BP Predicts TANAP Gas Pipeline Project Deal Within Two Months

Oil major also plans for June plant maintenance shutdown in June, briefly boosting Brent futures

BP plc (BP) says that it is expected to sign the Trans-Anatolian Natural Gas Pipeline (TANAP) project within a few months. The Country Manager of BP in Georgia, made the announcement on the sidelines of Georgian Oil, Gas, Energy, and Infrastructure conference held in the Georgian capital, Tblisi. He states that the company has signed all the necessary documents, with the final deal to be signed with government authorities, once the project receives its agreement from officials of all governments partaking in the project.

The company is seeking a 12% stake in the joint venture along with other oil and gas companies, such as Azeri firm SOCAR that holds a 58% stake, and Turkish firm, Botas, that has raised its stake from 20 to 30%. The TANAP Gas Pipeline project is a part of an effort by the European Union as well as Western allied governments in Central Asia, including Armenia and Georgia, to reduce their dependence of Russian gas. This gas is being used as a tool by the Kremlin government to influence European countries from issues ranging from the current conflict in Ukraine to the Iranian nuclear sanctions, all in the in the name of gas pricing issue. These endeavors, one way or the other, are entirely politically motivated.

TANAP envisages carrying 16 billion cubic meters of gas a year from Azerbaijan’s Shah Deniz ‘II’ field, which is one of the world’s largest fields. It will run from the Turkish-Georgian border to the Bulgarian Greece border, where the gas will then be injected to the system before being distributed to the entire EU bypassing Ukraine. The estimated cost arising from this ambitious gas pipeline project ranges between $10-11 billion.

Country Manager of BP says that the company is closely pacing on track in regards to the implementation of the project, though he stated that low crude oil prices is forcing them to tighten their belts, but they do not intend to back out from this venture. He refused to step back from the project since it is a long-term commitment and part of Europe’s energy security plan.

For the year 2015, the venture will invest about $6 billion on the Shah Deniz II and the South Caucasus Pipeline Expansion project, which is a part of the TANAP gas pipeline. Construction commenced few weeks ago, which is expected to be completed by 2018. However, gas deliveries from the Shah Deniz II field will not be injected into the system until 2019 latest.

Meanwhile, BP is proceeding ahead of its maintenance shutdown of its Sollom Voe oil terminal, located in one of the North Sea crude streams, in the second half of June. Brent Crude Futures briefly rose on the news, whereas BP stocks ended on $40.25 last week based on news of deal and planned shutdown.

Boeing Forecasts Huge Global Aviation Market in 2020s But Embroiled In Short Term Troubles And Facing Threats At Home

Plane maker anticipates strong orders for commercial aircraft orders from Middle East, Asia,    while Union action and lackluster aircraft variant orders likely to hold it back.

 

Boeing, Inc. (NYSE:BA) has forecasted a market size of 13000 aircrafts and less than 3000 aircraft orders for the Middle East respectively. This certainly is a very lucrative market for plane-makers for both, Airbus and Boeing, but especially for the latter. There is now a new dimension to this, as claimed by James Armington, Boeing’s Vice President for the East Asia-Pacific region. He now predicts that South Asia’s, and a part the Middle East, demand for defense aircraft is likely to grow, because of growing economic growth. The major reason for this rise in demand is also a number of territorial disputes and the battle for depleting natural resources erupting in the region, resulting in a number of Asian states beefing up their military to face any untoward threat.

Whilst the Chicago headquartered company also predicts a market of more than 7500 commercial planes, each for the North American and European market is below the average 10500 planes that were sold for the past few years due to debts and budget deficits. This compelled many governments there to trim down their defense budgets and focus on rationalizing their defense structure, although they will still be able to invest more on technologies and focus more on bootless warfare, involving no troops on ground, using technologies such as drones and other reconnaissance aircraft.

The above scenario presents a positive outlook for many aerospace companies, but for the likes of Boeing, that road trip for a greater slice of that aircraft order share is not without its speed bumps that they will likely come across the runway. Next month, Boeing will pit itself against the unions for the ‘union authorization vote’ that has disrupted the organized labor movement’s expansion down. Ever since Boeing set up its manufacturing plant down in South Carolina, the company has been engaged in a clash with the International Association of Machinists and Aerospace Workers (IAM). The former’s plan to take advantage of the anti-unionist labor market down South against the latter’s plan to expand the union membership there to provide benefits to workers on union membership.

Boeing has hit out at the IAM for false and misplaced information that it is subjugating workers’ rights, and points to investments made exclusively to South Carolina facilities to benefit the related communities. Another key area of concern is the variant aircraft orders. With the first quarter of this year ending, the company has recorded 80 orders, but only seven of them are ‘787' aircraft against the 60 ‘737’ upgraded models. The company must keep track of the demand in the market, and ensure a responsive supply chain to produce more airplanes of that model in high demand. The company has installed a new system in its manufacturing facility to help its 737s built faster and meet this demand.

Sony Cyber Security

Senator John McCain who is the chairperson of Senate Armed Services Committee, will conduct trials in the upcoming two weeks of the Congress meeting. The hearing will particularly focus on the cyber breach associated with Sony Pictures.

McCain who seemed very agitated over the issue considered it be "an act of war". He understands the sensitivity of the situation and demands revenge from North Korea. According to him the only possible revenge is to hit North Korea with a cyber security attack. No rocket or missiles can do justice to this act of cowardice. He further adds that this initiate is a threat to the integrity of free speech. The vulnerability of the situation can be deduced by the fact that he had never heard of a more brutal act in his lifetime. McCain knows that United States has immense potential in the cyber crime domain and he encourages to use this potential in favor of the nation.

Also the United States official plan to take revenge. According to White House Press Security spokesman, the culprits shall be avenged but so far they have not yet decided what the response shall be.

Sony Corp (ADR) (SNE) Pictures planned on launching their controversial comedy movie 'The Interview'. The plot of the movie narrated the murder of a North Korean revolutionist Kim Jong Un. This led to some hackers making their way to the servers of Sony Pictures and thus became an imminent threat to movie cinemas. McCain also encouraged Sony to exhibit the movie free of cost on the online medium. 

The entire United States government condemns cyber breaches and will not take cyber warfare lightly. McCain adds that the problem with American economy is that they do not understand the sensitivity of cyber attacks.

Sony Corporation took a fairly bold move to come up with a bizarre plot for 'The Interview'. This does not involve the hacking but in general, the entire movie is a bit hard to digest. 

The intellects at Sony made sure to leave no stone un-turned on their quest to produce something extremely delusional similar to a third world fantasy. The story revolves around CIA who hires two journalists belonging to United States. They embark on a mission to assassinate  Kim Jong-un who is a Korean madman.  

Apparently this project is a comedic venture that will break your nerves. The script writers are demanding quite a lot from viewers since the expect them to believe in the illegal assassination of a living being and that even with his face melting and flesh exploding. Either Sony expects viewers to pull the plug out or develop the virtue of patience. 

The movie gives birth to a conspiracy that actually poses American journalist as spies of the government. This has actually led to the death of some courageous journalist. 

This cannot be considered as a gateway of excuses to the cyber theft secrets of Sony. But certainly this rings a bell regarding the distortion Sony is experiencing long before the hackers attacked.

Crude Oil Plummets Below $62 On Strong Dollar And Excessive Supply

Economists estimate that the Iranian crude output may increase at a faster pace after removal of sanctions

BP plc (ADR) - (BP) on March 25th was trading at a stock price of  $39.51 after being down at by 1.57% at -$0.63, during trading hours. Brent crude plummeted nearly 2% below $62 per barrel on Monday due to stronger dollar and reports which suggested that Libyan oil production will increase. Furthermore, Iran's statement seeking agreement about nuclear program, which could lifts sanctions on the country, would upsurge its crude oil.

Brent, the benchmark index for global crude oil prices, plunged by $1.28 to $61.8 per barrel and it was at $61.3 earlier in March. Future of Brent (LCOc1) climbed 18% last month, which is the highest monthly increment in almost six years.

West Texas Intermediate (WTI), the benchmark used to determine crude prices in the US, slid $0.95 to $48.81 per barrel.

Stronger Dollar

The dollar climbed the most in 11 years against the basket of major currencies, as a cut in Chinese discount rate, which reduced the value of yuan against dollar, and growing speculations that Fed will increase the bench mark rates in the US, boosted the dollar.   

The dollar index, dollar against a basket of major currencies, jumped up to 95.5 today, which is the utmost point since September 2003. After the most sluggish economic growth in 2014 in a decade and the rate cuts in China, the dollar climbed two-year high against yuan.

Dollar was appreciated due to depreciation of Kiwi and Australian dollar. Due to growth issues, Kiwi dollar has been down in recent weeks; however, cut in Chinese interest rates gave some cushion to the currency.

Libyan Crude Supply

In first two months of this year, crude received cushion from Iraq and Libya, two members of Organization of the Petroleum Exporting Countries (OPEC), as both of the countries lowered their crude production. However, recent reports suggested that Libyan crude production has increased over 400,000 barrels per day (bpd).

Upsurge In Iranian Oil Exports

Earlier today, the Foreign Minister of Iran, Mohammad Javad Zarif said in a statement, "If there is the political will to accept that agreement and sanctions cannot go together, then we can have an agreement this time."

The US and the European countries put sanctions on Iran for seven years, which restricted it from exporting oil, due to its nuclear program issues. The West believes the program has been initiated to create atomic weapons, while Iran claims that its nuclear program is peaceful.

Economists estimate that the Iranian crude output may increase at a faster pace after removal of sanctions and upsurge in its exports by nearly 1 million bpd. According to Thomas Reuters survey, Iran produced about 2.8 million bpd of oil during February.

Maersk (AMKBY) Will Pay $6.5 Billion Dividend To Shareholders

 

Stakeholders to benefit from sale of stakes to Danske Bank; bondholders to lose out 

 

The largest Danish company, AP Moeller – Maersk A/S (AMKBY), is preparing to provide a record return of $6.5 billion to its shareholders in April, mainly due to selling stakes in Danske Bank A/S. However, the corporate bondholders of the company will lose out.

According to a statement, the company has decided to sell its 20% stakes in a local Danske Bank, which will boost dividend payout for shareholders by $5.5 billion next month. Furthermore, it will pay ordinary dividend of roughly $1 billion from its operations.

“Maersk will no longer benefit from the financial flexibility related to the Danske Bank stake,” Moody’s Senior VP Marie Fischer-Sabatie said in a statement a day after Maersk published its earnings report on 25th Feb. “The 20 percent stake in Danske Bank was indeed an asset of a large value, which Maersk had the possibility to monetize in case of need.”

Credit Rating Unchanged

Standard Poor’s (S&P) said that the flexibility of Maersk would reduce after the sale of the stakes, as it offers the company “somewhat less headroom within the rating”. Divestment of assets by Maersk will not result in any changes in its rating, as per S&P and Moody’s statements. Sale of the stakes would reduce Maersk source of income.

The logistics giant was once the largest corporate bond (unrated) issue in Europe. It asks credit rating assistance service from the two rating companies in September 2013 for its component and received “Baa1” rating grade at Moody’s and “BBB+” grade  at S&P.

Maersk Friendliness Towards Dividend to Shareholders

Since 2013, the bondholder has received return of around 5.5% on corporate bond maturing in November 2017. Over the same period, shareholders have realized 51% return, which includes reinvested dividends.   

Up till now in 2015, the company has provided 0.52% return to the bondholders and 23% to the shareholders.

PFA A/S has stakes in Maersk’s equity worth around $375 million, but it hasn’t spent in the bonds of Maersk, as Maersk provides more return to its shareholders compared to its bondholders.

Danske Market Inc., a US brokerage and affiliate of Danske Bank, provided a recommendation against buying the bonds of Maersk, after the company announced its financial results of 2014, due to company’s friendliness towards the shareholders in form of healthy dividends, share buybacks, and risk of debt rising on acquisitions.

Last year, Maersk repurchased share worth $1 billion for the first time by raising $3.2 billion from the sale of stakes in supermarkets.

However, the Danish multinational intends to issue more corporate bonds.

Telefonica Acquires Vivendi for $9.3 billion Which Plans To Return $6.4 Billion To Its Shareholders Through Assets

The French conglomerate accepts $4.37 billion bid from Altice SA for its residual 20% stakes in Numbericable SFR Vivendi Will Return $6.4 Billion To Shareholders Through Assets Sale

 

The French conglomerate, Vivendi SA (VIVHY), is shifting its focus completely on media sector by selling telecom assets, as the company aims to provide a return of €5.7 billion ($6.4 billion) to its shareholders.

Since mid-2013, Vivendi has adopted a strategy to depart from the telecom industry and sold three out of its six businesses, as the company desires to sell its telecom assets and reward its shareholders.

It accepted to sell Global Village Telecom, its telecom company in Brazil, to Telefonica SA (ADR) (TEF) for €7.2 billion ($9.3 billion) in cash and stocks.

Telefonica SA (ADR) is looking for expansion in its remaining media assets that include Universal Music Group (UMG), the largest music company in the world. Canal Plus, which primarily provides pay-TV service in France, is also expanding overseas, which will increase the revenues slightly in FY15.

The Paris-based media giant reported Friday, after the market closed, that it will provide return to the investors in form of extraordinary dividend share and stock buyback by second quarter of 2017 (1QFY17).

The company expects net earnings to rise 10% compared to FY14, as the restructuring cost would be lower and revenues will be boosted by strong international growth in pay-TV and music stream.

It also said that its directors have accepted a €3.9 billion ($4.37 billion) bid from Altice SA (ATCEY) Founder Patrick Drahi for its residual 20% ownership in Numericable SFR SA, the second-largest French telecom company by subscribers.

The sale price of the stock is €40 per share, which is at a discount of 27.8% to €55.4, closing price of SFR on Friday. The media giant said that it was a practical decision to accept the bid because liquidity issues prevail when a company tries to sell large amount of stocks on the open market.

Returns To Shareholders

The sale of telecom assets has driven Vivendi to increase the amount of shareholders' return to €5.7 billion by FY17. It promised to pay annual dividend per share of €1 for FY14 and plans to maintain similar payout for FY15 and FY16.

Vivandi also propose to buyback €2.7 billion stock, which is €20 per share.

2014 Performance

Vivendi posted its FY14 financial results on Friday in which the company’s net earnings were €626 million and annual revenues were €10.01. The media giant missed the Wall Street’s forecast of €679 million earnings and revenue of €10.21.

Revenues at UMG plunged 5.6% year-on-year (YoY) to €4.56 billion, as high revenue growth of steam couldn’t offset weak CD sales.

Canal Plus revenues mounted 2.7% YoY to €5.46 billion, as its Studiocanal production outperformed on hit movies like “The Imitation Game” and “Paddington”.

AbbVie Posts Better-Than-Expected Q4 Results

 

Humira drug sales growth offsets net foreign exchange loss, as AbbVie gets approvals for Viekira Pak.

U.S. biopharmaceutical research company, AbbVie Inc. (ABBV), announced its
fourth quarter earnings of 2014 on Friday, before the market opened. The earnings
surpassed the Street’s estimates, as the some drugs, especially Humira, generated
outstanding revenue growth.

The net revenues of the drug maker jumped 6.67% year-on-year to $5.45 billion, from
$5.11 billion.

AbbVie reported net loss of $810 million ($0.51 per share) in the fourth quarter of 2014,
down from net profit of $1.13 billion ($0.7 per share) in the same quarter last year.
Adjusted earnings per share (EPS) were $0.89.

The company thrashed the Street’s estimates of $0.86 EPS with $5.36 billion revenues.

"AbbVie delivered exceptional performance in 2014 with sales and earnings well above
our original projections for the year," Chairman and CEO of AbbVie, Richard A.
Gonzalez, said in quarterly press conference. "We returned to growth in 2014, a year
ahead of schedule, and we expect to continue building on that momentum in 2015 with
another year of strong performance.”

The company reported a net loss due to a charge for abandoning $55 billion deal to
acquire Shire Plc. (NASDAQ:SHAPG). AbbVie had to pay a charge of $1.6
billion,

Illinois-based company’s largest drug in terms of sales, Humira, contributes more than
half of total revenues of the company. Revenues of Humira jumped 10.6% YoY to 3.36
billion in the quarter, as the growth rate in the U.S. was strong. Export revenue
of Humira was affected by 3.8% due to

After U.S. Food and Drug Administration approved a hepatitis C multidrug, Viekira Pak,
on 19th December, the drug provided revenues of $48 million in the remain days of the
month. The company no longer has to rely solely on Humira, after the approval
of Viekira Pak. The Hepatitis C multidrug is expected to contribute $2.5 billion to total
revenue at 2015 year-end.

Other drugs also generate healthy revenue growth.  Dyslipidemia revenues rose 13.6%
to 104 million, while revenues from Duodopa mounted 14.7% to 56
million. Creon jumped 30.6% to 151 million. Rest of the drugs either underperformed or
their revenues were affected due to strengthening of dollar. Net foreign loss rose 89.7%
to $96 million

Total operating cost and expense mounted 64% YoY to $5.87 billion, as selling, general
and administrative expenses jumped 130.73% YoY to 3.34 billion in the fourth quarter,
due to additional overhead costs associated to recent launch of HCV and promotion of
growth brands. Research and development expense increased 10.15% YoY to $879
million in the fourth quarter.

JC Penney Plunges On Quarterly Loss And Disappointing Forecast

 

Share of JC Penney plunged 11% in pre-market trading, after 1QFY14 results were announced in after-market trading yesterday.

Share of JC Penney Company Inc. (NYSE:JCP), the U.S. departmental store, plunged 11% in pre-market trading, after the announcing financial results of fourth quarter 2014 (1QFY14) in after-market yesterday.
The retailer posted a quarterly loss in 1QFY14 as its spending rose on store expansion and it offered more than required discounts during the holiday season.

The net loss was $59 million ($0.19 per share) in the quarter, down from net earnings of $35 million ($0.11 per share) in prior-year quarter. The company also realized a $270 million tax-gain during the quarter. Adjusted earnings per share (EPS) were in line with analysts’ forecast of $0.11.

Sam-store sales mounted 4.4% year-on-year (YoY), beating the Street’s estimates, as per Consensus Metrix. Net revenues of the chain climbed 2.9% YoY to $3.89 billion in 4QFY14, compared to $3.78 in 4QFY13. Analysts forecast net revenues of $3.87 billion.

The Texas-based retailer expects same-store sales growth between 3-5% for the 1QFY15, which is a downgrade compared to previous forecast of mid-single digit growth for FY15-FY17. The Street estimates growth of 3% for 1QFY15.

Where analysts are looking for margin growth of 150 percentage points (pp) for FY15, the retailer expects margin to jump in range of 50-100 pp. Analysts have projected free cash flow of $25.4 million this year, the retailer excepts it to be flat, compared to $57 million in FY15

“2014 was a successful year for JC Penney,” JCP CEO Myron Ullman said in quarterly/full-year press release. “We are back in the eyes of our customers, back running the business effectively and back on solid financial footing.  We fully intend to build on this momentum and continue to significantly improve our business in 2015.”

Since taking the role of CEO, Mr. Ullman is striving to reduce the losses and focus on revitalizing revenues growth of the company, using a strategy that comprises of increasing products and revamping marketing.

Same-store sales of the company were pulled up by holiday season sale, especially high demand for apparel, jewelry and household products. Lower fuel prices and increasing jobs, which led to an increase in spending, throughout the holiday season helped many online retailers including Macy’s Inc. (NYSE:M) and Sears Holding s Corp. (NASDAQ:SHLD) in increasing their same-store sales.

JCP stocks closed at $7.44 after a decrease of $0.05 at 0.67% during after hours. The company shares were trading at $7.49 an increase of 2.46% during trading hours as of 7:59 PM before the weekend