Megadeals reshape the US oil industry
Today’s top stories
Sterling reached a 21-month high against the euro as more persistent price pressures encouraged investors to bet that the Bank of England will cut rates much later than the European Central Bank.
Belgian and French police have raided the apartment and parliamentary offices of a European parliament staffer on suspicion of working for Russia, the latest in a series of scandals befalling far-right lawmakers on the continent.
Donald Trump’s “hush money” trial entered its final stretch with the jury beginning deliberations after the days-long testimony of Michael Cohen, the former president’s sworn enemy, and closing arguments from the lawyers.
For up-to-the-minute news updates, visit our live blog
Good evening.
ConocoPhillips has agreed to buy rival Marathon Oil to the tune of $22.5bn, including $5.4bn of net debt, as the spate of merger and acquisition activity in the US energy sector continues.
The acquisition will combine two of the country’s best-known energy companies, providing Conoco — one of the world’s biggest independent oil and gas producers — with assets extending across the US, from North Dakota to Texas.
The takeover comes amid a renewed push to consolidate the sector. “There’s too many players. Scale matters, diversity matters in the business,” chief executive Ryan Lance said earlier this year, highlighting the ongoing scramble for the country’s best remaining shale resources.
In a similar vein, Hess shareholders yesterday approved a $53bn merger proposal from Chevron, the second-largest oil company in the US, in what chief executive John Hess is calling a “strategic transaction” of “compelling value”. This occurs despite an ongoing arbitration process initiated by ExxonMobil, which casts a dark cloud over the acquisition.
Exxon applied for arbitration in March, arguing that it has first right of refusal over Hess’s stake in an oil and gas block in Guyana. Exxon owns a 45 per cent stake in the project, while Hess owns 30 per cent.
Guyana’s president Irfaan Ali told the FT this week that Exxon gaining a majority stake in the development could be a cause for concern. Oil output in the South American country is expected to grow faster than any non-Opec offshore producer by 2030, and yesterday’s pivotal vote demonstrates burgeoning investor appetite in the region. The supermajors are gearing up for a lengthy battle that could extend into 2025.
Though the clamour for natural resources shows no sign of abating, there are still setbacks. BHP’s attempt to acquire mining company Anglo American has collapsed after a lengthy pursuit of its London-based rival.
The companies had been in talks since last week to come to an agreement after Anglo rejected BHP’s third offer, saying it did not address the “highly complex and unattractive structure” of the deal.
The proposal would have required spinning off Anglo’s two South African businesses, although it would still have retained its secondary listing in Johannesburg, as well as headcount in the office there. Both Anglo and the government in Pretoria strongly opposed this.
BHP had also pledged to promote South Africa as a mining destination and to enact a number of charitable and investment projects across the country. These commitments are even more poignant today, when South Africans — buffeted by high unemployment and a floundering economy — head to the polls for a general election.
Anglo’s vast copper mines — a crucial component in the green energy transition — was a key part of the appeal for BHP. Pierre Andurand, one of the best-known commodity traders, predicts that the price of copper will almost quadruple over the next few years.
He told the FT: “We are moving towards a doubling of demand growth for copper due to the electrification of the world, including electric vehicles, solar panels, wind farms, but also military usage and data centres.”
Need to know: UK and Europe economy
German wages rose 6.4 per cent in the first quarter of this year, representing the largest real terms pay increase in Germany since 2008. The numbers are unlikely to deter rate cuts, which European Central Bank chief economist Philip Lane signalled would be lowered from their historic heights when they next convene on June 6.
An acute shortage of drugs has forced British patients to ration their use, as pricing squeezes on manufacturers, checks related to Brexit and competition from generic, off-patent versions cause production rates to tumble.
Despite Labour brandishing an endorsement letter signed by 120 big business as part of its charm offensive on the City, an FT analysis reveals that support for the party is scant among big name corporations — with only one sitting chair or chief executive of a FTSE 100 company signing the letter.
Click here to use the FT’s model to predict the UK general election result in every constituency based on how each party is polling.
Need to know: global economy
US Treasury secretary Janet Yellen has urged companies to prioritise cutting carbon emissions rather than depending on carbon credits to save the climate. She hopes to foster “high-integrity” markets in light of criticism levelled at the dubiously effective carbon credit market.
Somalian pirate attacks, drought, threats in the Middle East and a glut of ships carrying electric vehicles from China have wreaked havoc on global shipping routes, forcing ships to circumvent the Suez Canal by following the much longer and costlier route around Africa.
Disease and bad weather in Brazil have blighted orange juice supplies, pushing up concentrated orange juice futures prices by almost double what they were a year ago. Manufacturers are now exploring whether they can substitute in mandarins to create the drink.
Recent stronger than expected first-quarter growth in China has buoyed the IMF’s growth forecast for the country this year — but the agency warns that Beijing’s industrial policies and muted demand at home present challenges for China’s economic outlook, particularly as the current tech arms race reaches new heights.
The US-China geopolitical relationship: what is the way forward? Join FT, Nikkei Asia and Asia Society experts for a free webinar on June 18 and put your questions to our panel now.
Need to know: business
Czech billionaire Daniel Křetínský has agreed to buy Royal Mail’s owner in a £5.2bn deal, pledging to revive the delivery service’s fortunes after years of strikes amid concerns about increasing competition and the obligation to deliver letters at a set price across the country.
UK water regulator Ofwat is sketching out plans to enable Thames Water to avoid nationalisation and spur investment in infrastructure by cutting its fines — though critics decry the moral hazard and the apparent soft touch on a company under fire for pumping 14bn litres of sewage into the Thames in 2023.
Tesla has formally instructed its suppliers to start making electronic components outside of China and Taiwan, in the latest effort to de-risk global supply chains amid rising geopolitical tensions.
OpenAI has done an apparent about-face on previous claims to build “superintelligent” systems that are smarter than humans. Hot on its heels is competitor Elon Musk’s start-up xAI, which closed a $6bn funding round Monday.
The World of Work
Whatever happened to the generic email sign-off? Nowadays, we are using that valuable email real estate to boast about the book we’re reading or the distances we’re cycling. FT columnist Pilita Clark explores how the email sign-off went astray.
Isabel Berwick asks whether personality alone is a good enough reason to hire someone in the latest edition of the Working It podcast.
US law firms are offering six-figure salaries to newly qualified London-based juniors in a war for top talent in the City — to much debate, notes John Gapper — illustrating the yawning gap in salaries either side of the pond.
Some good news
“Game changer” genetically modified mosquitoes released in Djibouti last week are heralding a new chapter in the fight against malaria on the African continent. The new technology stops female mosquitoes surviving into adulthood, thwarting the creatures that had begun outsmarting efforts to curb its spread in recent years.
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