- Credit Suisse Spends to Boost Booming Energy Team Amid Cutbacks
Credit Suisse Group AG, two years into a belt-tightening turnaround plan, splurged a bit last month in Texas.
While other big banks coughed up to attend the CERAWeek by IHS Markit conference, the energy industry’s biggest annual confab, the Swiss lender was the only one that officially sponsored the show in Houston. It shelled out a few hundred thousand dollars, scoring a hospitality suite for schmoozing executives as well as a choice panelist seat on day one of the conference.
Sponsoring CERAWeek — the oil patch’s equivalent to airing a Super Bowl commercial — underscored the bank’s affinity for its oil and gas team, which has been a bright spot amid trading losses, costly lawsuits and other woes.
It also showed how the firm aims to protect its share of the brutally competitive energy advisory business as it scales back on sales and trading to focus on wealth management.
“They have been in the business for a long time” said Anthony Tripodo, chief financial officer of Houston-based Helix Energy Solutions Group Inc., which hired Credit Suisse to run its $228.8 million equity raising this year.
“They have a feel of who will buy the securities. They delivered as promised. We almost did twice as much as what we went out for,” Tripodo said.
Credit Suisse’s energy bankers brought in $293 million in advisory fees in the Americas last year, according to data from Dealogic. Only JPMorgan Chase & Co. got more. The Zurich-based lender was particularly dominant at raising cash for shale explorers rebounding from the oil price rout. Credit Suisse acted as left lead on about 41 percent of the sector’s exploration and production equity offerings last year, valued at a total of $3.3 billion, according to data compiled by Bloomberg.
“They have a very strong U.S. presence” in energy, said Alison Williams, a bank analyst with Bloomberg Intelligence. “They do have relative strength versus the other European banks. Credit Suisse does earn more than everybody else.”
The equity-raising boom in oil and gas should continue through this year, said Osmar Abib, Credit Suisse’s global co-head of oil and gas, as the trend shifts from exploration companies looking to sell shares to issuances by services providers.
Credit Suisse expects as many as 15 oilfield-services providers to seek to raise a combined total of $3 billion to $4 billion through initial public offerings this year.
Just two have priced IPOs in the U.S. this year: ProPetro Holding Corp. raised $350 million while Select Energy Services Inc. raised $121. Credit Suisse worked on both listings
Companies that offer pressure pumping, hydraulic fracturing and other oilfield services are gearing up to IPO because energy prices have stabilized, creating a window for private equity-backed firms to tap the markets, Abib said.
They also need to raise money to hire workers and update equipment as producers ramp up drilling, he said.
“It has been a very brutal downturn,” Abib said. “Despite that, there has been a record amount of equity financing by the industry.”
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin
Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges
Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.
The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.
The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.
“We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.
Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.
Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.
In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.
The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.
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