2023-12-14 11:44

Dec 14 (Reuters) - (This Dec. 14 story has been corrected to clarify that Citi advised Exxon, not Pioneer, in paragraph 7) Six U.S. oil and gas bankers who missed out on a wave of mega deals in the oil patch after leaving mergers and acquisitions powerhouse Citigroup (C.N) last year to join smaller firm Guggenheim Securities are now decamping to Moelis & Co (MC.N), according to people familiar with the matter. The merry-go-round underscores the restlessness of dealmakers who try to get hired on big, high-prestige deals while working for firms that let them keep more of the advisory fees they generate. Energy and power has been the most active sector for dealmaking this year, accounting for $460.3 billion worth of transactions globally, up 4% year-on-year, according to LSEG. The six bankers which Moelis has hired from Guggenheim include Muhammad Laghari, Alexander Burpee, Benjamin Dubois, and Ryan Staha, said the sources, who requested anonymity because the moves have not yet been announced. The bankers, who previously worked at Citigroup together, are on gardening leave and will start at Moelis in the next few weeks, the sources added. Moelis and Guggenheim declined to comment. Dealmaking has soared among oil and gas producers in the last two months, as companies seek to boost profitability by adding more and better acreage. Exxon Mobil (XOM.N) clinched a $60 billion deal to buy Pioneer Natural Resources (PXD.N) and Chevron (CVX.N) announced a $53 billion agreement to buy Hess (HES.N). Occidental Petroleum (OXY.N) said on Monday it would buy closely held U.S. shale oil producer CrownRock for $12 billion including debt. While Citigroup advised Exxon on its purchase of Pioneer, neither Guggenheim nor Moelis were on these deals. Deal-focused investment banking boutiques like Moelis and Guggenheim typically allow their bankers to keep more of their client fees compared with big bulge-bracket banks like Citigroup, which run more diverse businesses they have to pay for. Guggenheim ranks 19th in LSEG's league table for U.S. oil and gas deals this year with $5.8 billion of announced transactions, having been outside the top 25 advisers in 2022. Its largest mandate was helping Civitas Resources (CIVI.N) on its $4.7 billion purchase of energy producers from private equity firm NGP, which was announced in June. Moelis has also been a minor U.S. player. It is currently 25th in the same league table this year, and was outside the top 25 in 2022. It has close ties, however, to a number of major international energy clients, including Saudi Aramco (2222.SE) and Abu Dhabi National Oil Co. https://www.reuters.com/markets/deals/guggenheim-oil-gas-bankers-leave-moelis-after-mega-deal-miss-sources-2023-12-14/

2023-12-14 11:27

Dec 14 (Reuters) - The U.S. Treasury Department's Office of the Comptroller of the Currency (OCC) carried out its first climate risk assessment of more than two dozen banks in recent months, laying the groundwork for heightened scrutiny of Wall Street's accounting for such threats, people familiar with the matter said. Dubbed a "discovery review," the previously unreported process involved the regulator assessing how banks are accounting for the impact of climate change on their loan books and business, as well as exploring how they manage energy finance and greenhouse gas emissions, according to the sources. The exams shed light on how the OCC plans to implement guidance on climate risk for banks with more than $100 billion in assets, which it issued in October together with the Federal Reserve and the Federal Deposit Insurance Corporation. More than 30 banks meet this threshold, according to the latest OCC data available on its website. Identifying and acting on this risk has been one of U.S. President Joe Biden's key administration priorities. The regulator used the discovery review to establish a baseline of banks' practices so it has a yardstick with which to assess their progress in implementing the guidance, the sources said. The OCC may take disciplinary action as early as next year against banks that do not show progress, the sources added, requesting anonymity to discuss confidential regulatory matters. An OCC spokesperson acknowledged carrying out the discovery review but declined to comment on the details. "The OCC's focus on and supervision of climate-related financial risk is firmly rooted in its mandate to ensure that national banks and federal savings associations operate in a safe and sound manner. The OCC's approach is focused on banks' risk management, not on setting industrial policy," the spokesperson said. The information-gathering visits, which happened mostly in the second half of 2023, involved multiple meetings with the banks over several days, three of the sources said. Specialists in risk management, operations, monitoring and audit were called to the meetings, according to the sources. Chief risk officers attended some of the meetings, two of the sources said. Bankers handling relationships with clients, compliance and risk officers and auditors were asked about climate risk to see if they responded coherently, one of the sources added. OCC officials also sent lengthy requests for information on dozens of points to banks, ranging from how they would prepare for a shift to low-carbon energy to how they use data and monitor progress towards targets, the sources said. Examiners also wanted to know how banks' public comments on climate align with their investment plans and risk appetite, two of the sources said. OCC staff were at times joined by officials from the Federal Reserve Board, one source said, and in other cases by representatives of the Prudential Regulation Authority (PRA) of the Bank of England, another of the sources added. It is not unusual for the OCC to share information with the Bank of England and other foreign regulators through memorandums of understanding to better supervise global banks. A PRA spokesperson declined to comment. 'PRUDENCE DEMANDS IT' Michael Hsu, who became acting OCC Comptroller in 2021, was among the first banking regulators to push for the sector to assess and manage its risk to climate change. Hsu told U.S. lawmakers in October that the OCC has worked with large banks to better understand and help them mitigate climate-related financial risks, and that it plans to monitor these frameworks in the future. "They should not wait for disaster to strike before they act. Prudence demands that regulators and the industry adapt as risks emerge," he said. The OCC appointed its first-ever Chief Climate Risk Officer in July 2021. Former banker Nina Chen, who had also worked at major non-profit The Nature Conservancy, has been serving in that role since September 2022. Federal Reserve Chair Jerome Powell has said his agency "is not and will not be a climate policymaker." The U.S. central bank has taken the lead on a separate, more narrowly targeted exercise which required the six biggest U.S. banks to map out what extreme weather and the transition to cleaner forms of energy will do to their assets and investments. That review included Bank of America (BAC.N), Citigroup (C.N), Goldman Sachs Group (GS.N), JPMorgan Chase (JPM.N), Morgan Stanley (MS.N) and Wells Fargo (WFC.N). This process has now wrapped up, with the Federal Reserve expected to publish aggregated findings shortly, a source familiar with the matter said. Spokespeople for the Fed and all the banks declined to comment. https://www.reuters.com/sustainability/cop/us-regulator-probes-banks-climate-risk-planning-2023-12-14/

2023-12-14 11:04

A look at the day ahead in U.S. and global markets from Mike Dolan Judged by the sharp drop in the dollar, European central banks may find it hard to match the dovishness from the Federal Reserve that's seen global interest rates plummet overnight. The European Central Bank and Bank of England now have to follow the fireworks, where the Fed's policymakers catapulted bond and stocks higher over the past 24 hours by indicating that as much as 75 basis points of policy rate cuts were coming down the pike next year. Even though Fed boss Jerome Powell publicly walked the cautious line of not declaring victory yet on inflation and refusing to rule out another rate hike if necessary - the median of Fed policymaker projections for rates in 2024 showed markets had not been too far from Fed thinking after all. A wide dispersion of Fed views on the policymaking Open Market Committee showed some uncertainty still, but the direction of travel was clear and a majority expect three quarter point cuts or more next year. Earlier in the day, news of a drop in annual "core" producer price inflation to 2.0% last month showed the backdrop of disinflationary process setting up the "pivot". Wall St boomed and the wave of positivity swept around the world through the night. The S&P500 (.SPX) had its best day in a month and surged more than 1% to within 2% of record highs. The Dow Jones Industrial Average (.DJI) clocked a record close and the Nasdaq 100 (.NDX) hit its highest since 2021. And futures pushed higher again ahead of Thursday's open. But the real action was in the rates market, where Fed futures now see the first quarter-point cut in March, two cuts by May and 150 bps of easing by yearend. Two-year Treasury yields plunged almost 50 bps from Wednesday's peak to hit their lowest since May, while 10-year yields plunged below 4% for the first time since early August to as low as 3.93%. Curiously, and perhaps showing that markets think the Fed may be moving too fast, inflation expectations embedded in the two-year inflation-protected securities rose to their highest since June at 2.3%. Most major bourses around the world followed Wall St's suit, however, and gained more than 1% on Thursday, with MSCI's all-country index (.MIWD00000PUS) soaring to its highest level since April 2022. But even with the ECB and Bank of England meetings up ahead on Thursday, the dollar index (.DXY) dropped sharply to its lowest since August. While the ECB and BOE may struggle to match such a clear easing view as the Fed, next week's Bank of Japan meeting may even see another tweak of tightening. And so the yen led the way higher to its best levels since July, near 140 per dollar. Despite the variations, however, bond markets everywhere were lifted around the meetings. Ten-year German bund yields plunged to near 2% to their lowest since March, while the precipitous drop in UK gilt yields - which had started on Wednesday on news of a contraction of the British economy in October - continued to its lowest 10-year rate since May. It wasn't all sweetness and light, however, and there were exceptions. Norway's crown surged to its best levels since August after Norges Bank raised its benchmark rate by 25 bps to 4.50% in a surprise decision and said it would likely stay put at that level for some time. And the negativity surrounding China's stock market (.CSI300) continued regardless, with its blue chip index bucking the global trend yet again and losing 0.5% - stretching the underperformance against the MCSI all-country index this year to some 26%. New bank lending in China jumped less than expected in November, even as the central bank keeps policy accommodative to support a feeble recovery in the world's second-largest economy. And geopolitical fears surrounding China's stance on Taiwan rumbled ominously in the background. Key developments that should provide more direction to U.S. markets later on Thursday: * European Central Bank, Bank of England, Central Bank of Mexico all make policy decisions * EU summit in Brussels, to Fri. WTO council meets in Geneva * U.S. Nov retail sales, import/export prices, weekly jobless claims, U.S. Oct business inventories and sales * U.S. Treasury auctions 4-week bills * U.S. corporate earnings: Lennar, Costco Wholesale https://www.reuters.com/markets/us/global-markets-view-usa-graphics-2023-12-14/

2023-12-14 11:02

Dec 14 (Reuters) - Canadian Natural Resources (CNQ.TO) said on Thursday it expects production to increase in 2024, as the energy producer bets on demand amid tight supplies. Canadian oil and gas producers have been disciplined with their output in 2023. However, an industry group, Canadian Association of Energy Contractors, expects companies to drill 8% more wells in 2024 to take advantage of greater access to pipelines. Calgary, Alberta-based Canadian Natural Resources expects total production to be between 1.33 million and 1.38 million barrels of oil equivalent per day (boepd) next year. It estimated 1.33 million to 1.37 million boepd for 2023. "As part of our 2024 budget, the drilling program is weighted towards longer-cycle projects in the first half of the year," President Tim McKay said in a statement. "During the second half of the year, we will focus on shorter-cycle development opportunities to better align with incremental market egress and potentially improved commodity pricing, maximizing value for our shareholders." The company set a target for exit production levels at around 1.46 million boepd, an increase of nearly 40,000 boepd from 2023 levels. The company expects annual production to grow 4% to 5% on an average in 2025, compared with 2024 targeted average annual production levels. Canadian Natural Resources expects to spend C$5.4 billion ($4.01 billion) in capital in 2024, largely in line with its 2023 forecast. ($1 = 1.3458 Canadian dollars) https://www.reuters.com/business/energy/canadian-natural-resources-projects-uptick-production-2024-2023-12-14/

2023-12-14 10:58

Cuts 2023 demand growth forecast by 90,000 bpd Raises 2024 demand growth forecast by 130,000 bpd to 1.1 mbpd Gap remains between OPEC, IEA views on 2024 oil demand growth LONDON, Dec 14 (Reuters) - World oil demand will rise faster than expected next year, the International Energy Agency (IEA) said on Thursday, a sign that the outlook for near-term oil use remains robust despite this week's COP28 agreement to transition away from fossil fuels. Despite the upgrade, there is still a sizeable gap between the IEA, which represents industrialised countries, and producer group OPEC over 2024 demand prospects. The two have clashed in recent years over issues such as long-term demand and the need for investment in new supplies. World consumption will rise by 1.1 million barrels per day(bpd) in 2024, the Paris-based IEA said in a monthly report, up 130,000 bpd from its previous forecast, citing an improvement in the outlook for the United States and lower oil prices. The IEA, which advocates a speedy transition away from fossil fuels, detailed the increase to its 2024 forecast only at the bottom of Page 4 of its report, after discussing other findings including a demand slowdown in the last three months of 2023 and rising supply. The 2024 revision reflects "a somewhat improved GDP outlook compared with last month's report," the IEA said. "This applies especially to the U.S. where a soft landing is coming into view." "Falling oil prices act as an additional boost to oil consumption," it said. Oil has weakened to a six-month low near $72 a barrel this week, even after OPEC+, which includes OPEC oil-exporting nations and allies such as Russia, on Nov. 30 announced a new round of production cuts for the first quarter of 2024. Crude was up almost 2% on Thursday after the IEA report was released to trade near $76. DEMAND SLOWDOWN In the report, the IEA also trimmed its forecast for oil demand growth in 2023 by 90,000 bpd to 2.3 million bpd and lowered its fourth-quarter estimate by almost 400,000 bpd. A halving in the rate of demand expansion next year is due to below-trend economic growth in major economies, efficiency improvements and a booming electric vehicle fleet, the IEA said. The extension of OPEC+ supply cuts into the first quarter of next year had done little to boost prices and higher output in other nations would act as a headwind, it added. "The continued rise in output and slowing demand growth will complicate efforts by key producers to defend their market share and maintain elevated oil prices," it said. OPEC in a monthly report on Wednesday kept its forecast for world oil demand growth in 2023 at 2.46 million bpd. In 2024, OPEC sees demand growth of 2.25 million bpd, also unchanged from last month. The difference between the IEA and OPEC 2024 forecasts has narrowed slightly but stands at 1.15 million bpd - equivalent to roughly 1% of daily world oil use and the daily production of an OPEC member such as Libya. Oil demand forecasters often have to make sizeable revisions given changes in the economic outlook and geopolitical uncertainties, which this year included China's lifting of coronavirus lockdowns and rising interest rates. https://www.reuters.com/business/energy/iea-raises-2024-oil-demand-growth-forecast-despite-economic-gloom-2023-12-14/

2023-12-14 10:51

LONDON, Dec 14 (Reuters) - (This story has been corrected to fix the name of the company to METYCLE, not METCYCLE, in the headline and paragraph 1) Germany's METYCLE, a scrap metal trading platform, has raised $5 million to expand to meet growing demand for recycling raw materials including aluminium used in electric vehicles and lithium used for batteries. Recycled or secondary metal is expected to be a key part of the energy transition, which includes electric vehicles and renewable energy such as solar and wind. It emits less carbon dioxide than that used in the production of primary metal from ores and concentrate and expectations are for this segment of the metals markets to grow at a fast pace over the coming years. Recycled or secondary aluminium, for example, typically uses 95% less energy than the primary metal. The $5 million was raised from investors that include venture capital firm Project A and private equity fund Partech. "Trade in secondary metals is global, highly fragmented, intransparent and characterised by low levels of trust," Rafael Suchan, co-founder of the company said. Unlike global mining giants, the secondary metals sector comprises mainly small and medium enterprises that focus on sourcing and sorting scrap locally. European Union countries raised their metal recycling targets earlier this year. Secondary metals are important due to red tape limiting mined production in the EU. https://www.reuters.com/markets/commodities/germanys-metcycle-raises-cash-expand-scrap-metal-platform-2023-12-14/