Connect with us

Business

Saudi Arabia Sees Oil At $50 Until 2023

Published

 on

Saudi Arabia appears to be more upbeat about the immediate future of oil prices than fundamentals warrant, according to Goldman Sachs analysts. These have calculated that the Saudi budget plan is based on a Brent average of $50 a barrel between 2020 and 2023, according to Bloomberg.

“Using our own estimates for the breakdown of government revenues, we calculate that the numbers presented in the budget statement are based on an average oil price of around $50 a barrel between 2020 and 2023,” one UK-based Goldman analyst told Bloomberg.

However, even at $50 a barrel, which is far from certain, Brent would be cheaper than Saudi Arabia needs it to be to shrink its deficit. Even the Saudis themselves have acknowledged the effect the pandemic has had on their finances. In a recent update, the governor of the Saudi Arabian Monetary Authority said the financial outlook for the year remained uncertain.

In July, the International Monetary Fund (IMF) said that the price plunge and the oil production cuts would hit oil exporters in the Middle East and North Africa hard, with the combined oil income for those countries expected to plummet by US$270 billion this year compared to 2019.

Saudi Arabia is the biggest oil economy in the Gulf and while it will not be the hardest hit, it is already being affected adversely by the combination of oil’s fundamentals and the pandemic. The Kingdom booked a deficit of $29 billion for the second quarter and effected some austerity measures although Riyadh insists this is not austerity. A tripling of VAT, a cancellation of so-called cost-of-living allowances, and the delay of some public spending decisions and the cancellation of others were among the measures.

Even so, the largest OPEC oil producer appears to believe oil prices will start improving soon, if Goldman’s calculations are right. The bank is among the oil bulls that expect prices to recover beginning next year as the supply and demand situation rebalances. However, fresh tightenings of movement restrictions in Europe last week hinted this may not come to pass. Brent closed below $40 a barrel at the end of the week and with Libya ramping up oil production with lightning speed, it may be a while before the benchmark recovers.

By Irina Slav for Oilprice.com

Source – OilPrice.com

Source link

Business

Coronavirus: Alberta's top doctor says "we have a challenge" as 1440 cases confirmed over weekend – Global News

Published

 on


[unable to retrieve full-text content]

  1. Coronavirus: Alberta’s top doctor says “we have a challenge” as 1440 cases confirmed over weekend  Global News
  2. Single-day case count breaks 500  Edmonton Journal
  3. 15-person limit on social gatherings in Calgary and Edmonton  CTV Toronto
  4. Alberta imposes new social gathering restrictions after setting daily record for COVID-19 cases  CBC.ca
  5. New mandatory limits to social gatherings in Calgary; 1,440 new cases over weekend  Calgary Herald
  6. View Full coverage on Google News



Source link

Continue Reading

Business

Cenovus Energy shares plummet on news of its $3.8B deal to buy Husky Energy

Published

 on

The all-share deal by Cenovus Energy Inc. to buy Husky Energy Inc. for about $3.8 billion will likely spark more mega-mergers among Canadian oil and gas majors, according to a veteran oilsands analyst.

“This is likely just the start of big deals in Canadian energy land and thus it begs the question of who is next?” said analyst Phil Skolnick of Eight Capital in a report on Monday.

“As seen in the U.S. with the accelerated M&A activity, when there’s one meaningful transaction, there’s likely more to come.”

Several industry observers point to Calgary-based oilsands producer MEG Energy Inc. as the leading potential target, noting Husky’s failed $3.3-billion hostile takeover attempt of its smaller rival two years ago.

In his report, Skolnick presents scenarios where Canadian Natural Resources Ltd. (sometimes referred to by its stock ticker, CNQ) or Imperial Oil Ltd. buy MEG, while also outlining the numbers involved if Canadian Natural combined with Imperial or Suncor Energy Inc., and if Suncor were to merge with Imperial.

Story continues below advertisement

“Some (scenarios) have been asked about before and I was just bringing up some new ones _ like a CNQ and Suncor merger is not something I’ve heard out there, but nor was Cenovus-Husky,” he said in an interview.

“I’m not going to give zero chance to anything anymore.”

Analysts generally applauded the surprise Cenovus-Husky hookup announced Sunday for its operational advantages but criticized the plus-20-per-cent premium in the price for Husky.

“The deal does makes strategic sense,” said Manav Gupta of Credit Suisse in a note to investors.

“Like U.S. E&P (exploration and production companies), Canadian energy companies also need to come together, cut costs and become leaner to better adapt to lower energy demand in post pandemic world.”

He said Cenovus’s reputation as an efficient operator in its steam-driven oilsands projects will help Husky overcome its struggles with operational issues, including higher operating and administrative costs.

The companies have identified $1.2 billion in potential annual cost savings which will include workforce reductions.

 

But Gupta added the premium is “excessive” and joined other observers in predicting Cenovus shares would trade lower, as they did, falling by as much as 15 per cent to $4.15 in Monday trading in Toronto before closing down 8.4 per cent at $4.47.

Husky, meanwhile, gained as much as 14.2 per cent to $3.62 before closing up 12 per cent at $3.55 .

Husky shareholders are to receive 0.7845 of a Cenovus share plus 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share if the deal is concluded.

Cenovus shareholders would own about 61 per cent of the combined company and Husky shareholders about 39 per cent.

The transaction must be approved by at least two-thirds of Husky’s shareholders but Hong Kong billionaire Li Ka-Shing controls 70 per cent of Husky’s shares and has agreed to vote them in favour of the deal.

The announcement Sunday came just as Calgary’s oilsands companies are about to start rolling out third-quarter financial results, with Suncor Energy Inc. set to report Wednesday and both Cenovus and Husky scheduled to report on Thursday.

© 2020 The Canadian Press

Let’s block ads! (Why?)

Source link

Continue Reading

Business

Ant Group raises $34.4 billion in the biggest IPO of all time – CNBC Television

Published

 on


[unable to retrieve full-text content]

  1. Ant Group raises $34.4 billion in the biggest IPO of all time  CNBC Television
  2. Ant Group set to surpass Aramco as biggest-ever IPO  Aljazeera.com
  3. Chinese fintech could shatter records with US$35B share offer  CTV News
  4. Jack Ma Wealth Surges Above Walmart Heirs’ With Record Ant IPO  BNN
  5. Behold the Mighty Ant  The Wall Street Journal
  6. View Full coverage on Google News



Source link

Continue Reading

Trending