Le Monde : Total poursuit l’Algérie en justice


Total poursuit l’Algérie en justice
Le siège de Total à la Défense | FRED DUFOUR / AFP
C’est une décision politiquement très sensible. Souvent considéré comme un bras armé de la diplomatie française, Total vient, en toute discrétion, d’engager un contentieux contre l’Algérie et sa compagnie pétrolière d’Etat, la Sonatrach. Le groupe français conteste la façon dont, au milieu des années 2000, l’Algérie a rétroactivement modifié à son avantage le partage des profits tirés du pétrole et du gaz.

Après avoir cherché en vain des solutions amiables, Total et son partenaire espagnol Repsol ont entamé en mai une procédure d’arbitrage, indiquent des sources concordantes. Ils ont déposé ensemble une requête à Genève auprès de la Cour internationale d’arbitrage, qui dépend de la Chambre de commerce internationale. Patrick Pouyanné, le PDG de Total, espère obtenir un dédommagement de quelques centaines de millions d’euros.

Cette action en justice – même s’il s’agit d’une justice privée – risque de ne pas améliorer les relations entre la France et l’Algérie, déjà tendues par les « Panama papers ». Début avril, Le Monde a révélé que des proches du chef de l’Etat, Abdelaziz Bouteflika, dont le ministre de l’industrie Abdeslam Bouchouareb, avaient disposé d’actifs cachés au Panama. Dans la foulée, l’ambassadeur de France a été convoqué par le ministre algérien des affaires étrangères.

Entre l’Algérie et la France, l’histoire des relations pétrolières a souvent été heurtée. Ce sont des géologues et ingénieurs français, notamment ceux de la Compagnie française des pétroles, ancêtre de Total, qui sillonnent les premiers le Sahara et découvrent les champs algériens au milieu des années 1950. Quinze ans plus tard, en 1971, l’Algérie devenue indépendante reprend le contrôle de ses richesses, et nationalise les actifs français au bénéfice de sa nouvelle compagnie nationale, la Sonatrach.

A la fin des années 1990, le pays souhaite cependant accélérer l’exploration et l’exploitation de ses gisements, et fait appel aux investissements étrangers. Les grandes compagnies occidentales affluent, de l’américain Anadarko au britannique BP, en passant par l’italien ENI, le norvégien Statoil ou encore Total.

DURCISSEMENT DE LA FISCALITÉ
Mais au milieu des années 2000, Alger change de nouveau de cap. Voyant que les cours de l’or noir ne cessent de grimper, l’Etat abandonne ses promesses de libéralisation du secteur. Il durcit au contraire la fiscalité pétrolière pour capter une plus grande part de la rente. Une loi instaure, en 2006, ainsi une « taxe sur les profits exceptionnels » réalisés par les compagnies étrangères. Dès que le prix du baril dépasse 30 dollars, ce qui est largement le cas à l’époque, celles-ci doivent acquitter un impôt supplémentaire variant entre 5 % et… 50 % de la valeur de la production.

Cette mesure contre les « superprofits » fait le désespoir d’Anadarko, de BP et des autres. Les compagnies réagissent de deux façons. Compte tenu de cette taxe jugée dissuasive et de la hausse simultanée de leurs coûts de production, beaucoup d’entre elles stoppent leurs investissements en Algérie. Au point que les trois appels d’offres lancés par le gouvernement pour explorer le domaine minier en 2008, 2009 et 2011 se soldent par des échecs.

Plusieurs entreprises attaquent en même temps l’Algérie devant des tribunaux arbitraux. Qu’un Etat modifie la fiscalité pétrolière, cela relève de sa souveraineté. En revanche, les compagnies refusent que ce changement se traduise par une modification unilatérale et rétroactive de leurs contrats. Selon elles, les documents signés avec la Sonatrach devaient leur assurer une stabilité fiscale. Le pétrolier national doit donc leur rembourser la taxe qu’elles ont acquittée.

Cet argument porte. Pour éviter d’être condamnée, l’Algérie consent en 2012 à payer plus de 4 milliards de dollars (3,6 milliards d’euros) de compensation, en particulier à Anadarko, le principal opérateur, et au danois Maersk.

« POUR TOTAL, L’ALGÉRIE N’EST PLUS UN PARTENAIRE MAJEUR »
Total, pour sa part, a beaucoup hésité sur la conduite à tenir. Avant de mourir dans un accident en octobre 2014, le PDG Christophe de Margerie était en passe de lancer une procédure contre l’Algérie. Dans un premier temps, son successeur a tout stoppé, d’autant que les pouvoirs publics souhaitaient plutôt apaiser les relations avec le régime de M. Bouteflika.

Mais les tractations tentées avec la Sonatrach et Alger n’ayant pas abouti, Patrick Pouyanné s’est résolu au printemps à recourir à l’arbitrage. Malgré le caractère tardif de cette action, les chances de récupérer conjointement avec Repsol quelques centaines de millions d’euros, plus de 500 millions peut-être, ont été jugées supérieures aux risques. Le gouvernement français, consulté, n’y a pas mis son veto.

En faisant ainsi pression, les dirigeants espèrent pousser les Algériens à négocier un accord. « La porte reste ouverte », note-t-on dans le camp français. Mais si aucune solution n’est trouvée, ce ne sera pas un drame non plus. « Pour Total, l’Algérie n’est plus un partenaire majeur », explique une personne au fait du dossier. Sur place, le groupe n’emploie qu’environ 200 personnes. Toute sa production provient d’un gisement de gaz, celui de Tin Fouyé Tabankort, dont Total détient 35 % aux côtés de la Sonatrach et de Repsol. L’Algérie, dont la production pétrolière a décliné de 20 % en dix ans, représente seulement 1 % des volumes d’hydrocarbures de Total.

Le groupe participe néanmoins à un autre projet, celui d’exploitation du gisement de gaz de Timimoun, à 800 kilomètres au sud-ouest d’Alger. Une usine est en cours de construction. Total détient 38 % du projet, aux côtés de l’espagnol Cepsa et surtout de l’incontournable Sonatrach, qui contrôle 51 % des parts. « Total est un investisseur important en Algérie et entend y poursuivre son développement », indique la société pour tout commentaire sur ce dossier hautement inflammable.

(ZH) Hedge Funds No Longer Have Any Idea How To Trade This Market


(ZH) Hedge Funds No Longer Have Any Idea How To Trade This Market

Hedge Funds No Longer Have Any Idea everal days ago we posted an update to our favorite trading strategy since 2013: namely betting on the stupidity of the "smart money" and going long the most underowned and hated names, while shorting the most owned ones (recall from September 2013: ""Presenting The Best Trading Strategy Over The Past Year: Why Buying The Most Hated Names Continues To Generate "Alpha""). As Bank of America confirmed three years later this past Wednesday, this indeed remains the best alpha-generating strategy. Here is what BofA's Savita Subramanian said:

As flows from active to passive funds have accelerated, one strategy that has worked unusually well for the last several years is a simple positioning trade of selling the 10 most overweight stocks and buying the 10 most underweight stocks by active managers. This single trade has yielded over 16ppt of alpha year-to-date. And implied derisking/ outflows on Brexit alone have been fierce, with the same strategy generating 5.2ppt of alpha just since last Thursday’s close. Even if Brexit’s impact on funds is limited from here, we believe that crowded stocks will likely continue to underperform neglected stocks: a whopping two-thirds of US large cap AUM still resides in active funds - there is likely a lot more to go in the rotation from active to passive.
Here is the proof: "the Top 10 most overbought stocks have trailed the S&P for each of the past three years, while the Top 10 "most neglected" stocks outperformed the S&P on average by 11.6%."
However, while we would be delighted to take this latest opportunity to gloat, there is a more troubling undertone to this data. Indeed, while we sarcastically pointed out back in 2013 that with the Fed (and now every other central bank) as the market's Chief Risk Officer, there is no longer a need for anyone to do fundamental analysis, this has not only come true but the outcome is now is far worse. Because it confirms what we have said all along: not only is there no market left aside from what Central Banks decide will happen to "risk assets" on any given day, but the smart money - both hedge and mutual funds - have now completely lost the plot.
For the evidence look no further than the charts below: the first two charts show the relative performance of Goldman's Hedge Fund VIP basket, the same stocks that comprise the most popular holdings among US hedge funds. Incidentally, this is also the same holdings which back in February we reported that Goldman was trying to make into an ETF in an attempt to offload the most concentrated hedge fund holdings into muppet hands (it failed) and which we added 5 months ago that the "the guaranteed way to make money with this ETF would be to short it"  We were right.
The second chart shows that, as we said in 2013, the best offsetting strategy remains to go long the most hated names. It has been pretty much straight up ever since.
Only it's not just hedge funds: despite what they may profess on twitter, the reality is that nobody has any idea how to trade this so-called market any more. Enter mutual funds, whose performance has been just as deplorable if not even worse than that of hedge funds.

 

So does any strategy aside from doing the opposite of what everyone else is doing work any more? The answer - and as the charts below prove - is no.
Putting it all together, here is a quote from Bank of America: "the anticipation of central bank support – the key to reversing every major stress event since 2013 – has been strong in recent days. Given the critical role of central banks in supporting markets in recent years, a loss of credibility remains the biggest visible tail risk, in our view."
For anyone still left in this s-called market, we urge you to pray that "key man" Janet will be safe and sound for years to come, or else.

WSJ : Germany Could Consider Offering Passports to Young British Nationals Follo

Germany Could Consider Offering Passports to Young British Nationals Following Brexit Vote

Vice-Chancellor Sigmar Gabriel plans to raise issue of double-citizenship during next year’s elections

BERLIN—Germany should offer passports to young British citizens following the U.K.’s vote to leave the European Union, Vice-Chancellor Sigmar Gabriel said Saturday.

Mr. Gabriel said he would raise the issue of dual-citizenship, which is generally forbidden in Germany for non-EU citizens, in the country’s national elections next year.

“Let’s offer it to the young Britons living in Germany, Italy or France so that they can remain EU citizens,” Mr. Gabriel said at a meeting in Berlin of his center-left Social Democratic Party.

The party took a hard-line stance in the wake of the U.K.’s vote leave the bloc, saying the country should complete the divorce process as quickly as possible to avoid wasting the bandwidth of the remaining EU members.

But on Saturday Mr. Gabriel said young Britons shouldn’t be punished for their country’s vote to exit the EU. “Better said, it was older people in England and Wales who decided” to leave, Mr. Gabriel said.


“It’s a good sign that the youth of Great Britain are more clever than their bizarre political elite,” Mr. Gabriel continued. “For that reason we can’t raise our drawbridge on them. We have to think now about what we can offer Great Britain’s younger generation.”

The campaign to Leave the EU beat Remain 51.9% to 48.1% in the recent referendum, but more young voters sided with Remain than Leave.

The U.K. still has to negotiate the terms of its exit and among the many major unknowns is what happens to the many British citizens living elsewhere in Europe.

Barron's : Safran Has 20% Upside as New Jet Engine Roars


Safran Has 20% Upside as New Jet Engine Roars
The French aerospace concern could see cash flow surge after launching the LEAP engine.

The airline industry’s long-term outlook is bright, as a burgeoning global middle class embraces air travel.
That bodes well for Safran (ticker: (SAF.France), the French aerospace and defense contractor, which has made a big bet on a new line of fuel-efficient, low-emission engines through CFM International, its 50/50 joint venture with General Electric (GE).

The so-called LEAP engine (the acronym stands for leading-edge aviation propulsion) is designed to power the latest narrow-body jets, including Airbus Group’s (AIR.France) A320neo and Boeing’s (BA) 737 MAX. As costs tied to the engine’s development decline, Safran’s free cash flow could rise sharply, propelling the company’s earnings and its shares.
Safran’s stock, which closed on Thursday at 60.92 euros ($67.63), could face some near-term head winds if Britain’s decision to leave the European Union causes economic growth to dip, reducing demand for air travel. But longer-term gains could exceed 20%. The Paris-listed shares more than tripled in the five years ended on Oct. 7, 2015, peaking at €72.45. They have since fallen on worries about the global economy and a shift in production from a popular family of engines to the new LEAP lineup.
Safran is trading for 15.2 times next year’s estimated earnings of €4.00 a share, a modest premium to the Stoxx Europe 600 index. The company also has American depositary receipts (SAFRY), which closed on Thursday at $17.02. Four ADRs are equivalent to one ordinary share.
Safran was created in 2005 through the merger of Snecma, a maker of jet engines and rocket motors, and Sagem, a specialist in communications electronics. The French government owns 15.4% of the company, down from 36% a decade ago.
Aerospace propulsion contributes 54% of revenue, which could total €18.06 billion this year. Aircraft equipment—including landing gear, wheels, and carbon brakes—generates 28%, and defense and security products, such as biometric-identification solutions, account for the remainder. Analysts put net income at €1.58 billion this year, rising to €1.63 billion in 2017, on estimated revenue of €18.7 billion.


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In addition to supplying commercial aircraft engines, Safran makes engines for the Mirage 2000 and Rafale jet fighters from Dassault Aviation (AM.France), and engines and thrusters for Arianespace launch systems. Maintenance, repair, and overhaul services account for more than half of revenue in the engine business; the company sells engines at about cost, but reaps significant profit from aftermarket services. Revenue from services, which totaled €5 billion in 2015, is forecast to grow by high-single digits for the rest of this year, and the outlook thereafter is encouraging.
Almost 30,000 of Safran’s CFM56 engines have been delivered to customers. According to Berenberg, about 5,000 are due for a first major overhaul in the next three years, and another 4,000 are due for a second. Those figures translate into annual service-volume growth of about 7%. Profit margins are growing, too, due to more hourly based service agreements rather than contracts that charge for spare parts, repairs, and labor costs.
By 2018, Safran could achieve an operating profit margin above 15%, compared with last year’s 14%, due to the growth of aftermarket services. Analysts are also optimistic about the LEAP launch; the first engines were delivered to Airbus in April. CFM has received orders and commitments from airlines for 10,534 LEAP engines, worth more than $140 billion. Combined with outstanding orders for the CFM56, CFM effectively has locked in about eight years of production.
SAFRAN HAS INVESTED heavily in recent years in new projects, including LEAP and the Silvercrest engine for Dassault’s Falcon 5X business jet. Capital expenditures remain at peak levels this year, and analysts at Berenberg estimate a €1 billion reduction of capex, research and development, and working-capital outflows from 2016 to 2020.
Safran is expected to generate €1.04 billion of free cash flow in 2017, roughly flat with this year’s level. But free cash flow could reach €2.4 billion a year by 2020, according to JPMorgan Cazenove.

Ramped-up cash generation “is what is going to drive the stock,” says William Booth, a portfolio manager and senior analyst at New York–based Epoch Investment Partners, which has owned Safran shares since 2012. He expects the stock to trade up to €72 in 12 months, equal to about 18 times estimated 2017 earnings. In the past five years, Safran has traded at a forward price/earnings ratio of as much as 20.
Andy Pauly, an analyst at Manning & Napier, also is attracted by the potential growth in free cash flow. M&N, which owns Safran shares, puts the company’s fair value at €75 a share.
Safran’s balance sheet is in good shape, with net debt of €783 million at the end of last year, down from €1.5 billion a year earlier. The company could swing to a net cash position by 2018, according to analysts’ projections. The shares yield 2.3%. With cash flow about to rise sharply, this could be a good entry point for investors.