to boost LNG exports not just to China, but other nations with whom the United States posts a trade deficit, including Japan, the world’s top LNG importer.
http://www.cnbc.com/2017/05/19/trump-just-gave-china-a-sledgehammer-to-smash-the-lng-monopoly.html
Interesting tot.
Time for PM to appoint a billionaire to his cabinet (Kee Chui Peter Lim?). At the very least it’ll save tax-payers a million dollars or so a yr in ministerial salary.
Global oil services companies, including Halliburton of the US, still talk of the the patchy nature of the sector’s recovery from the oil price crash of a few yrs ago. And we also have had a fall from the mid US$50s to the 40s to the 50s again recently.
So don’t play play with our offshore marine tiny tots.
DBS’s private banking clients were told Swiber bonds were safe ’cause DBS was a big lender?
This wicked, evil tot crossed my mind when I was reminded that DBS
had a S$700 million ($522 million) exposure to the Swiber group of companies and expected to recover roughly half, given some was secured by assets. That amount represents 92 percent of Swiber’s $567 million in total equity at the end of the first quarter, the last time it reported its financial position. It also probably means that just over half of all the leases, borrowings and notes payable reported by Swiber were owed to DBS.
Any credit officer should balk at a lender being in charge of more than half the debt of an entire company. It gets worse, however, because on top of that, Swiber’s debt had already become much larger than its equity, a sign the bank should have considered scaling back its exposure.
https://www.bloomberg.com/gadfly/articles/2016-08-03/how-deep-into-oil-rigs-is-dbs
I mean DBS wouldn’t lend money to any dog, let alone a dying dog with maggots festering in it, would it? And persuade its private banking clients snd accredited investors to join in, would it?
Will Temasek try its luck and put our chips here? What will Buffett do?
One reason why the coal industry is in such a bad shape is that US utilities are using more natural gas which is cheaper than thermal coa.
NYT Dealbook on the coal industry:
BANKS PULL FINANCING FROM COAL INDUSTRY Wall Street’s retreat from the coal industry is an ominous sign for a sector already in decline, Michael Corkery writes in DealBook. JPMorgan Chase said it would no longer finance new coal-fired power plants in the United States or other wealthy nations. Bank of America, Citigroup and Morgan Stanley have made similar decisions. At the same time, Peabody Energy, the world’s largest private-sector coal company, said it might have to follow three other large coal companies into bankruptcy.
Coal has had periods of boom and bust before, but some say this may be a permanent shift for the industry that helped drive Wall Street profits during the 19th and 20th centuries.
Banks say they are trying to do their part against climate change, but the retreat is driven by a more basic reason: Lending to coal companies is risky and could prove unprofitable. Coal companies are under pressure from less expensive energy sources and tougher regulations. As a result, even the most secure loans are off limits for many banks.
Even hedge funds and private equity firms, usually eager to pounce on companies in distress, do not have the stomach for the coal industry.
In the oil industry, however, investors are snapping up debt and equity from troubled companies, in expectation of a rebound.
FT’s Nick Butler had 4 questions for the oil majors’ results season: where they spintheir annual results, declare dividends and reveal strategy updates. These are useful questions for Keppel and SembBorp Marine except the second question should be about their analysis of their clients projects. And for Temasek too. And useful guide when asking questions about the small cap offshore marine stocks: stocks like Ezra amd Swiber. Btw, it’s rumoured that Temasel officials used Nick Butler’s questions when they last met Keppel and SembCorp Marine executives.
First, did you foresee the fall in prices across the energy sector in the past two years? I don’t think anyone can answer that with a yes, which leads inexorably to the supplementary question: if not, why not? This is the question the Queen asked a group of economists after the financial crash and the 2008 downturn. It seems she is still waiting for a clear answer.
Second, what proportion of your producing assets and projects under development requires an oil price above $50 a barrel (or a comparable gas price) to produce a positive rate of return? This is a more complex question but if answered truthfully will expose the extent to which some companies over invested at high prices and will continue to struggle.
Third, what is your strategy if oil, gas and coal prices stay low — say, below $50 a barrel for the next five years? This is the most important question, especially for investors who rely on a secure dividend flow. To the best of my knowledge no energy company has yet explained its strategy, which makes it all the more important that the question should be asked and answered. Any chief executive who says that a long period of low prices is impossible should be retired immediately.
Finally, what do you believe are the most significant advances in technology in the energy sector in the past year and how could they affect your business? What are you doing to make sure you capture the benefits of those advances rather than falling victim to them? The aim here is to extract a clear statement of long-term strategy. Focusing on technology should test whether companies are taking the time to look outside and watching the advances being made on solar and storage; and whether they understand the dramatic scale of the changes that are happening. At the individual level, the question will test whether chief executives are looking ahead at the medium and long-term or simply trying to coast to a well-padded retirement.
investors and lenders have laid the groundwork for the rebound – buying assets in fire sales and making new loans. But even opportunists are still uneasy. Many investors fear they could be too early if they jump in now – they had already been burned by forecasts that predicted oil would recover last year.
NYT Dealbook reports
LOW OIL PRICES AND A RECKONING ON DEBT Energy executives and their bankers are preparing for a prolonged downturn that could change the energy industry in a way not seen since the turmoil of the late 1990s gave rise to mega-mergers like Exxon Mobil, Clifford Krauss and Michael Corkery report in DealBook.
Crude prices have plunged more than 70 percent over the last 20 months, but until recently, companies were able to ride out the slump using hedges to sell their oil for more than the market price.
These hedges have expired in recent months, leaving oil companies low on cash and unable to pay their debts. They are also realizing that a recovery in oil prices is at least a year away – too long for many companies to hold out.
If prices hold at such low levels – oil traded near $28 a barrel on Tuesday –as many as 150 oil and gas companies could file for bankruptcy, according to IHS, an energy research firm.
That is a relatively small slice of the industry, but hundreds of other companies that piled on debt to grow into significant players in the shale oil boom are now likely to be acquired or sell their assets. As much as a third of the oil industry could be consolidated as a result of the downturn.
As losses have mounted, investors and lenders have laid the groundwork for the rebound – buying assets in fire sales and making new loans. But even opportunists are still uneasy. Many investors fear they could be too early if they jump in now – they had already been burned by forecasts that predicted oil would recover last year.
Temase should remember that it already has exposures to the oil patch via Keppel and SembCorp Marine: the bad and ugly, the good
And think about buying SembCorp. If oil prices recover, it’ll benefit from its stake in Marine. If it doesn’t, there’s the other biz.
There is talk that Saudi Armaco may be listed.
Continuing the theme of buying dogs, commodities and energy …
Forget what the financial equivalent of Goh Meng Seng says (reported here), and buy the two fallen Fab 5 stocks? And M’sian Sapurakencana Petroleum? One of Asia’s leading oilfield services groups, if you don’t know.
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He’s the journalist equivalent of Goh Meng Seng (three GEs, three different parties, and a declining share of the vote). This FT has in the about same period worked for Bloomberg, MediaCorp, Reuters and now Bloomberg again. Oh and the last time this FT was working for Bloomberg, he and Bloomberg had to pay damages to one of the Lees, can’t remember which.
As Goh Meng Seng is an exemplar of the traditional oppo politican, this FT shows that T can stand for “Trash”.
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There’s deep despair about the oil price as this report from NYT’s Dealbook recounts. But there’s two swallows in the sky:
–Premier Oil has finally agreed to buy all of German utility E.On’s UK North Sea assets in a deal worth $120m (£83m) despite oil trading below US$30,
— Statoil ASA, Norway’s biggest energy company, snapped up a 12% stake in Lundin Petroleum AB to increase its access to the giant Johan Sverdrup field.
The acquisition corresponds to a price per share of about 124 kronor, in line with Lundin’s average price over the past 30 days, according to data compiled by Bloomberg. Lundin shares have dropped about 20 percent since crude started to tumble in mid-2014. Brent oil, the global benchmark, is now trading near $30 a barrel.
“The market situation made it possible for us to secure this position at an attractive price,” Baard Glad Pedersen, a spokesman at Statoil, said by phone. The Stavanger-based company won’t seek representation on Lundin’s board, he said. Bloomberg
At current prices, extracting oil from the North Sea is theoratically the equivalent of burning dollar notes.. Its oil is expensive to extract.
Back to the gloom and doom painted by Dealbook bearing in mind that Monkey is a trickster
NO BOTTOM IN SIGHT FOR OIL PRICES The collapse in commodity prices pushed oil futures even lower on Monday and analysts predicted that the slide was far from over, Jad Mouawad reports in The New York Times.
Oil prices were at a 12-year low on Tuesday, with West Texas Intermediate near $30 a barrel after a decline of more than 5 percent overnight. Brent crude was just under $31 a barrel by the Asian afternoon, as The Wall Street Journal reports.
The drop in commodities prices is being felt throughout the energy sector and beyond. Saudi Arabia said it was considering selling shares in its state-run oil company. Arch Coal, one of the biggest oil producers in the United States, filed for bankruptcy protection to cut its debt. Russia’s main stock indexes plummeted on Monday as oil prices cast a pall over its energy-dependent economy, Andrew E. Kramer reports in The New York Times.
Oil’s decline in the last year was caused in part by Saudi Arabia’s decision not to reduce production. The change, intended to force out high-cost energy producers, backfired on the kingdom and other producers, which now have to consider how to finance their oil-dependent economies.
The slump in oil prices had gained momentum last week on renewed concerns about China’s economy.
Jason Bordoff, director of the Center on Global Energy Policy at Columbia University, said that everything indicated a continued oil glut. “Iran is about to re-enter the market, demand numbers and economic indicators look relatively weak, U.S. supply is holding up in a low-price environment much better than people though and global inventories are growing.”
Many analysts expect more declines. Goldman Sachs and Morgan Stanley have both said that oil could drop to $20 a barrel.
In 2013, I recommended investing in Temasek’s Fab 5 for KS types. Last June I pointed out problems at two of them Keppel and SembCorp Marine because of lower oil prices.
The rot continues as Bloomberg reports
The last time Singapore’s marine services industry was staring at what would eventually turn out to be an 18-year drought in demand for oil rigs, Mr Ronald Reagan was starting his second term as US President.
Jack-up rigs, used to drill for oil in shallow waters, saw orders evaporate between 1985 and 2003. As Macquarie notes, rampant overcapacity means such a prolonged slump could well occur again. That definitely would not be good news for the rig-building industry’s two Singaporean leaders – Keppel Corp and Sembcorp Marine.
After a decade-long boom, there were zero new orders globally for jack-up rigs last year. With oil prices swooning, and rigs’ daily rental rates having crashed to US$92,000 (S$132,000) from US$130,000 in 2014, there’s a risk that 70 per cent of Keppel and SembMarine’s order book might get cancelled, especially if the Petrobras bribery scandal in Brazil deepens, Macquarie analysts Somesh Kumar Agarwal and Justin Chiam wrote this week.
And there might be more trouble ahead. Since early 2004, the two stocks have returned about 300 per cent, thanks primarily to hefty dividends. Those might now start thinning out. According to analyst estimates compiled by Bloomberg, Keppel’s dividends will shrink by as much as 11 per cent over the next three years, compared with annualised growth of 3 per cent over the past three.
No orders coming in doesn’t augur well for shareholders, who will be far behind debtholders in getting paid, and the latter will have substantial claims. Oil- and gas- linked companies with outstanding Singdollar-denominated bonds have to refinance or repay some $625 million of notes this year, a further $390 million in 2017 and $700 million in 2018, Bloomberg-compiled data shows.
The other big risk comes from the duo’s Brazilian yards. Japanese shipbuilders like Mitsubishi Heavy are cutting their losses and exiting as the Petrobras saga drags on.
Stock in Ensco, the London-based owner of shallow and deepwater rigs, has been hit after Petrobras said it was scrapping a contract in the US Gulf of Mexico because, it claims, Ensco knew about improper payments between a shipbuilder and a consultant when the drillship was constructed, a charge Ensco denies.
Analysts are being predictably slow in sounding the alert. Their median price estimate predicts a 25 per cent jump over the next year in Keppel shares, and a 15 per cent climb in SembMarine.
So far factual or fair comment. But I think the Indian FT* writing for Bloomberg is talking rubbish when he talks of Temasek selling out. Our rig-builders are market leaders, not has-beens like NOL And the oil sector is a cyclical sector, not a declining sector.
Were that triumph of hope over experience to prove elusive, what might Temasek do? It recently decided to sell shipping company Neptune Orient Lines to CMA CGM at $1.30 a share, after having paid as much as $2.80 in 2004 to acquire a part of its 67 per cent stake.
If the Macquarie analysts are right about Keppel and SembMarine eventually trading below book value, like South Korean yards do, then there may not be much point in Temasek’s hanging on to the rig-builders either.
What strholders of SembCorp Marine should be concerned is that SembCorp privates Marine. About 15 yrs ago Keppel did that to FELS.
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*He’s the analyst equivalent of Goh Meng Seng (three GEs, three different parties, and a declining share of the vote). This FT has in the same period worked for Bloomberg, MediaCorp, Reuters and now Bloomberg again. Oh and the last time this FT was working for Bloomberg, he and Bloomberg had to pay damages to one of the Lees, can’t remember which.
As Goh Meng Seng is an exemplar of the traditional oppo politican, this FT shows that T can stand for “Trash”.
Wonder if Temasek got out of Chespeake when the going was good in 2913?
Even in November of last yr its shares had hit $24 and, amazingly, the company’s credit rating rose to the cusp of investment grade.
But now the company’s shares have fallen below $4. FT reports: A liquidity crisis has forced it to pursue a debt exchange. Bondholders can swap their existing notes for a discounted set of notes that mature further in the future.
The new notes are of a higher priority in the capital structure, which will induce some creditors to take the discount. Morningstar estimates that the transaction will create a $1.7bn cushion that will keep Chesapeake afloat.
Under the worst test scenario – this assumes that a 10 per cent cut in revenue, 10 per cent foreign exchange depreciation and 100 basis-point hike in interest rates happen all at once next year – three sectors emerged as the most resilient: China water-utility stocks, healthcare and manufacturing. So says MayBank Kin Eng in a report in mid Sept.
Don’t know about the Chinese utlities but the rest of list (see below)l ooks about right.
Healthcare stocks such as Q&M and Raffles Medical: “buffered by the largely non-elective procedures they offer”: “Under (the worst scenario), their earnings could drop 12 to 16 per cent when revenue declines, while foreign exchange and interest rate changes do not really move the needle,” said the report.
It added that manufacturers such as Innovalues, Valuetronics Holdings and Venture Corporation – which earn the bulk of their revenues in US dollars – should benefit from the strengthening greenback as they reap cheaper production costs.
Unsafe
Offshore and marine, property and banking sectors – already under pressure – which could be “severely tested” by falling oil prices, rising interest rates and depreciating currencies, noted the report.
In the event of a market shock, highly geared offshore and marine asset owners like Vard Holdings, Pacific Radiance and Swiber Holdings may need to “recapitalise their equity, restructure their debt or face consolidation”, it said.
Developers CapitaLand and OUE would also be at risk of cash-flow constraints as their earnings before interest, tax, depreciation and amortisation (Ebitda) fall to “dangerous levels”, while the local banks could well see profits slump by up to 80 per cent.
S’pore along with Thailand and India, appears to be more resilient compared with others in the region, said Maybank Kim Eng.
China and Indonesia stood out as the most vulnerable, with China the only country to log a negative free cash flow in the stress test.
“This could be a consequence of excess capacity in China, meaning a shock has a greater impact on cash flows,” noted the report.
FT’s Alphaville drew attention to PwC’s disclaimer: PwC said Noble records profits on long-term sales and marketing deals in a manner consistent with industry practice
So if it turns out that “There may be a fundamental difference between a company following the rules and a company presenting a true picture of its financial position,” (Andrew Fastow, the infamous treasurer of the even more infamous Enron, to a FT conference), PwC is not liable. https://atans1.wordpress.com/2015/07/03/noble-house-airasia-ceos-spin-meisters-take-note/
No wonder PwC is a “professional services firm” where the oldest profession is prostitution.
Forgotten the issues, here’s Michael Dee’s letter to employees: http://www.sharesinv.com/articles/2015/05/29/open-leter-noble/?utm_source=email?
He was at the very least right right that their jobs were at stake.”Noble said it was targeting a 16 per cent reduction it its global workforce to just over 1,500 people by the end of the year.” reports the FT.
Thoughts of a Cynical Investor 