? Investing in Energy is a comprehensive guide to the energy industry, a sum of the economics of the industry, the financial considerations involved in investing, and an evaluation of each major sector. ? It identifies the four major sectors as oil, natural gas, power, and the emerging green industry.
INVESTING IN ENERGY A PRIMER ON THE ECONOMICS OF THE ENERGY INDUSTRY AS IT REACTS TO new challenges in regulation, exploration, and alternative energy initiatives, the energy sector has emerged as one of the most rapidly growing and complex sectors for investment. Investing in Energy: A Primer on the Economics of the Energy Industry is a response to this growth, providing the most up-to-date knowledge for both established and would-be investors. Considering the economics of the industry and the multifaceted factors involved in investing, Investing in Energy identifies and assesses the major energy sectors: oil and natural gas? currently the most dominant sources? as well as power and emerging green industries. A comprehensive look at the economics of the energy industry, the book reviews the financial considerations necessary for evaluating and assessing investment opportunities, including cash flow, capital structure, and the role of capital markets across a myriad of energy sector firms. It also looks at the financial considerations for these sectors, including key credit metrics, the importance of liquidity, cash flow, and capital expenditure, as well as the multitude of investment strategies applicable to the green energy sector. A detailed guide to all of the major energy technologies, an overview of the economics of the industry, a review of the financial considerations, and an evaluation of each major sector of energy production, Investing in Energy covers everything from OPEC to biofuels, and everything in between, in order to get investors the information that they need to make informed decisions on how to invest in the energy industry.
Inhaltsverzeichnis
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
