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A Rebirth of Energy M&A

By  Roger S. Conrad
Issue No.179 . Oct. 12, 2020

Low cost capital, compelling valuations and building evidence on the ground that a bottom is in, or at least very close: Those are the necessary conditions for a resurgence of mergers and acquisitions activity in the energy sector.

At this point, cost of equity capital is high even for best in class companies. Debt capital, however, is a far different story. Model Portfolio member’s ExxonMobil (NYSE: XOM) bonds of April 2051 yield just 2.9 percent to maturity, while Williams Companies’ (NYSE: WMB) May 2050 bonds yield less than 3.7 percent. And private capital has rarely if ever been this flush.

Energy Commentary >>

Subscribers Only >>

  • Energy M&A Questions and Answers

    By Elliott H. Gue on Oct. 9, 2020

    After a long hiatus, energy M&A has heated up this year, first with Chevron Corp’s (NYSE: CVX) takeover offer for Noble Energy (NYSE: NBL) and now the proposed merger of equals between Devon Energy (NYSE: DVN) and WPX Energy (NYSE: WPX). Here are our thoughts for long overdue sector consolidation.

  • Endangered Dividends List

    By Roger S. Conrad on Oct. 9, 2020

    New Hope Corp (ASX: NHC, OTC: NHPEF) is the only Energy and Income Advisor coverage universe company to announce a dividend cut since the previous issue went to post. That brings the total number to 71 since early March.

  • Portfolio: What to Watch in Q3 Numbers

    By Roger S. Conrad on Oct. 9, 2020

    Calendar Q3 earnings reporting season is coming up fast. Here are confirmed and expected dates for EIA Portfolio and High Yield Energy List companies’ releases and analyst calls.

  • Another Winter of Disappointment for NatGas

    By Elliott H. Gue on Sep. 23, 2020

    US natural gas prices enjoyed quite a run this summer, jumping more than 91% from a 25-year low on June 26th of $1.432/MMBtu to a late-August high of $2.743/MMBtu. While that’s impressive, we’d caution about getting bullish on gas this year as we see little chance for sustained upside in US natural gas prices above the $2.75-$3.00/MMBtu range this winter. We continue to see a retest of this summer’s lows in gas, or even worse, as more likely.

  • Endangered Dividends List

    By Roger S. Conrad on Sep. 23, 2020

    Whitehaven Coal (ASX: WHC, OTC: WHITF) is the only Energy and Income Advisor coverage universe company to announce a dividend cut since the previous issue went to post. That brings the total number to 70 since early March.
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    Experts

    • Elliott H. Gue

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Roger S. Conrad

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor