WSJ : BP Wants to Stop Burning Off Gas in America’s Top Oil Field

BP Wants to Stop Burning Off Gas in America’s Top Oil Field
The oil giant flares more natural gas than its peers in the Permian Basin, but is now investing heavily to phase out the controversial practice

BP PLC has been one of the companies most responsible for the burning of unwanted natural gas in the busiest U.S. oil field. Now it is trying to clean up its act.

The British oil giant plans to spend about $1.3 billion to build a massive network of pipes and other infrastructure to collect and capture natural gas produced as a byproduct from oil wells in the Permian Basin of Texas and New Mexico. It plans to announce Monday that it will eliminate routine flaring of natural gas in the oil field by 2025.

BP’s investment reflects the growing pressure big oil companies face from regulators, investors and buyers of natural gas to reduce the fossil fuel’s carbon footprint and contributions to climate change.

BP has pledged to reinvent itself as a cleaner energy company, saying it will let its oil and gas fuel production fall 40% by 2030 and ultimately sell more renewable energy than oil while reducing its net carbon emissions to zero. But to finance its ambitious transformation, BP is counting on continuing revenue from oil and gas production.

“We will be producing oil and gas for decades, but it will be a certain kind of oil and gas,” said Dave Lawler, the chairman of BP America Inc. “It’s a highly profitable barrel and it’s a responsibly produced barrel.”

The burning of gas, known as flaring, is prevalent in the Permian because most producers there drill for more profitable oil, and often incinerate the gas that comes as a byproduct. They do so because there isn’t enough infrastructure to pipe and process all of the gas so it can be sent to market. Flaring is also necessary in emergency situations, when operators have to release gas to relieve pressure buildups.

But flaring has come under increased scrutiny because it results in sizable greenhouse gas emissions.

BP has more work to do in the Permian than its big-oil counterparts. As recently as 2019, it burned a higher proportion of the gas it produced—about 15%—than all but one other producer in the Permian, according to data analytics firm Rystad Energy, and far more than rivals such as Exxon Mobil Corp. and Chevron Corp.

Before the pandemic gutted demand for oil and gas and forced sharp cutbacks in production, companies were flaring about $1.2 million worth of gas every day in the Permian. That is roughly enough gas to meet the daily needs of Nebraska or West Virginia. Burning that much gas resulted in roughly as much carbon emissions as driving more than six million cars for a year, according to an analysis of data from the U.S. Environmental Protection Agency.

The first phase of BP’s project is a facility known as Grand Slam, which along with a nearby water-processing plant began operating in June and cost $300 million. Spread across 50 acres hidden behind sand dunes and cattle guards near the Texas-New Mexico border, the plants are a maze of nearly 4,000 tons of steel equipment and pipe that centralizes the collection of oil and gas and its byproducts, and processes the different fuels so they can be sold. Several similar plants are planned, ultimately processing nearly all of BP’s Permian production.

The investment already appears to be making an impact. BP burned about 3.5% of the gas it produced in the second half of 2020, down sharply from 13% in the second half of 2019, according to Rystad. Mr. Lawler said the portion has fallen to 2% so far this year.

Still, BP continues to flare. In January it asked Texas regulators to grant 121 exceptions allowing it to burn more gas than regulations permit through April 2022. By contrast, Exxon and Chevron burned 0.9% and 0.4% of their gas, respectively, in the second half of last year, according to Rystad.

Mr. Lawler acknowledged there is more work to be done but said that by 2025 BP will only burn “de minimis” amounts of gas and won’t need flaring permit exceptions.

Fossil fuel companies have made huge bets on natural gas as a bridge to a cleaner energy future, noting that it emits more than 50% less carbon dioxide than coal when burned for power. But activists, regulators and others have begun paying more attention to the burning of gas as waste at drilling sites, and gas leaks along the supply chain from wells to power plants, as evidence that gas’s true environmental footprint is considerably larger.

Flaring has begun to increase in the Permian this year as producers resume drilling in response to recovering demand. Colin Leyden, a director at the Environmental Defense Fund, said companies should commit to eliminate routine flaring as a starting place.

“The idea you can drill an oil well with no destination for the gas has to stop,” Mr. Leyden said.

While large companies including Chevron, Exxon and BP have promised to end routine flaring in coming years, many smaller, privately held companies haven’t made such pledges. Private operators in the Permian accounted for about 25% of gas production in the second half of 2020, but were responsible for 55% of wellhead gas flaring, according to Rystad.

BP bought its Permian assets in 2018 from BHP Group Ltd. for $10.5 billion and inherited some of the most carbon-intensive wells in the region. Even after BP began operating the wells in March 2019, their flaring remained among the worst until about a year ago.

Mr. Lawler said BP won’t drill any well in the Permian unless it has access to a gas pipeline. To ensure there is minimal flaring of its gas, the company has also chosen to build and operate its own gathering and processing infrastructure instead of relying on third parties.

Mr. Lawler said the investment will ultimately be profitable for BP, capturing for sale as much as 10% additional gas, which otherwise would have been flared. That in turn will help BP finance even-greener future investments to come, he said.

“The low-carbon development of these assets will bring the cash flows that will fund the new projects that help us achieve our mission,” Mr. Lawler said.

WSJ : Naspers Has a $100 Billion Headache

Naspers Has a $100 Billion Headache
Africa’s largest company is struggling to bring its valuation in line with its stake in WeChat operator Tencent

JOHANNESBURG—Africa’s largest-listed company, Naspers Ltd. NPSNY -0.28% , is wrestling with an unusual problem: It made one unbelievably good investment that has now become a headache.

Naspers bought a third of Tencent Holdings Ltd. TCEHY 1.28% in 2001, years before the operator of the WeChat messaging app became China’s most-valuable publicly listed company. The stake itself is now worth over $100 billion more than the market value of Naspers, despite the company’s other profitable businesses in areas like online classifieds, payments and retail.

The difference has presented Naspers executives with the enigma of determining how to unlock value for shareholders without cashing out on one of the world’s most successful tech companies. The problem has become more acute as the gap widened to new levels in the past year, when the coronavirus-induced rally in tech stocks pumped up valuations of Tencent and other tech companies.

“I don’t think there’s a senior person at the group level that isn’t involved in thinking through this problem and working on it,” said Basil Sgourdos, chief financial officer at Naspers. Mr. Sgourdos said executives are exploring more than 10 ideas to reduce the valuation gap, but he declined to elaborate on what options they are considering. Issues that any successful candidate will need to overcome include tax, regulatory, balance sheet structure and debt.


“With each idea and unpacking it, you learn something,” Mr. Sgourdos said. “That’s very valuable [intellectual property] in finding the final solution.”

Naspers paid $34 million for its initial Tencent stake, likely one of the greatest venture-capital investments of modern history. Now Tencent, the world’s largest videogame company by revenue, has a market capitalization equivalent to $780 billion.

Earlier this month, Amsterdam-listed internet conglomerate Prosus NV, which is majority owned by Naspers and houses the company’s international internet assets, sold $14.6 billion worth of shares in the Chinese internet giant. The sale, its second reduction in three years, cut its stake to 29%, currently worth about $226 billion.The market capitalization of Naspers is 1.53 trillion South African rand, equivalent to about $107 billion.

“We’re not happy where it is,” Bob van Dijk, chief executive of Naspers and Prosus, said of the valuation gap. “It’s a priority…to take further steps to address it.”

Mr. van Dijk said the near $15 billion windfall from the latest Tencent stock sale would be used to scale and expand the company’s online classifieds, payments, food delivery, retail and education businesses, as well as look for mergers and acquisitions. The company is hopeful that will make the businesses easier for investors to value, he added. Prosus’ portfolio excluding Tencent had a 20% internal rate of return during the six months that ended Sept. 30.

The size of Naspers on the Johannesburg Stock Exchange has become a constraint for local index-tracking funds, which can’t hold too much of a single stock. While many of the companies listed on the exchange have shrunk during the pandemic, Naspers shares have been boosted by Tencent, and the company now comprises more than 25% of the benchmark JSE SWIX Index. That means when Naspers goes up, many South African investors need to sell their stock, which can widen the discount of Naspers relative to Tencent.

“It is creating concentration issues for many fund managers,” said Kevin Mattison, managing director at Avior Capital Markets in Cape Town, South Africa. To help narrow the gap, Naspers could show positive contributions from other businesses in their earnings, spin off one or two of those assets or pay special dividends, he said.

Analysts have attributed the persistent valuation gulf to a few issues. One is that holding companies consistently trade at a discount to their underlying businesses.

Second is a dividend-withholding tax that Naspers would need to pay should it sell its stake in Tencent and distribute the proceeds to investors—a scenario that Naspers executives have said is unlikely.

Another reason for the difference is that investors can also gain direct access to Tencent shares through Tencent’s Hong Kong listing.

Naspers took action to address the valuation gap in 2019, when it created Prosus to hold its international assets—the stake in Tencent, along with investments in tech companies such as Russian social-media operator Mail.ru Group Ltd. , German food-delivery business Delivery Hero and U.S. online marketplace Letgo.

The move initially narrowed the gap but not for as long as executives had hoped.

“What we didn’t know is that Covid would happen, and we’d be back in this position in six months,” Mr. Sgourdos said.

In October, Prosus said it planned to buy back up to $5 billion of its own shares and those of its parent Naspers, after losing out on two high-profile acquisitions.

Though a buyback doesn’t solve the structural issue of the discount, it unlocks value by purchasing stock at a discounted price relative to the actual value of the Tencent stake, Naspers executives say. Earlier this month, Mr. van Dijk said the company could do more share buybacks in the future.

“They’re in a difficult quandary. They’ve got a complex structure they’re trying to solve,” said Neelash Hansjee, portfolio manager at Old Mutual Equities in Cape Town. “Dealing with it is taking longer than people anticipated.”

FTY : Saudi and Iranian officials hold talks to patch up relations

Saudi and Iranian officials hold talks to patch up relations
Senior officials from the regional rivals met earlier this month in Baghdad

Senior Saudi and Iranian officials have been holding direct talks in a bid to repair relations between the two regional rivals, five years after they cut off diplomatic ties, according to three officials briefed on the discussions.

The negotiations, which took place in Baghdad this month, are thought to be the first significant political discussions between the two nations since 2016 and come as Joe Biden seeks to revive the nuclear deal Iran signed with world powers in 2015 and de-escalate regional tension.

Saudi Arabia is keen to end its war in Yemen against Iranian-aligned Houthi rebels, who have stepped up their attacks against Saudi cities and oil infrastructure. The Houthis have launched dozens of missiles and explosive-laden drones into the kingdom this year.

Crown Prince Mohammed bin Salman has also taken steps that appear to lean towards gaining favour with the Biden administration, which has pledged to reassess relations with the kingdom and end the six-year war in Yemen.

The first round of Saudi-Iranian talks took place in Baghdad on April 9. They included discussions about the Houthi attacks and were positive, one of the officials said.

The official said the Saudi delegation was led by Khalid bin Ali al-Humaidan, the intelligence chief, adding that another round of talks had been scheduled for next week.

The process is being facilitated by Iraqi prime minister Mustafa al-Kadhimi, who held talks with Prince Mohammed in Riyadh last month.

“It’s moving faster because the US talks [related to the nuclear deal] are moving faster and [because of] the Houthi attacks,” the official said.

A senior Saudi official denied that any talks with Iran had taken place. The Iraqi and Iranian governments did not comment.

But a senior Iraqi official and a foreign diplomat confirmed the talks. The Iraqi official added that Baghdad has also facilitated “communication channels” between Iran and Egypt, and Iran and Jordan.

“The prime minister is very keen to personally play a role in turning Iraq into a bridge between these antagonistic powers in the region,” the official said.

“It’s in Iraq’s interest that it can play this role. The more confrontation you have in the region, the more they play out here . . . and these talks have been taking place.”

Relations between Saudi Arabia, which considers itself the leader of the Sunni Muslim world, and Iran, the region’s top Shia power, hit a low in January 2016 after the kingdom’s embassy in Tehran was ransacked.

The embassy was set ablaze after Saudi Arabia executed Sheikh Nimr al-Nimr, a senior Shia cleric. The rivals, which accuse each other of destabilising the region, then severed diplomatic relations.

Tension escalated further in 2018, after former president Donald Trump unilaterally withdrew the US from the Iran nuclear deal and imposed crippling sanctions on the Islamic republic.

Prince Mohammed was a staunch backer of Trump’s maximum pressure campaign against Tehran. But Saudi Arabia’s vulnerability to attack was exposed after a missile and drone assault in September 2019 temporarily knocked out half of the kingdom’s crude oil output.

The Houthis claimed responsibility for the attack, but US and Saudi officials blamed Iran.

Washington and Riyadh accuse Iran of smuggling missiles and drones to the Houthis, a battle hardened Islamist movement that has controlled Sana’a, the Yemeni capital, and northern Yemen since early 2015.

Iraq, which is home to powerful Iranian-backed militant movements, was also caught up in the regional tension, notably when Trump ordered the assassination of Qassem Soleimani, the commander of the Quds expeditionary force of Iran’s Revolutionary Guard, in Baghdad in January 2020.

That pushed the US and the Islamic republic to the brink of war, with Iraq, which hosts about 2,500 American troops, a likely battlefield as Baghdad was squeezed between Washington and Tehran.

Iran has forged strong security, political and trade ties with its neighbour since the US-led invasion toppled Saddam Hussein in 2003.

The Saudi-Iranian talks are a sign that the election of Biden, who has said he will rejoin the 2015 nuclear deal and lift many of the sanctions on Iran if Tehran falls back into compliance with the accord, has begun to shift regional dynamics.

The nuclear agreement’s remaining signatories — Iran, the EU, Germany, France, the UK, Russia and China — have been holding talks in Vienna to pave the way for the US to rejoin.

In January, Riyadh ended a more-than-three-year regional embargo on Qatar, imposed in part because of Doha’s links to Tehran. The move was widely viewed as part of Prince Mohammed’s efforts to gain credibility with the Biden administration.

Riyadh, which opposed the atomic accord, has said it will not hinder the nuclear talks. But it wants regional powers to be involved in any discussions related to any new agreement and insists Iran’s missile programme and regional activities should be addressed.

“Kadhimi has good links into the Iranian system. The new thing is Kadhimi playing this role with Saudi Arabia,” said another official briefed on the talks. “It’s a good thing Iraq is playing this role, but it’s very early days.”

Iranian President Hassan Rouhani, whose final term ends in August, has previously indicated that he has wanted to cool hostilities with Arab rivals.

FT : EU split over delay to decision on classing gas as green investment

EU split over delay to decision on classing gas as green investment
Brussels impasse over whether fuel should be classified as partially sustainable

The European Commission is split over whether to postpone a decision on classifying gas generated from fossil fuels as green energy under its landmark classification system for investors.

Brussels had planned to publish an updated draft of a taxonomy for sustainable finance later this week. The document is designed to guide those who want to direct their money into environmentally friendly investments, and help stamp out the misreporting of companies’ environmental impact, known as greenwashing. 

The commission was forced to revamp its initial proposals earlier this year after the text was criticised by member states which want gas to be explicitly recognised as a low-emission technology that can help the EU meet its goal of becoming a net-zero polluter by 2050. 

Now the publication of the draft rules could be postponed again as the commission seeks to resolve the impasse. According to a draft of the text seen by the Financial Times, the commission proposed to delay the decision in order to carry out a separate assessment of how gas and nuclear “contribute to decarbonisation” to allow for a more “transparent” debate about the technologies.

But officials told the FT that some commissioners were pushing for gas to be awarded the green label now, rather than delaying the decision until later this year. 

“There are a sizeable number of voices in the commission who want gas to be included in the taxonomy,” said one official. A final decision on whether to approve the current text or delay it again for further redrafting is likely to be made on Monday.

The EU’s taxonomy is being closely watched by investors as the first big attempt by a leading regulatory body to create a labelling scheme that will help guide billions of euros of investment into green financial products.

But the process has proved divisive, as several EU governments have demanded recognition for lower-emissions energy sources such as gas. 

Coal-reliant countries such as Poland, Hungary, Romania and others that are banking on gas to help reduce their emissions do not want the labelling system to discriminate against them. France and the Czech Republic, meanwhile, are also pushing for the recognition of nuclear as a “transitional” technology in the taxonomy.

A leaked legal text seen by the FT earlier this month paved the way for gas to be considered green in some limited circumstances. That has since been removed along with other sensitive topics such as how best to classify the agricultural sector, according to the latest draft the FT has seen.

EU governments and the European Parliament have the power to block the draft if they can muster a qualified majority of countries and MEPs against it. 

Environmental groups have hailed the exercise, and urged Brussels to stick to science-based criteria in defining the thresholds for sustainable economic activity.

Luca Bonaccorsi from the Transport & Environment NGO said delaying decisions on gas and nuclear risked allowing pro-nuclear countries like France and the Czech Republic to join up with pro-gas member states “to forge an alliance that will obtain the greening and inclusion of both energy sources”.

“Should they ally, it will be impossible to resist the greenwashing of these two unsustainable energy sources,” said Bonaccorsi. 

The delays in agreeing the taxonomy have forced Brussels to abandon an attempt to use it as the basis for EU green bonds that will be issued as part of the bloc’s €800bn recovery and resilience fund. About €250bn of debt will be issued in the form of sustainable bonds over the next few years, which will make the commission one of the world’s biggest issuers of sustainable debt.

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: Disney’s theme parks, television networks, and fast-growing streaming business will help the company thrive in a post-pandemic world
* Cover Story: Positive on DIS: Under chief Bob Chapek, who took the reins shortly before the pandemic started, the company faced the severest of financial stress tests and come out ahead, generating $3.6B in free cash flow during its fiscal year ending last September; Disney will do well if the pandemic lingers, but also stands to gain if commerce quickly bounces back—it expects streaming to continue showing gains in revenue and operating profits, while parks gain momentum and TV holds steady or slowly declines.

* Tech Trader: Positive on AMZN: Jefferies analyst Brent Thill believes the company can reach $5,700 a share over the next three years, a potential 70 percent gain that would boost its valuation to nearly $3T—though he’s nervous that the next few quarters will prove challenging for the e-commerce giant.

* Trader: The drop in the 10-year yield could be a sign that the bond market is finally starting to take Federal Reserve chairman Jerome Powell at his word: The Fed won’t raise rates even if the data suggests it should; “For investors with hardy constitutions, the recent plunge in SPAC prices has opened opportunities in a fast-growing sector: electric-vehicle charging companies.”

* Interview: Matthew McLennan oversees the $89B global value team at First Eagle Investment Management, including the First Eagle Overseas and First Eagle Global funds, warns of his concern over extreme economic uncertainty, speculative excess, and heady expectations for assets like tech stocks and Bitcoin.

* Profile: Gene Tannuzzo, Jason Callan, and Alex Christensen, co-managers of the $2.5B Columbia Total Return Bond fund, invest in government bonds, corporate bonds, and securitized debt, such as mortgage-backed and asset-backed securities—and while there is nuance within these groups, each provides different opportunities at different points in the economic cycle, a dynamic the fund tries to capture while building the portfolio bond by bond.

* Features: 1) Positive on PETQ: Pet-supply sales are growing by seven percent annually—they reached $11B in 2020—and retail sales are rising faster as volumes shift from vet offices to stores and online channels; PetIQ, which manufactures and distributes pet-health products and operates veterinary clinics around the country, “is flourishing in this climate, and its stock looks like one of the few bargains in the sector”; 2) An already active proxy season may turn out to be one of the most interesting in years—an array of shareholder proposals on workplace diversity and working conditions are in play, some inspired by the pandemic and the protests following George Floyd’s death, and third-party audits will be asking how companies are promoting racial equity; 3) Barron’s annual list of the Top 100 Financial Advisors and Teams; “Wealth management is organizing itself aggressively around advisory teams, a development that has myriad implications for the services that clients will receive in the coming years,” and they are increasingly a growth engine for financial firms; 4) “The disruption in the rollout of JNJ’s Covid-19 vaccine won’t derail the US vaccination campaign, nor put off an American economic recovery, at least in the short term—but it will heighten worries over the vaccine technology that is intended to inoculate much of the world outside of the US; 5) Positive on ORLY: The largest of the three major US auto-part retailers stands to win as lockdowns end and people start to drive more than they have during the past year, both for work and leisure—the company has used the downtime to improve its business and gain market share, while expanding its bricks-and-mortar footprint; 6) Positive on COIN: The cryptocurrency exchange went public at an ideal moment—the value of the cryptocurrency market has doubled in just the past two months, Bitcoin is booming, institutional investors are scrambling to get in, and Coinbase has competitive advantages that have enabled it to increase market share despite fierce competition.

* European Trader: Positive on Inditex: The Spanish-based owner of fashion retailer Zara “has developed an innovative way to manage its inventory, a move that has been overlooked by the market—the system is driving down costs and increasing profit margins, and that isn’t yet factored into the share price.”

* Emerging Markets: China’s crackdown on its 34 of its largest Internet companies—Beijing gave them a month to “correct anticompetitive practices” or face even more severe punishment—will lead to a slower rebound for the sector.

* Commodities: Demand for lumber, steel, and other commodities will get a boost from President Biden’s proposed infrastructure package, but prices for some building materials have already booked phenomenal gains in the first three months of the year, potentially limiting an extended rally.

* Streetwise: Lumber demand is up with construction booming, and sawmills are stretched to capacity; Mark Wilde of BMO Capital Markets says there was talk of a supercycle when lumber prices spiked in 2018, but the industry instead fell into a funk—this time around, he thinks companies should use their cash windfalls to reduce debt, build rainy-day funds, and pay dividends.

FT : Antoine Frérot, the victor in Veolia’s bitter battle for Suez

Antoine Frérot, the victor in Veolia’s bitter battle for Suez
CEO says he was ‘rational like Machiavelli’ in takeover fight with arch-rival that divided Paris

Only days after Veolia finally sealed a deal to buy arch-rival Suez, Antoine Frérot feels relaxed enough to describe himself in Machiavellian terms. 

“Machiavelli said that he who wants the end, accepts the means . . . I am rational like Machiavelli,” the Veolia boss told the Financial Times. 

But wry comments aside, Frérot dismisses suggestions — both from around Suez and more broadly in Paris — that he was too aggressive in the fight for his company’s water and waste competitor.

“There wasn’t a question of morality in what happened. There were just two incompatible objectives,” he said. “Faced with deviousness . . . I am straightforward. I hit back with what I call firmness, not violence.”

The battle ended in a very Parisian way: in the top-end Bristol hotel after a three-star chef had provided room service.

Across the table from Frérot was Philippe Varin, Suez chair and elder statesman. Alongside them was a board member from each side, a court-appointed observer and Gérard Mestrallet, the former Suez boss who had been called in to mediate. 

The French state, which had already tried and failed to end the fight, was not present. According to people familiar with the matter, Frérot insisted Suez chief executive Bertrand Camus not be in the room. 

The two CEOs had barely spoken since October, when Veolia bought 29.9 per cent of Suez from French energy group Engie and pledged to snap up the rest. Suez fought back, with Camus fierce in his fight to stay independent. 

Despite promises to convince the board of Suez, a hostile bid was finally launched in February and Veolia piled pressure on its target. Board members were threatened with criminal lawsuits. And a deal was only announced this week as pressure mounted on both sides.

Last Sunday, after long negotiations, Suez agreed to be bought by Veolia, which raised its price from €18 to €20.50 a share. Veolia said it would sell back a chunk of Suez, including assets that would have been sold to get past competition regulators, to create a smaller competitor. Legal threats are to be stood down. Shareholders on both sides are happy.

The price, Frérot told the FT, was “very close to the ceiling” of what they were prepared to pay. He also stressed that the governance of the new Suez was critical because if it “falls apart in a few years, I will be held responsible”, and that he had insisted on management pay limits at the new Suez and lockups before assets could be sold. 

Varin and Frérot decided to split 80 per cent of the capital of the new Suez between private equity groups allied to both sides. Ardian, which was aligned with Suez and wants control of the new group, is not happy, say people briefed on the matter. 

For 62-year-old Frérot the deal, which has been in the back of his mind for years, is a chance to create the “champion of the ecological transition” by combining the world’s two largest water and waste groups. 

Suez and Veolia, each with long histories, had come close before. In 2012 Suez tried to snap up Veolia three years into Frérot’s tenure. 

Coming out of the financial crisis, Frérot had to reduce debt and change strategy, earning the enmity of Henri Proglio, who had appointed him. The lessons he learnt facing down boardroom challenges have been put to use.

“When it comes to big changes . . . you have 20 per cent of people who agree and want to go for it, 20 per cent of people who are against it and want to slow you down. And there are 60 per cent waiting to see who will win,” he said. “It is therefore necessary, unfortunately, to get rid of the 20 per cent pulling the brakes and convince the 60.” 

If competition hurdles are cleared, Frérot will lead a group with €37bn in revenues from his office in a northern suburb of Paris. It is a far cry from when his father, a country doctor, “took a gamble” sending the 15-year-old Frérot to school at the famous Lycée Louis-le-Grand in Paris. 

From there he followed a well-trodden path of the French elite, through France’s École Polytechnique, an engineering college that churns out top executives.

Divorced and father to three daughters, Frérot now lives in the wealthy 3rd arrondissement but stands somewhat outside the Parisian set.

A private man, he resists sharing too much of himself in the office, not wanting his decisions to be influenced by personal factors. That means, according to one former colleague, he has depths most do not get to see. 

A student of philosophy and sociology, he re-read a biography of Claude Lévi-Strauss during his war with Suez. He smokes Craven cigarettes and collects “outsider art”. The first time he bought a painting was when he was on military service in Germany for 100 Deutschmarks.

Another former colleague said Frérot had “a long memory” and “does not forgive easily”. But he may need to show a different side to himself as he looks to integrate a bruised Suez. A man who has vocally supported a more inclusive form of capitalism must shrug off accusations he went too far. 

“Opinion on Frérot is going to stay divided,” said one banker advising Suez. “He was a good battlefield general, he told people to go out and kill, and they did it. But is violence the best way to get a good outcome? Integrating these companies is not going to be easy.”

But Frérot backs himself to bring the groups together and has one eye on his legacy. More so, his bet is that “if you don’t change your goal, people end up believing you.”

Barrons : 4 Electric-Vehicle Charging Stocks at Fire-Sale Prices

4 Electric-Vehicle Charging Stocks at Fire-Sale Prices

For investors with hardy constitutions, the recent plunge in SPAC prices has opened opportunities in a fast-growing sector: electric-vehicle charging companies.

Special purpose acquisition companies, and companies recently merged with SPACs, are getting crushed. Those losses are shaking investor confidence in many of the hot new technology start-ups—such as EV charging companies—which chose to go public by merging with a SPAC.

EV charging stocks are intriguing for three reasons. First, the stocks of the four main companies are down more than 43% from their 52-week highs, on average. Second, the business models are sound. And third, the government is coming to help.

President Joe Biden’s infrastructure plan contains roughly $300 billion for EVs in the form of purchase incentives, clean-energy infrastructure, and clean-energy manufacturing. Of course, the plan has to get passed, and the dollars have to get paid out.

Fortunately, the EV-charging sector has more going for it than just the American Jobs Act. The business model is, perhaps, the strongest reason to be bullish on the stocks. “Looking back to the days of Henry Ford, the gas stations are the ones that consistently made money, while hundreds of auto start-ups went out of business,” says Roth Capital analyst Craig Irwin.

There are more EVs coming. By 2030, if the car business hits projections, there will be roughly 15 million or more battery-powered EVs on U.S. roads, up from roughly 1.5 million today. Public EV chargers will get busier, and station economics will get better, as the utilization of EV “pumps” goes up.

The four main EV charging stocks come with slightly different investment angles.

ChargePoint Holdings (CHPT), the most valuable EV charging company by market cap, has already completed its SPAC merger and trades under its own name. Its stock is valued at about $6.8 billion, based on 305 million fully diluted shares outstanding and a recent price of $22.27.

The company has roughly a 70% market share of networked Level 2 charging in North America. Level 2 refers to a 240-volt plug, similar to the kind that is needed to run a large appliance at home. Level 3, or direct-current, charging is the fastest option.

ChargePoint doesn’t own the charging stations, but it provides the hardware and software. The company projects about $135 million in sales for 2021, growing to about $1.4 billion by 2025. It already has four ratings from Wall Street analysts, according to Bloomberg—all Buys. The average analyst price target is about $45.

Although ChargePoint sells Level 3 chargers, another company, EVgo, is aggressively building out its own network of fast-charging stations, which it will also operate. It boasts the largest network of Level 3 stations, with more than 800.

EVgo has an impressive list of partners helping build out its network, including Lyft (LYFT), General Motors (GM), and Tesla (TSLA). EVgo’s stock is worth $2.9 billion based on 363 million fully diluted shares outstanding when its merger with the Climate Change Crisis Real Impact SPAC (CLII) is wrapped up. EVgo projects it will generate $20 million in 2021 sales and about $600 million in sales by 2025.

No analysts cover EVgo or Climate Change yet. That’s not uncommon for companies that haven’t completed their SPAC mergers. That’s also the case for the third and fourth EV charging stocks.

Volta is merging with Tortoise Acquisition Corp II (SNPR). It envisions building charging stations on prime retail estate with partners, then generating sales from ads and direct payments from the retailers that benefit from EV drivers stopping and shopping.

Volta has about 1,500 charging ports and plans to generate about $47 million in sales in 2021. The company projects that will grow to about $800 million by 2025. The stock is valued at about $2 billion, based on 203 million fully diluted shares when the SPAC merger wraps up.

The final of the four EV charging options is EVbox, the largest charging-solutions company in Europe. Like ChargePoint, it produces equipment, and it has shipped 190,000 charging ports. It projects about $84 million in 2021 sales and about $450 million in 2023 sales. The company’s projections don’t go out to 2025. EVbox is merging with TPG Pace Beneficial Finance (TPGY). Its shares are valued at about $2 billion, based on 139 million fully diluted shares outstanding when the merger wraps up.

Of the four stocks, Barron’s likes EVbox best. It’s the least expensive of the group, and EVs are more popular in Europe than they are in the U.S. But cheapness isn’t always the best reason to buy a stock, and all four companies have potential.

The total market value of the EV charging stocks amounts to roughly $15 billion, a tiny fraction of the near-trillion-dollar market valuation of all the EV maker stocks combined. That seems like an anomaly.

If the auto makers deliver all the EVs projected—a necessary feat to justify all EV-related valuations—then there should be plenty of business, and profits, for the EV charging companies.