Big Oil’s bid to lure back investors with cash could ultimately fail

Published

3 years ago

August 18, 2021

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ExxonMobil Corp. and Saudi Basic Industries Corp. (Sabic) Gulf Coast Growth Ventures petrochemical complex under construction in Gregory, Texas, U.S., on Wednesday, July 28, 2021.

Eddie Seal | Bloomberg | Getty Images

LONDON — The world’s largest oil and gas majors are seeking to lure back investors by returning more cash to shareholders. Market participants, particularly those looking to the long term, remain highly skeptical.

It comes at a time when oil and gas companies are raking in their highest profits since the onset of the coronavirus pandemic amid a sustained period of stronger commodity prices.

A robust showing in the three months through June built on better-than-expected first-quarter earnings and lent further support to the industry’s efforts to pay down debt and reward investors.

In the U.S., ExxonMobil said late last month that it would back shareholder returns through its dividend and Chevron announced it would resume share buybacks at an annual rate of between $2 billion to $3 billion.

In Europe, meanwhile, the U.K.’s BP, France’s TotalEnergies, Norway’s Equinor, Italy’s Eni and Anglo-Dutch oil giant Royal Dutch Shell all announced share buyback programs or increased dividend payouts — or both. It reflects a broader industry trend of energy majors seeking to reassure investors that they have gained a more stable footing amid the ongoing Covid-19 crisis.

Share buybacks are designed to boost the firm’s stock price, benefiting shareholders. Dividend payments, meanwhile, reflect a token reward to shareholders for their investment. Both are options available to a company seeking to reward investors.

These investments are likely to become stranded assets, and investors don’t want to be left holding the bag.

Kathy Hipple

Finance professor at Bard College

Ahead of the second-quarter results, energy analysts had warned that Big Oil still faced a host of uncertainties and challenges. Some of these include the remarkable success of shareholder activism in recent months, a “tremendous degree” of ongoing investor skepticism and intensifying pressure to massively reduce fossil fuel use.

“Day traders may reap short-term profits, but serious long-term investors have concluded that the old energy of the past — oil and gas extraction, is just that — old, with a sell-by date that is moving closer by the day,” Kathy Hipple, finance professor at Bard College in New York, told CNBC via email.

“Once institutional investors determine that demand has peaked — which likely has already happened — they will abandon the sector permanently,” she added. “Many already have, based on the stock performance of the sector over the past several years.”

IPCC report a ‘death knell’ for fossil fuels

The energy sector, alongside financials, is one of this year’s top performers on the S&P 500, up almost 30% year-to-date. Yet, share prices of many oil majors continue to trail the earnings outlook considerably.

In the U.K., for instance, BP has seen its stock price climb nearly 20% so far this year, but the oil and gas giant recorded a collapse of more than 47% in 2020. BP has previously described 2020 as “a year like no other” due to the impact of the Covid-19 crisis on global energy.

Oil prices have since rebounded to near $70 a barrel and all three of the world’s main forecasting agencies — OPEC, the IEA and the U.S. Energy Information Administration — expect a demand-led recovery to pick up speed through to 2022.

Hipple said that savvy long-term investors would shy away from oil and gas majors “unless and until” they fully acknowledge the climate crisis. “These investors understand that the oil majors are still investing tens of billions in unnecessary oil and gas infrastructure, ignoring the IEA findings that no additional infrastructure is possible to meet a 1.5 [degrees Celsius] scenario,” Hipple said, referring to a critically important target of the Paris Agreement.

“These investments are likely to become stranded assets, and investors don’t want to be left holding the bag.”

Last week, the world’s leading climate scientists delivered their starkest warning yet about the deepening climate emergency. The Intergovernmental Panel on Climate Change’s landmark report warned a key temperature limit of 1.5 degrees Celsius could be broken in just over a decade in the absence of immediate, rapid and large-scale reductions in greenhouse gas emissions.

U.N. Secretary-General, António Guterres, described the report’s findings as a “code red for humanity,” and said it “must sound a death knell” for coal, oil and gas.

Energy majors are typically still overwhelmingly reliant on oil and gas revenues for their earnings — a concept that is irreconcilable to the demands of the climate emergency.

“We frankly just don’t think these are very good businesses,” David Moss, head of European equities at BMO Global Asset Management, told CNBC’s “Street Signs Europe” on Friday.

European energy majors are currently generating “very strong” cash flow following a sustained rebound in oil prices, Moss said, but noted that many are choosing to keep spending relatively tight rather than invest in future production projects.

“With the oil companies, we still just don’t think they represent good long-term businesses,” Moss said. “They don’t generate consistent returns on capital or cash flow, albeit at the moment they look to be in a pretty good place.”

Not everyone is as downbeat on the outlook for the oil and gas industry, however.

Rohan Reddy, analyst at Global X, a New York-based provider of exchange-traded funds, says there are currently a number of positive signs for energy majors, citing rising stock prices, an upswing in second-quarter earnings and increased shareholder distributions.

“Right now, the energy sector is the best performing one within the S&P 500 and many European markets, and even though some of the big majors like BP and Shell have lagged the broader energy sector, we think right now that’s just due to hesitancy around the delta [Covid] variant,” Reddy told CNBC on Aug. 11.

“We think there is going to be a lot more investors starting to pile into to some of those big energy names.”

Tesla board members officially settle excessive compensation case for nearly $1 billion

Published

11 hours ago

January 8, 2025

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Tesla board members officially settle excessive compensation case for nearly billion

A judge has officially approved a settlement in a case brought by Tesla shareholders against board members who will now have to return stock, cash, and give up on stock options worth a total of nearly $1 billion.

Let me start this article with a quote from Tesla CEO Elon Musk:

Tesla will never settle a case where we’re in the right, and never contest a case where we’re in the wrong.

Today, Chancellor Kathaleen McCormick approved a settlement agreement between Tesla and all its board members from 2017 to 2020 and the Police and Fire Retirement System of the City of Detroit on behalf of Tesla shareholders over what the shareholders believed to be excessive compensation.

The agreement was first reported in July 2023, but it is only now being officially approved and we learn a few more details.

Shareholders believed that members of Tesla’s board were compensating themselves excessively with hundreds of millions of dollars between 2017 and 2020 when the average compensation of a board member of a S&P500 company is just north of $300,000.

Under the settlement, the board members agree to return to Tesla $277 million in cash, $459 million in stock options and to forgo $184 million worth of stock options awarded for 2021-2023.

That adds up to nearly $1 billion.

The board members include Kimbal Musk, Elon’s brother, Brad Buss, Ira Ehrenpreis, Antonio Gracias, Stephen Jurvetson, all close friends of Elon Musk and people who have financial dealings with Musk outside of Tesla, Linda Johnson Rice, Kathleen Wilson-Thompson, Hiromichi Mizuno and Larry Ellison, the co-founder of Oracle Corp and also a close friend of Musk.

As part of the settlement, Tesla or the board does not admit to any wrongdoing.

Musk didn’t take compensation as part of the board, but he is embroiled in a similar case over his own $55 billion CEO compensation package, which was rescinded by the same judge after she found that it wasn’t negotiated or presented to shareholders in good faith.

The board members who received this “excessive compensation” also happened to be the one who “negotiated” Musk’s CEO compensation package.

The case is heading to the Delaware Supreme Court, as reported earlier today.

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Nissan’s Ariya electric SUV takes on the extreme weather in its new test chamber [Video]

Published

12 hours ago

January 8, 2025

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Nissan's Ariya electric SUV takes on the extreme weather in its new test chamber [Video]

Despite how cold it may feel outside, Nissan’s electric SUV has likely been through colder. Nissan is proving its Ariya SUV can handle the extreme weather at its unique new test chamber at its tech center near Detroit. With temperatures ranging from -40 to 176 °F, the Ariya is being pushed to see what it’s made of.

Nissan launched the Ariya, its first electric SUV, in the US in late 2022. Over 13,400 Ariya models were sold in the US in its first sales year, with another nearly 20,000 handed over in 2024.

A few weeks ago, Nissan introduced the 2025 Ariya, starting at just $39,770. It has two battery options, 66 or 91 kWh, good for 216 and 289 miles range. That’s for the FWD models.

You can opt for Nissan’s e-4ORCE AWD dual-motor system for “thrilling acceleration” with up to 389 hp and 442 lb-ft of torque. However, with the added power, you sacrifice some range. The AWD Ariya gets up to 272 miles range.

With many parts of the country seeing frigid temperatures, Nissan says its “Ariya is very well equipped” to combat freezing weather.

Nissan-2025-Ariya-incentives — 2025 Nissan Ariya Platinum+ e-4ORCE (Source: Nissan)

The electric SUV was already the first vehicle (EV or gas-powered) to drive from the North to the South Pole in 2023. Now, it’s being put through the paces at Nissan’s tech center outside of Detroit.

It’s currently around 23 °F in Detroit, with a low of 11 °F, but Nissan says it’s even colder in its unique new test chamber. The chamber is located at the Nissan Technical Center North America campus, just outside Detroit.

Nissan Ariya handles cold weather tests in new chamber

“Our chambers are capable of temperatures ranging from -40 degrees Fahrenheit to 176 degrees Fahrenheit,” Jeff Tessmer, senior manager of Zero Emission Vehicles at Nissan’s tech center, explained.

Nissan tests the Ariya in a test chamber with “far more extreme” temperatures than the typical driver will see. Tessmer said, “We want to test the worst-case scenario so that our customers will still get the same performance in a wide variety of weather conditions.”

One of the biggest goals is to prove the electric SUV’s battery can maintain charge levels even in extreme weather.

[embedded content]

Nissan Ariya undergoes extreme cold weather chamber test (Source: Nissan)

Nissan puts it through “cold soak” tests to ensure performance. During a 24-hour cold soak, the Ariya was parked in -4 °F weather with a 17% battery charge. It also wasn’t plugged in or using its battery heater. After the team returned the next day, the electric SUV still had a 17% charge and started up immediately.

The Ariya is equipped with a battery heater that drivers can turn on ahead of time to ensure optimal performance. On hot days, it includes a liquid-cooled system to regulate battery temperatures.

Drivers can also use the MYNISSAN app to pre-warm the cabin, check the interior temperature, and schedule charging times. Ansu Jammeh, an engineer on Nissan’s Zero Emissions Engineering team, said the best time to use the heating feature is “when the vehicle is plugged in so that it uses power from the grid instead of the vehicle.”

2025 Nissan Ariya trim	Battery (kWh)	*Starting Prices (MSRP)**	Range (miles)
Engage FWD	66	$39,770	216
Engage e-4ORCE	66	$43,770	205
Evolve + FWD	91	$44,370	289
Engage + e-4ORCE	91	$45,370	272
Evolve + e-4ORCE	91	$48,370	272
Platinum + e-4ORCE	91	$54,370	267

2025 Nissan Ariya prices and range by trim (*not including a $1,390 destination fee)

Nissan added a new wireless charging pad across all 2025 Ariya models. The inside features Nissan’s Advanced Drive-Assist setup with dual 12.3″ infotainment and driver display screens formed in a “wave-like” shape.

Other standard features of the 2025 model include wireless Apple CarPlay and Android Auto support, a Head-up display, and a Virtual Personal Assistant. It also includes Nissan’s ProPilot Assist for assisted driving.

Are you ready to check out Nissan’s electric SUV for yourself? We can help you get started. You can use our link to find Nissan Ariya models at the best price in your area today.

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Environment

This Florida solar farm is supplying clean energy to 12 cities

Published

12 hours ago

January 8, 2025

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This Florida solar farm is supplying clean energy to 12 cities

Florida olar farm — Photo: Florida Municipal Power Agency

Florida’s Rice Creek Solar Energy Center is now online, delivering nearly 75 megawatts (MW) of clean electricity to 12 cities across the state. The solar farm is part of the Florida Municipal Solar Project, one of the largest municipal solar initiatives in the US.

Located in Putnam County, near Palatka, the Rice Creek site is covered with 213,000 solar panels that generate enough power for around 14,000 homes. This marks the third solar site in the Florida Municipal Solar Project, with more on the way.

Twelve utilities are tapping into the clean energy from Rice Creek, including Beaches Energy Services (Jacksonville Beach), Fort Pierce Utilities Authority, Homestead, Keys Energy Services in Key West, Kissimmee Utility Authority, Lake Worth Beach, Mount Dora, New Smyrna Beach Utilities, Newberry, Ocala, Town of Havana, and Winter Park. This is the first solar power project for Havana, New Smyrna Beach, and Newberry.

Jacob Williams, the general manager of the Florida Municipal Power Agency, explained, “By working together, our members and their communities benefit from additional solar-powered energy that’s both cost-effective and carbon-free.”

The FMPA, based in Orlando, coordinates the project, while the 12 municipal utilities – who are also FMPA’s member-owners – purchase the power. Miami-based Origis Energy is the builder, owner, and operator of Rice Creek. According to Origis Energy’s Josh Teigiser, “We are honored to support this FMPA work. Long-term agreements for solar generation, including for Rice Creek Solar, provide a stable rate base contributing to lower and more predictable customers’ bills.”

Construction is already underway on a fourth Florida solar farm, Whistling Duck Solar, in Levy County. The Florida Municipal Solar Project is expected to grow to seven sites in the next few years and will generate a total of around 525 MW of clean energy.

To limit power outages and make your home more resilient, consider going solar with a battery storage system. In order to find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. They have hundreds of pre-vetted solar installers competing for your business, ensuring you get high-quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use and you won’t get sales calls until you select an installer and you share your phone number with them.

Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –trusted affiliate link*

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