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Investing in Energy
A Primer on the Economics of the Energy Industry
Gianna Bern (Author)
9781576603758, Wiley
Hardback, published 17 June 2011
240 pages
23.6 x 16.3 x 2.3 cm, 0.463 kg
An energy industry researcher and investment advisor provides a fresh perspective on the economics of energy From major players in the energy industry, such as big oil, to the emerging cap-and-trade market, no other book offers a more complete overview of the energy industry, specifically its economic and financial intricacies, than Investing in Energy: A Primer on the Economics of the Energy Industry. A comprehensive guide to the economics of the energy industry, Investing in Energy will prove an invaluable resource for traditional energy investors looking to expand into new areas, as well as for eco-investors looking to better understand how energy markets function.
Preface xiii Acknowledgments xv Part I: Introduction and Financial Considerations Chapter 1 Historical Perspectives 3 Oil and Gas Producers 4 Production Perspectives 5 Importance of Reserves 6 Regulatory Environment 7 Alternative Energy Forms 8 Alternative Energy Growth 8 Energy Investment Cost Considerations 12 Concluding Thoughts 12 Chapter 2 Investment Opportunities in Energy 15 Asia Comes of Age 15 Australia’s Natural Gas Boom 16 Brazil Beckons with Deepwater 17 Iraq’s Road to Recovery 20 North American Unconventional Natural Gas Plays 23 Solar Power Generation 24 Concluding Thoughts 24 Chapter 3 Cash Flow and Liquidity at Various Crude Prices 27 Independent Oil Companies 27 National Oil Companies 28 Capital Expenditure Planning 29 Liquidity—Cash Is Still King 31 Liquidity Metrics 32 Cash-Flow Considerations 32 Cash-Flow Metrics 33 Leverage 33 Concluding Thoughts 34 Chapter 4 Capital Structure and Capital Markets 37 Capital Structure 37 Investors 39 Alternative Energy Subsidies 42 Concluding Thoughts 43 Chapter 5 The Quarterly Earnings Disconnect 45 Short Term versus Long Term 45 Business Risks 49 Concluding Thoughts 50 Part II: Crude Oil and Natural Gas Chapter 6 Analyzing Reserves 53 Authorities on Reserves 53 Proven Reserves 54 Industry Nomenclature 54 Proven Reserve Criterion 55 Unproven Reserves 57 Certification Process 58 More on Reserve Authorities 59 Measuring Reserves 61 Concluding Thoughts 63 Chapter 7 Crude Oil Markets and Production 65 The Crude Oil Markets 65 Benchmark Crudes 65 Inventory Levels 67 Crude Oil Quality 67 Crude Oil Markets 68 Concluding Thoughts 74 Chapter 8 Natural Gas Markets and Production 75 De-Coupling of Natural Gas from Crude Oil 75 Conventional Natural Gas Production 76 North American Unconventional Natural Gas Shale Plays 77 Canadian Natural Gas Markets 78 Natural Gas Markets 79 LNG—Fuel for the Future 81 Natural Gas Storage 81 Natural Gas as a Utility 82 Natural Gas—The Cleaner Fuel 82 Concluding Thoughts 83 Chapter 9 Understanding Refining Economics 85 The Business Model 85 Challenge for Independent Refiners 86 Physical Crude Oil Trading 86 Refining Capacity, Complexity, and Utilization 87 Benchmark Crude Oils 90 Crack Spreads 90 The Challenge 93 Concluding Thoughts 94 Chapter 10 Integrated Majors and the Evolution of the Competitive Landscape 95 Role of National Oil Companies 95 The Road Ahead for Integrated Majors 97 U.S. Safety and Regulation 97 UK Environmental Program 98 Technological Challenges Abound 99 Reserve Changes 101 Concluding Thoughts 102 Chapter 11 The Oilfield Service Sector and Oil Juniors 103 The World Is Their Platform 103 Oil Juniors: Is Smaller Better? 106 Concluding Thoughts 110 Chapter 12 OPEC 111 OPEC Organization 111 OPEC Crude Basket 112 OPEC Crude Production 112 OPEC’s Role during the Financial Crisis 2008 to 2009 113 Saudi Arabia’s Role in OPEC 115 OPEC versus Non-OPEC Reserves 116 Geopolitics of Crude 117 Nationalization of Assets 117 Concluding Thoughts 118 Chapter 13 Bidding and Production Rights 119 Brazil 119 Mexico 121 Norway 123 The United Kingdom 124 Venezuela 125 Concluding Thoughts 126 Chapter 14 Analyzing State-Owned Oil Companies 127 Hydrocarbons, a Source of Revenue 127 Regulatory Frameworks 128 Concessions and Bid Rounds 129 Taxes and Royalties 129 Pensions and Legacy Support 129 Transparency 130 Social Programs 130 Capital Markets 131 Mexico’s PEMEX 131 Ownership Structure 132 Hybrid-Capital Companies 132 Concluding Thoughts 136 Chapter 15 Crude Oil Pricing and Industry Investment 137 Higher Crude Prices Impact Demand 137 Global Oil Imbalance 138 Unprecedented Financial Crises 139 Great Commodity Collapse of 2009 140 Leverage Creep 141 Improved Market Fundamentals 142 Investment Outlook 142 Concluding Thoughts 143 Part III: The Power Sector Chapter 16 Hydroelectric Power 147 Advantages 148 Disadvantages 149 China 150 Brazil and Paraguay 151 Concluding Thoughts 152 Chapter 17 Nuclear Quagmire 153 The Issue: Nuclear Waste 153 The Benefits 154 Nuclear Power in the United States 154 The Future of Nuclear Energy 156 Nuclear Energy in France 157 Concluding Thoughts 159 Chapter 18 Geothermal and Wind Energy 161 United States 162 Philippines 162 Wind Generation Energy 163 Denmark 164 United Kingdom 165 Concluding Thoughts 165 Chapter 19 Solar Energy 167 Types of Solar Energy 167 Spain 168 Germany 170 Concluding Thoughts 171 Part IV: Green Energy Chapter 20 Biofuels and Ethanol 175 Biofuels Development 175 Ethanol Development 177 Concluding Thoughts 182 Chapter 21 Cleaner Coal 183 Coal as a Fuel Source 183 Cleaner Coal 186 Concluding Thoughts 189 Part V: Summary and Conclusion Chapter 22 Opportunities and Challenges in Green and Traditional Energies 193 Renewable Energy 193 Cap and Trade 195 Natural Gas Opportunities 196 Offshore Drilling Challenges 197 Concluding Thoughts: Energy Independence—A Strategic Imperative 197 Appendix: Energy Equivalent Conversions 199 Glossary 201 About the Author 205 Index 207
Subject Areas: Finance & accounting [KF]
