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Chevron's entry into Guyana oilfields resolves the company's biggest challenge
Chevron is about to enter Guyana's offshore oilfields, which will solve one of its biggest problems: how it will grow beyond the next couple of years. The U.S. oil company closed a $55 billion deal to acquire Hess, one of the biggest oil and gas transactions ever. It also acquired the stake that Hess held in Guyana's Stabroek Block following a legal battle with Exxon Mobil. Chevron had seen its oil and gas reserves drop to their lowest level in more than a decade. The Stabroek block contains at least 11 billion equivalent barrels of oil and is one the most important oil discoveries of recent decades. Mike Wirth, CEO of Chevron, said that the acquisition of Hess would enhance and extend the company's growth profile into the future. Investors hailed the move as an improvement in the long-term prospects of the company. The acquisition fills a cash flow gap that Chevron was facing at the end this decade and into the 2030s. According to LSEG, American Century Investments has a $351-million stake in Chevron. He said that without Hess it was not clear how Chevron would maintain its free cash flow. The acquisition will also help Chevron to sustain its dividend well into the 2030s. Shares fall after the closure. Chevron has had a tough few months, during which they announced layoffs worldwide, experienced an increase in safety concerns, and lost Venezuelan exports. Over the last year, its shares have fallen 7.5%. In midday trading on Friday, the shares fell 2%. Chevron’s oil and natural gas reserves or the amount of oil and gas it could potentially extract from its fields fell to 9.8 trillion boe by the end 2024. This is the lowest level in more than a decade. The ratio of its organic reserve replacement, which is a measure that compares the new oil and natural gas reserves to what it produces, but excludes sales and acquisitions, was only 45%. A ratio of 100 percent or higher means that the company replaces its reserves at the rate it depletes. Comparatively, UK-based Shell and French oil giant TotalEnergies have both had average reserve replacement rates over the last three years that are more than 100%. John Gerdes, President of Gerdes Energy Research, stated that the combined production volume for Chevron and Hess would be 4.31 million boe/d by 2030. This is significantly more than what Chevron could produce as a stand-alone company. Chevron will produce 3.3 million boe/d by 2024. Exxon which operates Stabroek Block and CNOOC the other minor partner in this field filed arbitration claims last year against Hess, claiming they had a contract right of first refusal for purchasing Hess stake. Chevron's battle was crucial, as the Guyana oil field was Hess’ most prized asset. The acquisition would have failed if the arbitration went against Chevron. Chevron also faces a long-term issue: whether or not it will renew its contract with the Tengiz oilfield, a giant oilfield located in Kazakhstan. The current agreement expires 2033. Chevron owns a 50% stake of the Tengizchevroil, a joint venture it runs. In January, the company said that after an expansion project reaches full capacity, it will produce approximately 1 million boe/d. Reporting by Sheila Dang, Houston Editing Rod Nickel
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Media reports: 3 killed in blast at Los Angeles Sheriff's office
Fox News and the local media reported that three deputies were killed in an explosion at a Los Angeles County Sheriff's Department Training Facility, although officials have yet to confirm any deaths. A spokesperson from the Los Angeles Sheriff's Department confirmed an explosion at the Biscailuz Academy Training in East Los Angeles. The spokesperson stated that the cause of the explosion was still under investigation, and they had not yet confirmed any injuries or deaths. The Los Angeles Times, citing anonymous sources, reported that an explosives squad was moving explosives at the time of the explosion. U.S. attorney general Pam Bondi posted on social media about her conversation with U.S. attorney for the Central District of California Bill Essayli, "about what seems to be an horrific incident which killed at least three people at a training facility for law enforcement in Los Angeles." Bondi stated that federal agents are at the scene to find out more. Reporting by Maiya Kiedan and Bhargav Acharya; editing by Frank McGuire
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In Nigeria's Zamfara State, bandits kill six and kidnap more than 100.
Residents and a local legislator said that gunmen attacked the Kairu community, located in northwest Zamfara, Nigeria, and killed six people. They also abducted over 100 other people, including women, children and elderly. Zamfara has been the epicenter of attacks by heavily armed men known as bandits in Nigeria. They have caused havoc in Nigeria's northwestern region in recent years. They have kidnapped thousands of people, killed hundreds, and made it dangerous to travel on roads or farms in certain areas. Abubakar Isa told Abubakar Isa by phone that the bandits attacked Kairu at 1040 GMT, shooting indiscriminately. His wife had been abducted. Hamisu Faru is a local legislator who confirmed the attack, saying that the attackers took "no less than 100 people including women and children". Faru told me by phone that they were searching from house to house and abducting people. Mohammed Usman, another resident, stated that the attackers besieged the town for almost two hours before capturing their captives. He said that thousands of people have fled the village. Zamfara Police did not immediately respond to requests for comment. Reporting by Elisha Gbogbo, Editing by Mark Potter
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South Africa announces its assets gains as it concludes the G20 Finance Meeting with a communique
The rand, government bond and stock prices of South Africa rose on Friday, as investors considered the country's hosting of the two-day Group of 20 Finance Meeting, where participants agreed to a final communiqué, the first such meeting since October 2024. South Africa has promoted an African agenda under the motto of its presidency "Solidarity Equality Sustainability". Topics include high capital costs and funding climate change actions. The communique shows that the G20 finance leaders are in agreement on some issues. The rand was trading at 17.7050 per dollar against 1503 GMT. This is up approximately 0.6% from Thursday's closing. Johannesburg's Top-40 Index was up last by 1.5%, and the All-Share Index up 1.4%. Both are hovering at all-time highs. Anchor Capital stated in a recent research note that mining stocks were a major contributor to the local stock market. Gold Fields shares were up last by 2%. Harmony Gold was up 1% and Sibanye Stillwater rose 4%. As they signed the communiqué, the G20 finance and central bank ministers stressed the importance to multilateralism and independence of the central banks. This was ahead of the deadline set by U.S. president Donald Trump for tariffs on country-specific products. Next week, domestic investors will focus on South Africa’s leading business cycle indicator for May and the June consumer inflation figures to get clues about Africa's largest industrialised economy. ETM Analytics stated in a recent research note that "(Inflation data), is unlikely to have much of an impact on the performance of the ZAR as the rate markets are already pricing out the prospect of a second rate cut." The yield on the benchmark 2035 South African government bond fell by 1.5 basis points, to 9.945%. Reporting by Sfundo parakozov. (Editing by Joe Bavier, Mark Potter and Mark Potter.)
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G20 communique: main points and omissions
G20 finance chiefs issued a communiqué on Friday, which emphasized the importance of central banks' independence and the World Trade Organization's role in advancing trade. The following are the main points that the finance ministers, central bank governors, and other participants agreed upon during the two-day Durban meeting, South Africa. Also, we list the policy areas that were left out. Global Economy and Trade The communique highlighted global economic uncertainty caused by conflict, trade tensions and supply chain disruptions. It also highlighted high debt levels and frequent extreme weather and natural disasters. The statement also stated that central bank independence was crucial in achieving price stability. COOPERATION MULTILATERAL The chiefs of finance emphasized the importance of multilateral collaboration, recognising that the World Trade Organisation plays a key role in advancing issues of trade and maintaining rules agreed upon as part of the global system of trading. They acknowledged that the WTO faces challenges and called for "meaningful reform" The finance chiefs stated that they were committed to addressing the debt vulnerability in low-and middle-income countries. This included a commitment to strengthen the G20 Common Framework implementation in a "predictable and timely manner" and in an orderly and coordinated fashion. The G20 Common Framework was launched in late 2020. It is a platform designed to allow debt restructuring on an individual basis, and help overstretched nations get back on their feet. The progress is slow. The communique stated that "we further call for enhanced transparency of debt from all stakeholders, private creditors included." Omissions The communique did not mention climate change explicitly, but it did refer to "extreme weather and natural disasters". The communique also did not mention the Russian invasion of Ukraine - a longtime source of disagreement for the group - nor the conflict between Israel and Hamas on Gaza. The communique instead mentioned "ongoing conflicts and wars" without providing any further details. The word "tariff" did not appear in this communique. Instead, it referred to the "trade tensions." Reporting by Olivia Kumwenda Mtambo, Editing by Mark John & Hugh Lawson
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Chevron wins arbitration against Exxon over Hess deal, according to analysts.
Chevron is moving forward with its acquisition of Hess for $53 billion after winning a landmark court battle against Exxon Mobil, allowing it to access the largest oil find in decades off of the coast of Guyana. KIM FUSTIER HEAD OF EUROPEAN OIL & GASOLINE RESEARCH HSBC Hess has helped Chevron grow from a company producing 3.3 million barrels per day (bpd), to one that produces 4.2 million, which is not far behind Exxon's 4.5 million. In contrast, the failure to close Hess had negative consequences. It would have increased the gap between Exxon and Chevron, raised doubts about Chevron's management, and raised the question of the need for other M&A acquisitions in order to replace Hess. ALLEN GOOD, MORNINGSTAR ANALYST We view the outcome as positive for Chevron given the size and quality of the Guyanese asset. We don't see the ruling as negative for Exxon. Their ultimate goal was to deny Chevron access, or secure a favorable ruling that could be used elsewhere, not to acquire the assets themselves. AJAY PARMAR IS THE OIL AND ENERGY TRANSITION ANALYTICS DIRECTOR OF CONSULTANCY ICIS The U.S. oil giant's victory in the arbitration case over the Guyana oil assets is a major win. It opens the door for the acquisition of Hess, which will strengthen Chevron’s upstream presence across Guyana, Canada and U.S. On-shore... We expect the company to further strengthen its portfolio in the coming years. BIRAJ BORKHATARIA, ANALYST AT RBC CAPITAL MARKETS We expect Chevron shares to outperform in the next few weeks, now that investors are more confident about the investment case. They can also focus on the growth of Hess assets and the free cash flow inflections into 2026-2027. Chevron will likely review its synergy targets at (Capital Market Day), which is scheduled for November 12th. Chevron plans to dig deeper into the company's longer-term goals. JASON GABELMAN ANALYST AT TD COWEN Chevron said when it announced the deal that eight assets (Guyana GOA Australia TCO Permian DJ Bakken Eastern Med) were core. This is not clear if it still holds true, as some may see the Bakken area as a potential divestiture candidate. "Chord Energy, Devon Energy and other companies have been acquiring in the basin. We expect Chevron to be interested in future opportunities as a consolidator and/or divesting." PHILLIPS JOHNSTON, ANALYST AT CAPITAL ONE SECURITIES The ruling ends a 16-month saga which began in March 2024 when Exxon attempted to block the merger deal. Since the first announcement on October 23, 20,23, Hess's total shareholder return has been -6.6%, compared to -2.2% for Chevron and +7.7% for Exxon (all before today's trading). Reporting by Seher Daeen, Vallari Srivastava, and Pooja menon in Bengaluru. Editing by Louise Heavens & Frances Kerry.
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Gold gains as safe-haven on the back of global uncertainty and a weaker dollar
Gold prices increased on Friday, as a weaker dollar and the ongoing geopolitical uncertainty and economic instability boosted demand for this safe-haven. Platinum prices fell after reaching their highest levels since 2014. Gold spot rose 0.5%, to $3,353.80 an ounce at 0947 am EDT (1347 GMT) after dropping 1.1% the previous session. U.S. Gold Futures also rose 0.5%, to $3360.50. Edward Meir, Marex analyst, said that the weaker dollar has led to gains in the precious metals sector. We do not think that gold is a good investment over the medium term, given the current situation, which includes out-of control U.S. expenditure, trade tensions lingering, inflation uncertainty, and the constant Fed bashing. The dollar fell 0.5% on the day. Gold tends to be cheaper for buyers who hold other currencies when the dollar is weaker. Trump stated earlier this week that he did not plan to fire Federal Reserve Chairman Jerome Powell. He left the possibility open, but he also renewed his criticisms of Powell for not lowering the interest rates. Market participants expect two U.S. interest rate cuts totaling 50 basis points by the end this year. The gold market thrives in times of economic uncertainty. Lower interest rates also boost demand, as gold is a non yielding asset. Indonesia is still working out the finer details of the trade agreement it recently signed with the United States. Janet Yellen, the U.S. Treasury secretary, told Japan's Prime Minister that both countries could reach a "good deal". After reaching its highest level since August 2014, spot platinum dropped 0.7% to $1.448.03 an ounce. Palladium rose 0.7% to $1.289.50 - its highest level since June 2023 - and silver increased 0.5% to $35.31. BullionVault's head of research, Adrian Ash, said that the precious metals market has moved from gold, a safe haven, to silver, palladium, and platinum as industrial, pro-growth alternatives. (Reporting from Sarah Qureshi, Bengaluru; additional reporting by Ashitha Shivprasad. Editing by Tasimzahid)
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Reliance's profits top estimates for energy business rebound
Reliance Industries, owned by Indian billionaire Mukesh Amani, beat expectations for its quarterly profit on Thursday, thanks to strong growth in the company's energy, retail, and digital services businesses. According to LSEG, the combined profit for the quarter ending June 30 was 269.94 billion rupees (3.14 billion dollars), a 78.3% increase over analysts' estimates of 198.59 trillion rupees. Reliance’s oil-to-chemicals division, which accounts for 57% of the company’s revenue, has been under pressure over recent quarters due to a decline in transportation cracks, and a sluggish petrochemical demand. The oil-tochemicals segment, however, has benefited from an improvement in domestic fuel retail margins. The oil-tochemicals business saw its earnings before interest, taxes and depreciation increase 10.8%, to 145.11bn rupees. EBITDA for its digital services, which include telecom unit Jio jumped by 23.9% compared to a year ago, while EBITDA for the retail segment grew by 12.7%. Reliance Retail, Jio and the Energy business had helped Reliance to offset the weakness in its earnings for the six-month period ending March. Retail revenue accounts for approximately 31% of total company revenues.
China says Canada's steel import tariffs violate WTO rules
The Chinese Embassy in Ottawa criticised duties imposed by Canada on Chinese import steel this week, saying that they violated World Trade Organization rules and disrupted global trade.
In response to questions, the embassy released a statement in response to an agreement made between Canada and China, which was reached in June, to improve bilateral relations and to take first steps towards rebuilding their fraught trading relationship.
Mark Carney, the Prime Minister of Canada, announced on Wednesday that Canada will impose 25% tariffs on all steel imports from countries that contain steel melted and poured by China before July's end.
A spokesperson for the Chinese Embassy said that "Such practices are in violation of WTO rules and disrupt the international trading order. They also harm China's interest."
Carney wants to protect the Canadian Steel Industry, which complained that other countries were dumping steel cheaply in Canada due to the U.S. tariffs of 50% on imported steel imposed President Donald Trump.
Canada has already imposed 25% tariffs on imports of steel and aluminum from China, and this week it is attempting to clamp down on Chinese steel which was further processed in other countries.
China was Canada's 2nd largest trading partner, with C$120 Billion ($87.48 Billion) in bilateral trade in the past year. However, their relationship has deteriorated.
"Canada's strategy is not justified in principle, lacks a legal basis and will be ineffective." The embassy warned that the move would severely damage normal economic and commercial cooperation between Canada and China.
Carney's Office did not respond immediately to a comment request.
Carney and Chinese Premier Li Qiang agreed to resume trade talks last month.
In an interview conducted on Thursday, Canada's Minister of International Trade Maninder Sidhu said he wanted Canadian officials to speak to their Chinese counterparts as soon as possible.
Canada has imposed 100% tariffs for the import of Chinese electric cars, which have pushed them off of the local market.
In March, Beijing announced that it would impose tariffs of over $2.6 billion on Canadian agricultural and food goods.
The investigation is underway and results are expected by September. The embassy stated that the investigation may be extended by six months in special circumstances.
The embassy stated that if Canada cancels their discriminatory tariffs against China, China can adjust, suspend or even cancel its countermeasures according to the procedures. $1 = 1.3717 Canadian Dollars (Reporting and Editing by Caroline Stauffer & Alexandra Hudson).
(source: Reuters)