Egypt Independent: Business-Main news en Egyptian 3-month T-bill yields drop at auction, 9-month yields rise <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><div>Yields on Egypt&#39;s three-month treasury bills dropped while those on its nine-month bills rose at Sunday&#39;s auction, data from the Finance Ministry showed.</div><div>&nbsp;</div><div>The average yield on Egypt&#39;s 91-day bill dropped to 11.392 percent from 11.413 percent at the last sale on January 31, while the yield on the 273-day bill rose to 12.060 percent from 12.059 percent on January 31.&nbsp;</div> Sun, 07 Feb 2016 14:13:00 +0000 Reuters 2466292 at sites/default/files/photo/2015/03/25/1755/finance_minister_hani_demian.jpeg As Big Oil shrinks, boards plot different paths out of crisis <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><div>As oil and gas companies cut ever-deeper into the bone to weather their worst downturn in decades, boards have adopted contrasting strategies to lead them out of the crisis.</div><div>&nbsp;</div><div>Crude prices have tumbled around 70 percent over the past 18 months to around $35 a barrel, leading to five of the world&#39;s top oil companies reporting sharp declines in profits in recent days.</div><div>&nbsp;</div><div>Executives at energy firms face a tough balancing act: they must cut spending to stay financially afloat while preserving the production infrastructure and capacity that will allow them to compete and grow when the market recovers.</div><div>&nbsp;</div><div>Companies have opted for differing approaches to secure future growth, often choosing to narrow focus to their areas of expertise and the geographic location of their main assets.</div><div>&nbsp;</div><div>American firms Chevron CVX.L ConocoPhillips (COP.N) and Hess Corp (HES.N) are withdrawing from more costly deepwater projects to focus on shale oil fields on their home turf, for example.</div><div>&nbsp;</div><div>Britain&#39;s BP (BP.L) is betting on offshore gas in Egypt, while Royal Dutch Shell (RDSa.L) has opted for an alternative route as it seeks to safeguard its future: the $50 billion takeover of BG Group (BG.L).</div><div>&nbsp;</div><div>In the five years before the downturn began in mid-2014, when crude prices held above $100 a barrel, big energy firms had raced to expand production capacity, including buying stakes in vast, costly fields sometimes located thousands of meters under the sea, and miles from land.</div><div>&nbsp;</div><div>Over the past year however, companies have slashed their overall capital expenditure, scrapping plans for mega projects that cost billions to develop and take up to a decade to bring online.</div><div>&nbsp;</div><div>&quot;Companies want to strike a balance between long and short-cycle investments while maintaining a robust balance sheet to fund their way through the down cycle,&quot; said BMO Capital analyst Brendan Warn. Focusing on a specific set of expertise and geographies allowed them to offer investors a &quot;unique value proposition&quot;, he added.</div><div>&nbsp;</div><div><strong>US shale, Egypt gas&nbsp;</strong></div><div>&nbsp;</div><div>Chevron, the second-largest US oil firm after Exxon Mobil (XOM.N) by market value, last week outlined plans to target spending on &quot;short-cycle&quot; investments - lower-cost projects that can take months, rather then several years, to come online.</div><div>&nbsp;</div><div>In particular, it is focusing on its big presence in shale oil fields in the US Permian basin at the expense of high-cost, complex deepwater projects after cutting its 2016 capital expenditure, or capex, by 24 percent.</div><div>&nbsp;</div><div>&quot;In terms of longer-cycle projects, we aren&#39;t initiating. We aren&#39;t initiating any ... You are going to see us preferentially favor short-cycle investments, and if they don&#39;t meet our hurdles, we won&#39;t invest,&quot; Chevron Chief Executive Officer John Watson said in an analyst call.</div><div>&nbsp;</div><div>Even though developing shale wells can be more costly than some deepwater projects on a per-barrel basis, a much shorter development cycle and lower execution risks mean that companies can reap benefits quicker.</div><div>&nbsp;</div><div>The short-term investment strategy is driven in part by the fact that, unlike for example BP, it already has a pipeline of longer-term projects - it is currently developing some of the world&#39;s largest liquefied natural gas (LNG) projects such as the Gorgon and Wheatstone plants in Australia.</div><div>&nbsp;</div><div>Smaller firms ConocoPhillips and Hess have also shifted away from deepwater projects to onshore shale production including in North Dakota&#39;s Bakken Shale.</div><div>&nbsp;</div><div>BP was one of very few companies that approved a major project last year, with its $12 billion investment decision in the West Nile Delta gas project in Egypt. The strategy is partly based its plans to see a large part of its future production growth come from gas off the coast of the North African country.</div><div>&nbsp;</div><div>But the company, which reported its biggest-ever loss last week, also does not have the line-up of long-term projects boasted by the likes of Chevron; the development is also driven by the fact it sold more than $50 billion of assets after the deadly 2010 Gulf of Mexico oil spill, leading to a significant decline in output, according to analysts.</div><div>&nbsp;</div><div>&quot;BP aren&#39;t digging themselves through a hole. They are investing a little bit through the cycle,&rdquo; said Warn.</div><div>&nbsp;</div><div><strong>Dealmaking&nbsp;</strong></div><div>&nbsp;</div><div>Shell, by contrast, opted at an early stage of the downturn to acquire Britain&#39;s BG Group in the sector&#39;s largest deal in a decade. It will make it a leader in LNG and offshore oil production in Brazil and increase its energy reserves by about a fifth.</div><div>&nbsp;</div><div>The Anglo-Dutch group, which posted its lowest annual income for 13 years last week, expects to complete the deal this month.</div><div>&nbsp;</div><div>US giant Exxon may need to take a leaf out of Shell&#39;s book and seek a major M&amp;A deal after it surprised many in the market last week by slashing its 2016 spending by a quarter to $23 billion, said Anish Kapadia, analyst at Tudor, Pickering, Holt and Co.</div><div>&nbsp;</div><div>The capex cut signals the company - which reported its smallest quarterly profit in more than a decade - is not planning to invest in many new projects, he said.</div><div>&nbsp;</div><div>&quot;That is a signal that Exxon doesn&#39;t have an attractive enough project queue to invest in and is not willing to invest in upstream, so if it wants to grow it will have to make an acquisition,&quot; added Kapadia.</div><div>&nbsp;</div><div>&quot;In this environment with the potential for higher oil price, Chevron are doing the right thing. They can survive over the next few years and have the option to grow. Exxon is at the bottom of the pile. It looks the most expensive but it is hard to justify given the lack of growth outlook.&quot;</div><div>&nbsp;</div><div>Tudor, Pickering, Holt and Co. has a &#39;buy&#39; recommendation on Chevron and Shell, a &#39;hold&#39; on BP and &#39;sell&#39; on Exxon.</div><div>&nbsp;</div><div>Norway&#39;s Statoil (STL.OL) and France&#39;s Total (TOTF.PA), meanwhile, appear to be sitting in the middle ground: both have indicated they will not invest in new projects this year but they also have big projects coming on stream in the coming years that will counter production declines.&nbsp;</div> Sun, 07 Feb 2016 12:53:00 +0000 Reuters 2466287 at sites/default/files/photo/2016/01/25/503194/saudi_oil.jpg Egypt's Palm Hills posts 2015 Q4 profit of $26 million <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><div>Palm Hills, Egypt&#39;s second-largest listed property developer, reported on Sunday a 128 percent rise in fourth-quarter net profits to LE203.5 million (US$25.99 million) from LE89.2 million in the same period last year.</div><div>&nbsp;</div><div>The company posted a 192 percent rise in net profit of LE1.03 billion for the 2015 full year, up from LE353.3 million in 2014.</div><div>&nbsp;</div><div>Its board of directors proposed its first cash dividend, LE0.15 per share, and a bonus shares issuance of one bonus share for each 20 shares held, the company said in a statement.</div><div>&nbsp;</div><div>&quot;Our pre-sales for the year have for the first time ever broken the LE6 billion mark, recording 6.3 billion with a growth of 61 percent,&quot; said Chairman Yasseen Mansour.</div><div>&nbsp;</div><div>&quot;Growth in pre-sales was fueled by demand for primary housing as Egyptians continue to migrate from Cairo, heading west and east, as well as demand for secondary homes in the North Coast,&quot; he added in the statement.</div><div>&nbsp;</div><div>Palm hills posted revenues of LE957.2 million in the fourth-quarter of 2015 versus LE777.5 million in 2014. Revenues for the full year in 2015 stood at LE3.56 billion compared to LE2.1 billion in 2014.</div><div>&nbsp;</div><div>The company expects to spend LE2 billion on construction in 2016 and achieve gross sales of LE6.5 billion, delivering about 1,600 units.</div><div>&nbsp;</div><div>&quot;We expect to reach an agreement with the Egyptian government for the co-development of a mixed use 42 million square meters in West Cairo during the first half of 2016,&quot; said Mansour.</div><div>&nbsp;</div><div>&quot;Moving forward, we are planning to return excess cash to shareholders with plans to distribute almost 30 percent from annual free cash flows in the form of cash dividend to shareholders or share buyback, depending on market conditions.&quot;</div> Sun, 07 Feb 2016 09:40:00 +0000 Reuters 2466266 at sites/default/files/photo/2016/02/07/94/palm_hills.png Egypt stocks up as foreigners return <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><div>Cairo&#39;s main index jumped 2.3 percent to 6,202 points as foreign buyers returned. Foreign investors, who had mostly been exiting positions since the start of the year, were net buyers on Thursday, bourse data showed.</div><div>&nbsp;</div><div>Technical analysts at Cairo-based Pharos Research said this could be an opportunity to enter the Egyptian market.</div><div>&nbsp;</div><div>&quot;We think that any break above the 7,100 level - which is the resistance line - would be a confirmation of a bullish rally,&quot; they said in a note to clients.</div><div>&nbsp;</div><div>Commercial International Bank, one of the Egyptian stocks preferred by foreign fund managers, surged 4.9 percent.</div> Thu, 04 Feb 2016 15:02:00 +0000 Reuters 2466208 at sites/default/files/photo/2016/01/31/501010/stock_market.jpg