>>> SHELL/BG - Analyst conclusions >





Our analysts thoughts on the deal.. Ultimately the deal has good optionality for Shell

 

Positives

Raises their production growth capability

Drives more thoughts about capital efficiency – interesting to me that from 2017 onwards They will consider buying back stock to offset the share issuance

Commitment to dividend 2015-16 and mix/match with buyback afterwards

Got the balance sheet to do it

Double the size of anyone else in LNG now – preferring to expand here and in conventional rather than double up on unconventional

Name checked the Brazilian assets at length

 

Problems/issues? –

Of course will look silly if oil price falls etc.  Talked about stress testing the deal and believe buying at an attractive SOTP discount

Headline synergy levels not a huge % of acquisition price

Risk of a counterbid? If XOM are interested in BG then this has to be the time

Helger Lund newish BG CEO on the call – surely he is moving on with a big pay-off

 

Net net –

Shell shareholder – the deal washes through fine and the closer to that 2000p support level where the shares get  more interesting 

 

BG shareholder – hold on, Shell shares getting nearer big support for equity element and you never know re a counterbid

 

Broader industry – big assets versus market cap the key.  Tullow?  Apache, Anadarko in the US?

 

FT : ExxonMobil keen to join oil M&A party

ExxonMobil keen to join oil M&A party


US major has motive and firepower to gatecrash Shell’s bid for BG or swoop on other explorers
©APS
peaking to analysts in New York last month, Rex Tillerson, chief executive of ExxonMobil, stressed how the company’s great financial strength gave it options that were not available to most of its competitors.
“We maintain flexibility so if something really interesting is in front of you, you don’t have to pass because you didn’t have the financial capacity to do it,” he said.

Royal Dutch Shell’s agreed £47bn deal to buy BG Group might count as the sort of “really interesting” prospect he had in mind.
A move by Exxon to break up the deal by outbidding Shell for BG is not impossible. However, more likely might be a move to acquire another company similar to BG’s size, on the grounds that Exxon should not be the last single person at the dance looking for a partner.
Exxon has long been rumoured as a potential bidder for BG, and now has both the motive and the opportunity.
Like Shell, it is struggling to grow and will find it easier to raise production by dealmaking than by drilling. Exxon’s output was about 4.3m barrels of oil equivalent per day in 2001, and 4m boe/d last year.
BG has attractive positions in some of the industry’s most interesting long-term prospects, including oil in the deep water off Brazil, and gas off the coast of Tanzania. Both of those positions are large and complex projects to develop that would benefit from Exxon’s financial strength and technical capabilities.
Buying BG would also be a way for Exxon to build its position in exports of liquefied natural gas from the US, helping it to catch up in a race where it has been lagging behind.
BG said in February that, along with its partner the Energy Transfer group, it would be deferring until 2016 an investment decision on the proposed Lake Charles LNG export terminal. Oil-linked gas prices in Asia and Europe have slumped along with the price of crude, and BG wanted to be sure both that it could sell the LNG and that the cost of the development had been brought down as much as possible.
In spite of the delay, the companies are still pushing ahead with an application for the permits they need from the Federal Energy Regulatory Commission, which they expect to receive by the end of the year.
Exxon, which prides itself on cost-effective and punctual delivery of large and complex projects, would stand a better chance than most companies of completing the Lake Charles plant on time and on budget. Its large US gas reserves might also make the economics of LNG exports look more favourable.

If it does decide to fight for BG, Exxon certainly has the firepower. With its greater size, low debt and triple-A credit rating, it could probably muster a larger cash component in any offer than Shell’s 28 per cent of its total offer of ₤13.50 per share.
However, there are also some good arguments against Exxon attempting to butt in. For a start, hostile deals are very rare in the oil and gas industry. Exxon would have to persuade BG’s board to back its bid, which will not be easy given that Shell has a substantial head start.
Second, it would be hard to prevent an acquisition for shares diluting earnings for some time. Shell’s agreed purchase price implies a multiple of about 26 times consensus estimates of BG’s 2016 earnings, while Exxon’s shares trade at about 16 times. Paying a higher premium to see off Shell would make that problem even greater.
ExxonMobil chief Rex Tillerson laughs with Russian leader Vladimir Putin during a Rosneft deal signing in 2011©AFP
ExxonMobil chief Rex Tillerson with Russian leader Vladimir Putin during a Rosneft deal signing in 2011
Third, Exxon is not under the same pressure to do a deal as Shell. Exxon has replaced 101 per cent of its oil and gas production in its proved reserves over the past three years, excluding the effects of acquisitions and disposals, according to Martijn Rats at Morgan Stanley. For Shell, the equivalent figure is 76 per cent, meaning that it has been running down its reserves.
Finally, Exxon’s executives will be alert to the risk of overpaying during a downturn, following the deal to buy XTO Energy, a US shale company, for $41bn including debt that they agreed at the end of 2009.
Exxon insists that was a good deal that will be vindicated over time, and XTO, retained as a separate unit within the group, has reported some impressive performances in increasing its US shale oil production. Even so, Exxon’s critics argue that the collapse in the gas price in 2011-12 probably meant that the company moved too soon, and it could have secured a better deal later.
N
While BG might not be the perfect fit for Exxon, however, there are others in the category of midsized exploration and production specialists that could be tempting. Paul Sankey of Wolfe Research last month suggested Hess, Continental Resources, Devon Energy, Apache and Anadarko as possible targets.
There is a good chance that the Shell/BG deal will prompt others. When the crude price is moving fast, it is hard to bring buyers’ and sellers’ expectations into alignment, but a deal of this size provides a benchmark that other boards and investors will take into account.
Once deals start being agreed, as in the big oil merger wave at the end of the 1990s, companies tend to start making a rush to reach agreements to avoid being left behind.
Bankers have been suggesting that the oil merger and acquisition market after the crude price crash was waiting for the first big domino to fall to tip over many others. Shell and BG have just given that first domino a push.

>>> ABBV - To present new data from hepatitis C clinical development program at

To present new data from hepatitis C clinical development program at The International Liver Congress 2015 

AbbVie today announced that 29 abstracts from its ongoing hepatitis C clinical development program have been accepted for presentation during The International Liver CongressTM (ILC) 2015 in Vienna, Austria from April 22-26. Data being presented include sub-analyses of the recently approved VIEKIRAX(ombitasvir/paritaprevir/ritonavir tablets) + EXVIERA(dasabuvir tablets), Phase 3b studies, including a head-to-head comparison of AbbVie's three direct-acting antiviral treatment with telaprevir-based therapy and Phase 2/3 studies investigating AbbVie's combination treatment in genotype 1 (GT1) and genotype 4 (GT4). Additionally, data from Phase 1 studies of ABT-493 and ABT-530 will be presented. 

Preliminary results from a Phase 2b study (n=79) of ABT-493 and ABT-530 in non-cirrhotic GT1 patients receiving the RBV-free recommended regimen for 12 weeks demonstrated a sustained virologic response rate at four weeks post treatment (SVR4) of 99 percent (n=78/79). These results, announced for the first time today, included both GT1a and GT1b, treatment-nave and pegylated-interferon and RBV prior null responders. Patients across both study arms were randomized to receive ABT-493 (200mg) and either 120mg or 40mg of ABT-530. To date, the most common (>5 percent) adverse reactions were fatigue, headache, nausea, diarrhea and anxiety. Data from these Phase 2b studies of ABT-493 and ABT-530 will not be presented at ILC 2015, and will be released at future medical congresses.

(BFW) Petrobras May Get $1.7b Compensation Payment From SBM: Folha

Petrobras May Get $1.7b Compensation Payment From SBM: Folha
2015-04-08 08:11:04.10 GMT


By Katerina Petroff
(Bloomberg) -- Link

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kpetroff@bloomberg.net

>>> Saudi Arabia’s March Crude Output at Record High --> Crude -2% @ $52.89

Saudi Arabia’s March Crude Output at Record High
Oil Minister Ali al-Naimi gives no reason for the increase

Saudi Arabia raised its crude output to 10.3 million barrels a day in March, its oil minister Ali al-Naimi said, signaling an unexpected strong demand from its customers.

Mr. Naimi didn't give a reason for the increase in output, according to the official Saudi News Agency.

The Kingdom’s previous record peak was 10.2 million barrels a day in August 2013. It told the Organization of the Petroleum Exporting Countries that it produced 9.64 million barrels a day in February.

Mr. Naimi said that the kingdom’s production will continue at around 10 million barrels a day, signaling that his country is determined to ride out the price slide without making any output cut.

“In terms of petroleum, I expect that prices will improve in the near future, that the Kingdom’s production will continue at approximately 10 million barrels a day,” Mr. Naimi said in a speech at an energy event in Riyadh.

Saudi Arabia is willing to participate in restoring market stability and steering prices back up, but it can only do so with participation from major oil-producing countries inside and outside OPEC, he said.

“The burden cannot be borne by Saudi Arabia, the GCC [Gulf Cooperation Countries], or OPEC members, alone,” he said.

>>> BOJ Gov Kuroda: Reiterates view that domestic recovery is moderate; positive

BOJ Gov Kuroda: Reiterates view that domestic recovery is moderate; positive cycle remains in place and is working - post rate decision press conference 
- Reiterates view that inflation to hit the 2% target during FY15/16 period
- To examine both upside and downside risks to economy and adjust policy as appropriate
- Reiterates view that falloff in demand following the April sales tax Increase is waning
- Tankan showed business sentiment at favorable level

(Barcap) European Banks : Dividend is main metric, which bks can raise and can't

--> Those who can and those who can’t
Dividend ratios are currently the best predictor of returns for European bank shares. This suggests that forthcoming regulatory changes will be critical to determine which banks can and can’t surprise on dividends. Regulators are
currently considering changes to how RWAs are calculated and to purify CET1 definitions. Whilst in general higher yielding shares (eg, DNB, UBS, Lloyds) should be able to absorb these changes, we highlight Credit Agricole, BNP and SocGen as challenged, at the very least in terms of payout ratios increasing.