Latest news with #RobThummel
Yahoo
4 days ago
- Business
- Yahoo
Shell probably won't buy BP: Here's a 'more realistic' outcome
A potential Shell (SHEL) and BP (BP) merger is on investors' minds after The Wall Street Journal reported Shell is in early talks to acquire BP, though Shell has denied the report. Tortoise senior portfolio manager and managing director Rob Thummel says it makes sense for the two energy companies to combine, but it's unlikely that Shell would buy BP outright, explaining that it's more probable that BP will sell parts of its business to Shell and others. To watch more expert insights and analysis on the latest market action, check out more Market Catalysts here. While Shell is denying the Wall Street Journal report that it's in talks with BP about a possible merger, our next guest says a deal could be a first step towards improving the valuations of the combined company. Here with more, we've got Rob Dummel, who is the Tortis Senior portfolio manager and managing director. Great to have you here with us. So, just take us into your analysis of the deal-making environment now through the lens of Shell and BP, and what it could mean for the sector. Well, so, so thanks for having me. So, if you just look at what's happening in the overall sector, obviously commodity prices are down. Oil prices are down a lot. And so, it's hard for deals to be made today, uh, just because, uh, because of the low oil price. And a lot of these oil and gas producers, oil producers in particular, have really repaired their balance sheet so they don't need to do deals. But it's a little different for Shell and Shell and BP. So, if you look at the valuations of Shell and BP, they're really low. They trade at much lower valuations than their peers: Exxon, Chevron, Total. So, obviously, there are a lot of investors that are looking for ways to unlock that value. I know Elliott's been active in in BP to try to, to try to encourage them to sell several of their assets to try to realize and get the market to recognize a more of a sum of the parts type of valuation. So, does it make sense for the two to combine? Uh, yeah, it probably does longer term if you think about, then what will the what will combined entity do? It's much bigger. Um, and then ultimately what it needs to do, and I think both companies need to do, is continue to be disciplined, continue to deliver cash back to the shareholders in the form of dividends and stock buybacks. And, and I think if you put all those together, then ultimately, you result in in an improving valuation. But, but clearly, there these, both of these stocks are at really discounted valuations. What is the likelihood that this deal even goes through knowing that there are now more restrictions in different parts of the world for this to be necessary or be possible to take place, considering British stock regulations that have now come more into light which would mean that essentially there would be a six-month period that Shell would have to wait, uh, if this indeed was rejected and, and ultimately they would have to find, uh, some other approach. Yeah, I, I think the odds of Shell buying BP as it is today is very low. Uh, um, what I think the more realistic, uh, possibility is that, you know, BP starts to sell off certain pieces of its business and then ultimately a combination between Shell and BP, uh, makes a little more sense. I think BP's obviously interested in the oil and gas producing assets, the Gulf of Mexico, um, some of its international oil and gas producing assets. Um, and I think BP has a little bit of LNG as well that, that that would, would be complementary. But, but uh, but there are other businesses, I think, inside of BP that that may make sense in the hands of other buyers rather than Shell. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Axios
4 days ago
- Business
- Axios
Why BP takeover speculation won't go away
Shell's firm denial that it's eyeing acquisition of BP may tamp down chatter of a blockbuster deal for now — but it won't end speculation about BP's fate as long as it underperforms its Big Oil rivals. Catch up quick: Hours after the WSJ's buzzy scoop Wednesday about "early stage" talks, a Shell spokesperson said, "This is further market speculation. No talks are taking place." "As we have said many times before we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification," the company said. It also circulated execs' past comments about using capital to buy back shares, and the company's high bar for outside acquisitions. BP did not comment. Yes, but: The idea of a Shell-BP mega-merger has been floating around for a while. BP has trailed Shell's and TotalEnergies' performance among European-headquartered giants. And Big Oil has gotten bigger among U.S. multinationals, with Exxon's roughly $60 billion acquisition of Pioneer Natural Resources that closed last year, and Chevron's efforts to acquire Hess. What they're saying:"A combination could be the first step toward improving the valuations of the combined company" and boosting free cash flow, Rob Thummel, senior portfolio manager at Tortoise Capital, said in emailed comments about a Shell-BP tie-up. BP has recently pivoted back toward its core oil and gas business and gotten more selective about renewables, a move Thummel said recognizes its "core strengths." He notes BP's "top tier" assets in the Gulf of America (formerly the Gulf of Mexico), among other holdings. The bottom line: Thummel was asked whether Shell's comments will put merger speculation to rest. He doesn't think so, noting BP trades at a "cheap valuation."
Yahoo
23-06-2025
- Business
- Yahoo
What is the Strait of Hormuz and why is it so significant?
While there have been no major disruptions to the global oil supply so far, the attacks on Iran – by Israel and then the US – have rattled investors, sending oil futures soaring by around 10%, among fears Iran could retaliate by disrupting shipping in the Strait of Hormuz. From the perspective of the global economy, there are few places as strategically important. The waterway, located between the Persian Gulf and the Gulf of Oman, is only 21 miles wide at its narrowest point. It's the only way to ship crude from the oil-rich Persian Gulf to the rest of the world. Iran controls its northern side. About 20 million barrels of oil, about one-fifth of daily global production, flow through the strait every day, according to the US Energy Information Administration (EIA), which called the channel a 'critical oil chokepoint.' On Sunday evening, following US airstrikes on three of Iran's nuclear facilities, Brent crude, the global benchmark, briefly surged above $80 per barrel, according to Refinitiv data, the first time that's happened since January. Before the conflict, prices had largely hovered between $60 and $75 a barrel since August 2024. Brent last traded at $78.2 per barrel, while WTI, the US benchmark, was at $75.06. Whether oil prices will climb further now depends on Iran's response. Rob Thummel, senior portfolio manager at energy investment firm Tortoise Capital, told CNN that a potential disruption to the Iran-controlled sea route would cause oil prices to surge toward $100 per barrel. A functioning Strait of Hormuz is 'absolutely essential' to the health of the global economy, he said. A prominent adviser to Iran's supreme leader, Ayatollah Ali Khamenei, has already called for the closure of the Strait. 'Following America's attack on the Fordow nuclear installation, it is now our turn,' warned Hossein Shariatmadari, the editor-in-chief of the hardline Kayhan newspaper, a well-known conservative voice who has previously identified himself as a 'representative' for Khamenei. Geographic leverage over global shipping gives Iran the 'capacity to cause a shock in oil markets, drive up oil prices, drive inflation, collapse Trump's economic agenda,' Mohammad Ali Shabani, an Iran expert and editor of the Amwaj news outlet, told CNN. When it comes to moving oil, the Strait is actually much narrower than its 21-mile official width. The navigable shipping lanes for massive supertankers are only about two miles wide in each direction, requiring vessels to pass through both Iranian and Omani territorial waters. But Vandana Hari, founder and CEO of Vanda Insights, which tracks energy markets, sees Iran's blocking of the Strait as a 'remote tail risk.' The presence of a beefed-up US naval fleet in the region is both a deterrent and a response tool, she said. 'Iran has a lot to lose and very little, if anything, to gain by attempting to close the Strait,' Hari said. 'Iran cannot afford to turn its oil-producing neighbors, who have been neutral or even sympathetic towards the Islamic Republic as it faced Israeli and US attacks, into enemies, any more than trigger the ire of its main crude market, China.' A closure of the Strait would be particularly detrimental to China and other Asian economies which rely on the crude oil and natural gas shipped through the waterway. The EIA estimates that 84% of the crude oil and 83% of the liquefied natural gas that moved through the Strait of Hormuz last year went to Asian markets. China, the largest buyer of Iranian oil, sourced 5.4 million barrels per day through the Strait of Hormuz in the first quarter this year, while India and South Korea imported 2.1 million and 1.7 million barrels per day, respectively, according to the EIA's estimates. In comparison, the US and Europe imported just 400,000 and 500,000 barrels per day, respectively, in the same period, according to the EIA. On Sunday, India's Minister for Petroleum and Natural Gas Hardeep Singh Puri sought to reassure jittery investors on X that the country has 'diversified' its oil supplies in the past few years. On Sunday, India's Minister for Petroleum and Natural Gas Hardeep Singh Puri said on X that the country has 'diversified' its oil supplies in the past few years. 'A large volume of our supplies do not come through the Strait of Hormuz now. Our Oil Marketing Companies have supplies of several weeks and continue to receive energy supplies from several routes,' he said. 'We will take all necessary steps to ensure stability of supplies of fuel to our citizens.' CNN's John Towfighi, Nadeen Ebrahim, and Rhea Mogul contributed reporting.
Yahoo
17-06-2025
- Business
- Yahoo
How to play the energy sector as oil prices rise
Oil prices (CL=F, BZ=F) rise as the conflict between Israel and Iran continues. Tortoise senior portfolio manager and managing director Rob Thummel joins Market Domination with Julie Hyman and Josh Lipton to discuss investing in the energy sector. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Oil prices moving again as the conflict between Israel and Iran enters its fifth day. The geopolitical tensions rippling through the broader energy sector. We're navigating how to play this space with the Yahoo Finance playbook and joining us now is Rob Thummel, senior portfolio manager and managing director at Tortoise Capital with nearly $9 billion in assets under management. Rob, always good to see you, especially on set. Thanks for having me. So listen, geopolitics dominate the headlines, Rob. Israel, Iran, war is running hot. You saw President Trump was posting today. He's demanding Iran surrender. And you look at oil, it is moving higher today, Rob, but I'm looking at WTI, it's still sub 75 here. I'm curious what you make of that response or reaction in the oil markets. Yeah, well, I think if you just look at really is oil being disrupted? No. The answer's no, Josh. So so I think the markets are not are not being disrupted, the flows are still happening. I mean, the key thing to watch is of course, the Strait of Hormuz and that's that's where 20% of the oil goes through and and and and and that's straight. And if that's disrupted, then you're going to see oil prices rise. Without that happening, and I don't think that that's probably going to happen, you're going to probably see oil prices ten trend downward. And if you look at the futures curve, I think it's obviously indicating that because we just think that there's going to be an oversupply of oil in the market. Oil prices will come down. Um, and and that frankly will be a good thing for consumers because that means lower gasoline prices for the summer. I mean, it's interesting in the meanwhile though to see, I mean, yesterday to your point, we saw oil prices come down because of what you're saying. There wasn't a widespread belief that there would be disruption through the Strait of Hormuz. And then today they're going right back up again because of the at least possibility that investors seem to be considering that things will be ratcheting up. So, as an investor, how do you buy insurance against that possibility or do you do you just say it's so unlikely Yeah, I think that I'm not even going to put money down. No, I think it's I think I think it's a good observation, Julie. I just think it's so unlikely if you just think about it. I mean, 20% of the oil markets, if if we had the straight home moves, uh some disruption there, I mean, we've got a global energy crisis immediately if you think about it, right? And so it it's not in the interest of the two largest consumers of oil in the world, you know, the US and China. It's frankly not even in the interest of Iran because Iran obviously generates a lot of revenue from oil. So is your point, Rob, if there was disruption in the Strait of Hormuz, US and allies would immediately make a move? Yes, that's exactly it. That that's exactly, Josh, because nobody like I said, no nobody in the world wants this wants this global energy crisis and it would be one immediately. And so there there there would be uh actions taken, I think very quickly uh to to to remedy um and have the ships then start to float back and forth and get out of the straight home at that point. So absent that, where's fair value for oil right now? Why do you think it's going to come down and how far? Well, in the short term, I think it's probably Julia I think is in the 60s, probably even maybe in the 50s for now. Um, the market's going to be oversupplied. OPEC Plus is bringing back volumes. But we think, you know, in the US, we're going to see actually, we might see a lower production next year, uh actually for the first time for a while. Now, that's we think that that's temporary. think the the longer term oil price is probably right where we are right now, right in the 70s. Um, and we'll see oil prices come back up, but we got to get the balance the oil market balance and you got to get some of these oil volumes from from OPEC Plus that were off the market back onto the market. So Rob, let's talk about you have to decide where to put money to work. Let's talk about some places where you see opportunity in this sector. One was Constellation Energy, largest nuclear energy play. Why is that a smart opportunity here? Yeah, Josh, because we think that electricity actually is the new oil. So the, you know, we're we've got this got this revival of energy. The the the the the sector's going to be changing in a lot of ways and we think that electricity becomes the new oil. Where do you get a lot of electricity? You get it from nuclear and natural gas. And so Constellation Energy, one of the largest, well, the largest nuclear operator, generates a lot of electricity. It's in the right location, really in Pennsylvania and the eastern area of the of the country generating a lot of energy for that area. And because of AI, uh, you know, where are all the AI data centers, where are the most in the world? Well, Northern Virginia. So anyway, we see that as a huge opportunity for constellation. It's so interesting to me because I think of you, I mean, we've been talking to you for years and you're an oil stock guy, right? This is how we've come to know you, you know. And so it's so fascinating to me that, you know, when I when we asked what you were liking right now within the market, it's not oil and you know, exploration and production names, the traditional big oil names. It's these other types of energy companies. Um, on the flip side, like you're not the only one noticing this, right? These these types of companies have gotten a lot of money into them and as a result, the valuations have gone up. So how are you thinking about their popularity? Yeah, I know Julian, you're right, I've been investing in energy for 30 years. And at tortoise we we look for opportunities across the whole energy value chain at all times and you know, where are the most commercial opportunities? You're right, we've talked about oil for years and you know, look, oil's still relevant and it's still important. But but we just think that natural gas and nuclear will will be this the engines really that that drive this AI trade that that help really drive AI and help drive electricity going forward. And so that that that's that's really why we have I want to say changed at all, but we've just evolved because the energy sector's evolving. The energy sector is being redefined. And so that that that's kind of how we've gotten into this position and it's frankly it's an exciting one uh for for all the reasons that you've articulated. But it's a really exciting opportunity in energy because it's for the first time in my time my career where you've had energy and technology kind of merge together and both need each other to be successful. Here's another one you like, Rob, which is interesting, a uranium miner, Cameco Corporation. Explain that thesis to us. Well, so so if we're going to develop nuclear, the nuclear uh we we need to develop the nuclear supply chain. So that starts all the way from developing and and having more uranium production. That's what Cameco does. It's a you know, it owns, I think about 17% of the world reserves in in uranium. And so that that that's where it starts is with with basically the mining of uranium and Cameco is one of those companies. Then you need to enrich it and there's and there's some companies that that aren't on the list yet that that we like that you need to enrich more uranium in the US. This is a little ways away yet until we get uranium being more of an important part of the or nuclear being a larger part of the of the uh energy supply chain. Natural gas in the meantime is going to be probably the biggest um and and the best opportunity to to to capture, you know, growing electricity volumes. I want to bring it back to valuations for a minute because as I mentioned, constellation has been bid up and as a result, its valuation has gone higher. That's true of pretty much all the other names that you like and pretty much anywhere you look at nuclear. Yeah. We have seen a lot of money and in traditional power companies, a lot of money going in. So how do you think about the valuations? Is it too late for someone not like yourself who hasn't been looking at these who's new to coming in, have they have they kind of missed it? Yeah, and that was your question earlier, and so I apologize. But but but you're you're right. There's there's been a great run for these stocks, but we just think that there's still there's significant growth opportunities going forward related to this because just think about how I mean, it's just think about the the demand for electricity. We need a thousand uh more terawatt hours of electricity between now and and 2030. You're like, what does that mean? Well, it's the same amount of electricity that's currently being uh used in the states of California, uh Texas, uh North uh New York, um and Florida together combined on a retail basis. So there's a lot of electricity. And so so there's a lot of growth that's a that's ahead for for the companies like Constellation, companies like Avista, a lot of these electric utilities. You know, you think about it, these stocks historically weren't known as growth stocks. They were defensive stocks. Now they're still kind of they're still kind of defensive because we still need electricity, but now because of AI they're now growth stocks too. So they so they're going to attract new investors as well, we think which will result in improved valuations going forward. So there's still our opportunities here. Rob, always good to see you, especially in person. Thanks, Josh. Thanks. 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Yahoo
17-06-2025
- Business
- Yahoo
How to play the energy sector as oil prices rise
Oil prices (CL=F, BZ=F) rise as the conflict between Israel and Iran continues. Tortoise senior portfolio manager and managing director Rob Thummel joins Market Domination with Julie Hyman and Josh Lipton to discuss investing in the energy sector. To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
