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What Do Analysts Think Of Shell’s $9.5B Permian Asset Sale To ConocoPhillips?

On Monday, Royal Dutch Shell plc ADR (NYSE: RDS-A) (NYSE: RDS-B) announced a $9.5 billion sale of its entire Permian Basin assets to ConocoPhillip…

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On Monday, Royal Dutch Shell plc ADR (NYSE: RDS-A) (NYSE: RDS-B) announced a $9.5 billion sale of its entire Permian Basin assets to ConocoPhillips (NYSE:COP). Shares of both stocks traded higher on Tuesday morning, but at least one firm is more bullish on Shell than ConocoPhillips moving forward.

The Analysts: Bank of America analyst Christopher Kuplent has reiterated his Buy rating and $57 price target for Shell. BofA analyst Daniel Lungo also reiterated his Market Weight rating for ConocoPhillips.

Related Link: If You Invested $1,000 In Exxon Mobil Stock One Year Ago, Here’s How Much You’d Have Now

The Theses: ConocoPhillips is acquiring all of Shell’s onshore Texas assets, about 225,000 net acres currently producing about 175,000 barrels per day. Shell will maintain its offshore Texas assets. The $9.5 billion deal is expected to close in the fourth quarter.

On Tuesday, Kuplent said Shell has a lot to gain from the sale, which will reduce the company’s overall carbon footprint by about 1%. At the same time, he said it could unlock value in Shell’s upstream assets while only reducing free cash flow by about 3%.

“We have long argued that Europe’s Big Oils — driven by pressure to show near-term progress toward more stringent decarburization targets — are effectively net sellers of all their fossil fuel assets (whether so-called ‘core’ or not) as long as any exit can balance the corresponding dilution of Group cash flows with visibility on valuation uplift,” Kuplent said.

For ConocoPhillips, Lungo said the deal was the right move, but investors shouldn’t expect a big positive reaction from the stock.

“Overall we view this transaction positively over the medium to longer-term, as it increases the company’s size/scale and reserve base in the lowest cost onshore basin in the US,” Lungo said.

However, ConocoPhillip’s leverage will certainly take a hit, and Lungo expects new issuance in response to the deal.

Benzinga’s Take: The oil and gas industry is in a tricky spot given most industry experts don’t expect the world to hit peak oil demand for roughly another decade. But valuations could remain pressured in that time as investors look to the extremely far long term and a shift in the global energy market to renewable sources.

Photo: Courtesy of Royal Dutch Shell

Related Link: If You Invested $1,000 In Exxon Mobil Stock One Year Ago, Here’s How Much You’d Have Now

Source: https://markets.businessinsider.com/news/stocks/what-do-analysts-think-of-shell-s-9-5b-permian-asset-sale-to-conocophillips-1030813708

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HR-software startup Personio has more than tripled its valuation in 9 months, to $6.3 billion, as 2021 deal sizes boom

Hanno Renner, the CEO and founder of Personio. Personio Personio, an HR-tech firm, is one of Germany's most valuable startups after raisin…

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Hanno Renner, CEO and founder of PersonioHanno Renner, the CEO and founder of Personio.

Personio

  • Personio, an HR-tech firm, is one of Germany’s most valuable startups after raising $270 million.
  • The firm’s valuation has risen to $6.3 billion from $1.7 billion in January.
  • The median deal size for HR startups has risen substantially in 2021, according to PitchBook data.
  • See more stories on Insider’s business page.

Personio, which provides human-resources software for small and midsized businesses, more than tripled its valuation, to $6.3 billion, in a new funding round.

Founded in 2015 by Hanno Renner, a former yacht skipper, Personio helps companies manage staff and resources through its platform.

Personio last raised $125 million in January 2020 at a $1.7 billion valuation. Its $270 million in fresh Series E funding came from Greenoaks Capital Partners with participation from Altimeter Capital and Alkeon Capital.

“If you’d asked me about fundraising four weeks ago, I would have said we have plenty of capital and don’t need to raise again,” Renner told Insider. “I took a couple of meetings with this group of investors on the recommendation of another founder, and they were keen to invest. These are the right type of investors to bring on board because they will be with us for the long term, as we eventually go public and beyond.”

The deal takes Personio to about $500 million raised to date and makes it Germany’s second-most-valuable private tech startup, after Trade Republic.

Much of the new funding is set to go toward the company’s new product called people workflow automation, a tool to help stitch up data from fragmented departments within a company to avoid delays. Renner cites hiring as an example where a candidate’s acceptance documentation sit with an MD rather than with a company’s HR department. Personio’s platform can automate the process of ensuring the right forms are in the right place at the right time, he said.

“We’ve worked with more than 5,000 companies in the past six years and seen how some of these processes span beyond traditional HR, so we want to help our customers more,” Renner said. “Investors were so excited by this, so want they wanted to invest at a higher valuation than January.”

The Personio deal coincides with a spike in the median deal size globally for startups operating in HR technology, according to PitchBook data: The median post-money valuation is about $28 million this year, more than double 2020’s figure of $11 million.

Personio has expanded its footprint in recent years and now has about 1,000 staff members across offices in Munich, Madrid, Dublin, London, and Amsterdam. Alongside the development of its automation tool, funding will go toward expansion into new markets like France and Italy and hiring thousands of people in the coming years, Renner said.

  • The median deal size for HR startups has risen substantially in 2021, according to PitchBook data.
  • Source: https://markets.businessinsider.com/news/stocks/personio-german-tech-startup-triples-valuation-with-new-270-million-round-2021-10

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    The SEC is taking a hard line on stablecoins right now – but it could permit more coin issuers if it gets to regulate them, a financial policy expert says

    SEC Chair, Gary Gensler. Photo by Chip Somodevilla/Getty Images The range of stablecoin issuers could widen if the SEC becomes regulator, desp…

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    GettyImages 175048059SEC Chair, Gary Gensler.

    Photo by Chip Somodevilla/Getty Images

    • The range of stablecoin issuers could widen if the SEC becomes regulator, despite its tough stance on the cryptos.
    • A fight is brewing between the SEC and the Federal Reserve over which will oversee stablecoins, a senior Cowen analyst said.
    • If the Fed wins, big banks will have an advantage in stablecoin issuance, Jaret Seiberg said in a note.
    • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

    The Securities and Exchange Commission is taking a hard line on stablecoins right now – but if it ends up regulating the asset-backed cryptocurrencies, that could mean a far greater range of these coins on offer.

    That’s the view of Jaret Seiberg, a DC-based financial services policy analyst at Cowen, who noted the government agency has a tough rival for the oversight role.

    “We see a fight brewing between the Federal Reserve and SEC over which will regulate stablecoins,” Seiberg said in a note this week.

    The boom in crypto assets’ popularity over the past year has regulators training their sights on potential risks to investors and to the financial system.

    Gary Gensler, chairman of the SEC, has likened stablecoins to “poker chips” at the casino in the “Wild West” crypto market. Stablecoins are cryptocurrencies backed by fiat money such as the US dollar, or by traditional assets with stable value.

    Tether and Circle, the two biggest stablecoins by market capitalization, have taken regulatory heat recently, with the SEC issuing an investigative subpoena to Circle this summer.

    Gensler and Fed Chair Jerome Powell were among top officials – including Treasury Secretary Janet Yellen – who hinted at tightening the rules around stablecoins when they met to discuss tether in July.

    The SEC boss has said some stablecoins may well be securities. Meanwhile, the Fed chief has said stablecoins are like money market funds, or bank deposits.

    If the SEC wins the fight for oversight, it would treat stablecoins like prime money market mutual funds, or MMMFs, which come with liquidity requirements and redemption limits, according to Cowen.

    “We believe there will be a greater diversity of stable coin issuers if the SEC prevails. Many entities from asset managers, to banks to securities firms could be issuers,” Seiberg said.

    The Fed will take a bank-regulatory approach, according to Cowen. Stablecoins would become another deposit product, with the usual bank rules and Community Reinvestment Act obligations.

    “If the Federal Reserve wins this fight, then we expect big banks to have the advantage when it comes to stable coin issuance,” Seiberg said.

    The Biden administration appears to support the Fed’s approach, as it has been pushing Congress to create a bank-like charter for stablecoins. It has urged the Financial Stability Oversight Council to look into stablecoin-related risks to the financial system.

    Cowen expects the FSOC to deem stablecoins “systemically important,” paving the way for the Fed to oversee them like banks. The central bank has a key ally in Yellen, a former Fed boss who now chairs the FSOC.

    “This is not the first power struggle between the two. They fought in the 1990s to be the umbrella regulator of financial firms. The Fed won that battle,” Seiberg said.

    Cowen believes the SEC has the edge because the markets regulator is seen as having the simplest path to bringing in a regulatory regime.

    “The FSOC process has been cumbersome, and Congress rarely acts,” Seiberg said about the Fed’s path.

    By contrast, the SEC may be able to treat stablecoins as securities, clearing the way for rules like those for money market mutual funds.

    Whichever way it goes, there’s little real difference for stablecoins between the two regulatory regimes, according to Cowen. Either would boost confidence.

    “To us, both options should reassure investors that stablecoins are fully backed by US dollars. That should limit the risk of a run,” Seiberg said

    Read More: These 20 stocks are set to grow earnings by at least 20% in 2022, Goldman Sachs says – even as broader market growth slows and taxes rise

  • If the Fed wins, big banks will have an advantage in stablecoin issuance, Jaret Seiberg said in a note.
  • Source: https://markets.businessinsider.com/news/currencies/stablecoin-regulation-sec-federal-reserve-gary-gensler-jerome-powell-cowen-2021-10

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    Surging natural gas prices trigger hundred of millions of dollars in margin calls, report says

    Workers move a section of well casing into place at a Chesapeake Energy natural gas well site. Ralph Wilson/AP Commodity trading houses are fa…

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    natural gasWorkers move a section of well casing into place at a Chesapeake Energy natural gas well site.

    Ralph Wilson/AP

    • Commodity trading houses are facing margin calls as prices for natural gas spike, Reuters reported Monday.
    • Brokers and exchanges are telling major commodity traders to deposit funds to cover their exposure to surging gas prices.
    • Sources told Reuters trading houses and other players together had accumulated $30 billion worth of short positions in the Dutch TTF gas market.
    • See more stories on Insider’s business page.

    Brokers and exchanges are telling major commodity trading houses to deposit hundreds of millions of dollars in extra funding to cover their exposure to surging gas prices, according to a Reuters report on Monday.

    Commodity traders Glencore, Gunvor, Trafigura and Vitol and others are facing margin calls on their positions in natural gas markets, seven unnamed sources told the news agency.

    A margin call occurs if funds in the account fall below the minimum margin requirement, which Reuters said, in this case, is 10% to 15%.

    Two sources said trading houses and other players had together accumulated $30 billion worth of short positions in the Dutch TTF gas market, with European utilities positioning on the opposite long side of the play. The Dutch TTF gas market hub is the main platform for building a short position in gas futures.

    Trading firms have made big bets on natural gas produced and exported from the US by signing long-term contracts to buy cargoes of liquefied natural gas (LNG). The contracts are mainly designed to export gas to Europe and Asia and some contracts run through 2041.

    “While there have been margin calls associated with the European natural gas price rally, Gunvor maintains a healthy liquidity position and instruments to manage any further volatility,” a company spokesperson told Reuters. Glencore, Trafigura and Vitol declined Reuters’ request for comment.

    In order to hedge against price differences between physical gas in the US now and the rest of the world in the future, traders need to sell short positions in the European and Asian gas futures markets. Traders create short positions by selling a gas futures contract with the aim of buying it again later at a lower price.

    But Reuters said the strategy backfired last month when European gas prices surged on a range of factors including low inventories and high demand in Asia. The front-month Dutch TTF gas contract, a European benchmark, has soared by nearly 400% since January.

    The margin calls have led some smaller companies, in particular, to increase borrowing, eating into their cash available for trading and potentially pressuring their profits.

    The November contract at the Dutch TTF hub rose 0.6% to €94.23 ($109.47) per megawatt-hour in Monday’s session.

  • Sources told Reuters trading houses and other players together had accumulated $30 billion worth of short positions in the Dutch TTF gas market.
  • Source: https://markets.businessinsider.com/news/commodities/natural-gas-price-margin-calls-commodities-prices-markets-2021-10

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