Five years after BHP Billiton plunged $20bn into the US shale revolution, the wait goes on for shareholders. Even if oil prices rally by one-third the fields will not generate significant free cash flow until the turn of the decade, the mining company cum oil producer revealed at investor briefings last week. Yet the head of BHP’s petroleum business says the company remains committed to its shale assets, which he believes can outstrip its conventional oilfields and plug a supply gap that it sees emerging from the industry-wide investment drought brought about by the collapse in crude prices since mid-2014. “We admit straight away that we didn’t get the timing right [of the shale deals],” says Steve Pastor in an interview in London. “But what we did pick up were fantastic assets.” BHP’s acquisition of two US shale producers in 2011 was followed by $17bn of investment, beefing up an oil business that has long set the world’s most valuable mining company apart from its peers. About one-third of BHP’s group earnings before interest, tax, depreciation and amortisation have come from petroleum over the past five years. The timing of its shale bet proved ill-judged. Following a savage market downturn that has seen oil prices more than halve, BHP has racked up $12bn of impairments and the US shale business is now valued at just $12.6bn. Output is expected to fall by a quarter this year, the consequence of a much reduced drilling programme. BHP’s oil exposure has been a reason for the company’s underperformance against peers over the past year and a half. But as China’s economic growth slows and the industry expects sluggish long-term demand for commodities such as coal and iron ore, BHP’s petroleum business is arguably more important than ever. At last week’s investor briefings BHP attempted to reset expectations for its oil business, stressing a commitment to the company’s US onshore position and a belief that the crude market will come back into balance before its other commodities. “When you think about what we have today … [oil] is one of the most attractive growth levers and options across the group portfolio,” says Mr Pastor. Even before its venture into US shale, BHP was unusual among miners in having a significant oil business, based largely on deepwater fields around Australia and the Gulf of Mexico. Today BHP says it is a top 10 producer of both US shale gas and oil and ranks fourth by output in the Gulf of Mexico. In terms of production — some 660,000 barrels of oil equivalent per day — BHP’s oil business bears comparison with that of Chesapeake Energy and Apache, according to Wood Mackenzie data. Mr Pastor addressed investors after a timely lift from Opec, the oil producers’ cartel, which last month agreed to cut output for the first time since the financial crisis — a surprise that helped to propel BHP’s share price to a 12-month high. But one of analysts’ main conclusions from a welter of information on BHP’s oil business this month is that its US onshore assets — in well-known shale formations such as the Permian basin and Eagle Ford in Texas — may not be sufficiently cash-generative for a while longer. “The challenge for the portfolio remains the lack of free cash flow,” say analysts at Deutsche Bank. BHP’s projections imply that the US onshore business is unlikely to contribute positive free cash flow until 2020 if today’s oil and gas prices persist, say analysts at JPMorgan. The US oil benchmark West Texas Intermediate — today at about $50 per barrel — would have to rise to $70 “to generate sustainable, positive pre-tax free cash flow”, add the analysts. BHP says the US onshore business should at worst be broadly cash flow neutral, adding that earnings from other commodities mean the company can be patient with shale, where it is cutting the cost of building wells. Particularly in the Permian basin, BHP thinks it could lift production from 30,000 boe/d to 150,000 boe/d in five years, making it the largest part of its petroleum portfolio. Indeed, BHP is relying on its US onshore business to plug the production gap expected from declining conventional fields. One intended new conventional project — Mad Dog 2 in the Gulf of Mexico, where BHP has a 24 per cent share alongside operator BP — will reach a final investment decision within six months. Analysts at Credit Suisse highlight how Mad Dog 2 will only produce from 2022 or later. “What we think is missing is a conventional oil asset that could fill the gap before Mad Dog 2 … a post-discovery, pre-production acquisition in deep water oil would be ideal to fill the asset gap but probably unlikely,” they say. Mr Pastor does not rule out deals. “It has to be at the right price but also consider fiscal terms and political risk,” he says. “And it has to compete with any other opportunity for capital in BHP.” Source link

Poor air quality affecting most office workers Published:  17 August, 2016 A new survey has found that indoor air pollution is prevalent in work places across Britain, potentially causing long-term health problems. The YouGov survey, commissioned by the Building Engineering Services Association (BESA), reports that almost 70% of office workers believe poor air quality in their place of work is having a negative effect on their day-to-day productivity and well-being. Additionally, a third of office workers are concerned that poor indoor air quality could be having a negative effect on their health. Those office workers surveyed reported suffering regularly from symptoms commonly linked to poor indoor air quality: 68% of office workers experience lapses in concentration on a monthly or more frequent basis Over two thirds (67%) of recipients reported suffering from fatigue while at work on a monthly or more frequent basis Over half (54%) of office workers surveyed experience decreased productivity on a monthly or more frequent basis Over a third (41%) of people experience watery or irritated eyes when in the office on a monthly or more frequent basis Almost 40% of office workers who suffer from at least one of the symptoms listed believes poor ventilation is the main reason for the problems they experience. The BESA survey follows a report published by the Royal College of Physicians earlier this year, which revealed that indoor and outdoor air pollution could collectively be linked to at least 40,000 premature deaths a year in the UK. Opening windows is the most commonly used form of ventilation, with 60% of office workers saying it is the first thing they do if they need ‘fresh air’. However, although this is seen as a natural response, opening office windows runs the risk of allowing outdoor toxins into the building, potentially further polluting the air, the survey found. Statistics suggest that, as a nation, we spend an average of 90% of our time indoors and 212 days a year at work. BESA has now called on the industry, building managers and the general public to ensure proper, effective, well-maintained ventilation systems are operating in all offices across the UK. “Many people in the UK end up working more than 40 hours per week and, generally, we spend upwards of 90% of our time indoors,” said BESA chief executive Paul McLaughlin. “It is, therefore, crucial that buildings provide a healthy working environment. “More and more people are becoming aware of the inadequate ventilation options in their offices, as well as the negative effect this is having on their health and their productivity. “There is a perception that a lack of windows contributes to poor indoor air quality but, in reality, we need proper, well maintained air conditioning and ventilation systems in place. We need to make our buildings a safe haven for occupants, to protect them from the worst impacts of outdoor pollution as well as providing good quality, healthy indoor air.” Commenting on the survey results, the Royal College of Physicians’ special adviser on air quality, Professor Stephen Holgate, said: “As we noted in our report: ‘Every breath we take: the lifelong impact of air pollution’, indoor air pollution is often an area which is overlooked. Poor ventilation is one part of this problem and, with the drive to reduce energy costs by making spaces more airtight, things will only get worse. “We now know that air pollution has a substantial impact on many chronic long-term conditions, increasing strokes and heart attacks in susceptible individuals. That is why this is not just a job for government, local authorities or business – as individuals we can all do our part to reduce pollutant exposure,” he added. Dr. Prashant Kumar from the Department of Civil & Environmental Engineering at the University of Surrey added: “The World Health Organisation ranks air pollution as the third most significant health risk worldwide. Indoor air quality is greatly affected by the ventilation conditions of a household, commercial or workplace buildings. “Modern buildings and workplaces are usually made airtight to conserve energy, but this can in fact compromise the indoor air quality due to lack of sufficient air changes. The results of this survey are very useful and indeed pertinent, not only for the general public but also for the scientific community and the urban planners.” BESA is collaborating with a number of industry bodies including the Chartered Institution of Building Services Engineers (CIBSE) and Institute of Healthcare Engineering & Estate Management (IHEEM) to raise awareness about IAQ and produce detailed guidance for contractors, designers and facilities managers.   Source link

Alan Vallance has been appointed Chief Executive of the Royal Institute of British Architects (RIBA) following a competitive recruitment process. Alan Vallance has a background in finance, consulting, strategic planning and general management in Europe and Australasia. He joined the RIBA in September 2015 as Interim Director of Finance and Operations and has been interim Chief Executive since February 2016. Prior to joining the RIBA Alan spent three years as Chief Operating Officer at the Law Society, the membership and regulatory body for solicitors in England and Wales. RIBA President Jane Duncan said: “I am delighted that Alan Vallance has been appointed as Chief Executive of the RIBA. We had a large and strong field of applicants and the interview panel were unanimous in concluding that Alan is the right person to lead the RIBA as we deliver our 5 year strategy. As Interim Chief Executive since February this year, Alan has demonstrated his energy, drive and commitment to strengthening the RIBA’s voice and impact as a global professional membership body driving excellence in architecture.” Alan Vallance said: “Architects are creative, visionary and collaborative professionals who ensure that our built environment serves and strengthens communities now and in the future. It is a privilege to have been appointed to the role of Chief Executive of the RIBA. I look forward to working with the Board and Council, the staff team and members in the UK and globally to deliver the RIBA’s five year strategic plan and to further strengthen the RIBA’s offer to current and future members.” ENDS  Notes: 1. For further press information contact Howard Crosskey in the RIBA Press Office howard.crosskey@riba.org 020 7307 3726 2. An image of Alan Vallance can be downloaded here: https://riba.box.com/s/dyb8xesdwguh5ln19c0e7l4um3r6jdyw  3. Alan tweets at @Alan_Vallance 4. Alan Vallance trained as a chartered accountant and has a background in finance, consulting, strategic planning and general management across a wide variety of roles in Europe and Australasia. Prior to joining RIBA in September 2015 as Interim Director of Finance & Operations, Alan spent three years as Chief Operating Officer at the Law Society, the membership and regulatory body for solicitors in England and Wales. Between 2009 and 2011 Alan was the Chief Operating Officer of the Australian Bureau of Meteorology, the national weather agency, based in Melbourne, Australia. As part of his responsibilities, Alan spent considerable time at the United Nations in Geneva participating and leading Australian Delegations at the World Meteorological Organisation. Alan is a Fellow of the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants in Australia and New Zealand and the Australian Institute of Company Directors. He obtained a BA (Hons) in Economics at the University of York. 5. The Royal Institute of British Architects (RIBA) is a global professional membership body that serves its members and society in order to deliver better buildings and places, stronger communities and a sustainable environment. www.architecture.com Follow us on Twitter for regular RIBA updates www.twitter.com/RIBA   Posted on Monday 19th September 2016 Source link

3 June 2016 | James Richards A project to merge the back-office functions of a number of Whitehall departments has “not achieved value for money”, says a National Audit Office report.   The government’s Next Generation Shared Services scheme has saved around £90 million over two-and-a-half years – substantially less than the £128 million originally forecast. Meanwhile, investment costs have reached £94 million.   In 2014, the Cabinet Office began the project to merge the five existing shared service centres into two independent centres to save money.   Eleven government departments including the Home Office, Ministry of Justice and the Department of Work and Pensions receive services from the shared centres.   But the National Audit Office has reported a raft of delays and inefficiencies across the programme, caused by a backlog of requests to change over to the new service centres and standardised operating systems.   It says there are 888 requests for change currently outstanding across the two independent centres.   Only two of 26 participating organisations that planned to switch to the single operating platforms have done so, with none doing so by deadline. The report found the average delay in migrating to single operating systems was 14 months.   The report blames “weaknesses in the design programme”, poor management of certain aspects, and a failure to secure buy-in from stakeholders.   Also, “several departments were unhappy not to have been sufficiently consulted on key elements”, including the appointment of one of the two private-sector providers, Steria, the other being arvato.      Source link

Construction companies sharply curtailed their activity on repair and maintenance work in August in one of the few concrete signs of falling output after the EU referendum. Official figures on Friday showed output in the construction industry down 1.5 per cent in August compared with July, with the decline unlikely to be just a monthly blip because production in the latest three months between June and August was also lower, by 1.3 per cent compared with the previous quarter. But the figures reveal little about the overall effect of Brexit on the economy over the summer because construction accounts for only 6 per cent of the UK economy. The official construction figures have also been stripped of the “national statistics” quality status by the UK statistics authority after concerns about their reliability. Chris Williamson of IHS Markit said the weak figures “put the sector on course for its worst quarter for four years and at risk of heading back into recession”, but held out the hope of a better September given a rebound in surveys of the sector that month. New construction work was down marginally in August but has been broadly flat for the year, while there has been a marked decline in recorded repairs and maintenance. The largest drop in output came in the repair and maintenance of public housing, following the continued squeeze on the budgets of local authorities and housing associations with such activity 14.5 per cent lower in August than a year earlier. Infrastructure also showed a sharp decline in August, although that reversed an equally large increase in July. Almost all of the components of new work — housing, infrastructure and other work — have been flat for most of the past year, although there has been a sharp decline in the construction of new public housing. The one exception is private industrial construction, where output was down 13.1 per cent in August compared with a year earlier. With a weight in national income of only 6 per cent, a similar decline over the third quarter would represent a drag of 0.08 percentage points on the economy-wide growth rate, significant but unlikely to dominate the growth figures due out on October 27. Samuel Tombs of Pantheon Macroeconomics said the construction weakness would be unlikely to derail the official figures for the whole economy. “A robust increase in services output, however, still looks set to ensure that GDP grows by about 0.5 per cent, greatly exceeding the MPC’s original expectation of zero growth,” he said. The Office for National Statistics warned against strong conclusions from the data given that the infrastructure component was volatile. “Monthly construction data can be quite erratic, though, so we would warn against trying to read too much into one set of figures,” it said in a statement. Sample the FT’s top stories for a week You select the topic, we deliver the news. Source link

©Bloomberg Siemens has agreed to pay €3.75 a share in cash to shareholders of Spanish renewables group Gamesa, as part of a deal that will see their wind businesses combined to form the world’s biggest builder of turbines, valued at about €10bn. Under the terms of the deal, which the two companies have been discussing since the start of the year, the combined entity will be 59 per cent owned by the German industrial group. Once merged, the business will be listed and headquartered in Spain, and is expected to have an order backlog of about €20bn, annual revenues of €9.3bn and operating profit of €839m. The deal is estimated to lead to annual earnings synergies of roughly €230m, before interest and tax. Siemens’ €3.75-a-share cash payment represents 26 per cent of Gamesa’s share price on January 28, before the talks were disclosed. Gamesa’s shares were suspended in Spain on Friday. They closed at €15.475 on Thursday. Ignacio Martín, executive chairman of Gamesa, said: “The merger with Siemens constitutes recognition for the work performed by the company in recent years and evidences our commitment to generating value in the long term by creating significant synergies and extending the horizon of our profitable growth.” He predicted the combined group would become the dominant player in wind turbine construction. “Today, we are embarking on a new era, creating, alongside Siemens, a world-leading wind player,” he told investors. “We will continue to work as before, albeit as part of a stronger company and with an enhanced ability to offer all of our customers end-to-end solutions.” Siemens and Gamesa began talks after a round of consolidation in the energy sector including General Electric’s purchase of Alstom’s energy business and a merger between Germany’s Nordex and Spanish rival Acciona Wind Power. Before their deal talks, Siemens had a 9.5 per cent share of the global wind turbine market, according to data from FTI Consulting, which made it the second-biggest manufacturer after Denmark’s Vestas, which had a share of nearly 12 per cent. But Gamesa’s 4.5 per cent market share put it behind other large players, such as China’s Goldwind, which has been expanding internationally into fast-growing renewable energy markets in Latin America, as well as the US and Europe. Copyright The Financial Times Limited 2016. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web. Source link

Issue A supermarket banned a customer from taking his foldaway bicycle into store for health and safety reasons. Panel opinion This is clearly a myth as health and safety at work law does not prohibit taking folding up bicycles into retail premises. It’s refreshing to see those who used ‘elf and safety’ as an excuse to tell their customer ‘on your bike’ back-pedalling, holding their hands up and admitting this was clearly inappropriate. Source link