News Archive


As shale wells grow longer, buyouts attract hemmed in oil producers

HOUSTON (Reuters) – A recent drought in oil company mergers and acquisitions could be coming to an end over a new Texas range war: U.S. shale producers are building miles-long horizontal wells that are running into their rivals’ land holdings.

FILE PHOTO — A pump jack stands idle in Dewitt County, Texas January 13, 2016. Picture taken on January 13, 2016. REUTERS/Anna Driver/File Photo

This week, U.S. shale producer Concho Resources Inc (CXO.N) said longer horizontal wells are among the factors spurring its $8 billion deal for rival RSP Permian Inc (RSPP.N), with well spacing and sharing infrastructure needs also playing roles. RSP Permian controlled the land adjacent to its own in many cases.

The average length of U.S. shale wells has grown by roughly 1,500 feet, or 25 percent, in the past three years to 7,213 feet, according to RS Energy Group, an energy investment data provider. Producers are drilling longer shale wells – some exceed three miles – to extract more crude from each well.

Oil company MA fell in the wake of the 2014 oil price crash and more producers refocused on their best holdings. The value of U.S. oil producer deals last year was less than half the $137.7 billion in 2013, according to data provider PLS Inc. That could be changing in West Texas’s Permian, the largest U.S. oilfield, where checkerboard-like leases dating to land grants made to railroads in the 19th century are hemming in producers.

“Consolidating acreage is going to be extremely meaningful,” said Brook Papau, managing director of RS Energy. “We’ll see more deals.”

Smaller companies with prime acreage, especially on the Permian’s western edge, could be buyout candidates, including Abraxas Petroleum (AXAS.O), Lilis Energy LLEX.A and Jagged Peak Energy (JAG.N), industry analysts have told Reuters.

Shared transport systems, such as oil and gas gathering and water disposal, also are driving the need for scale and property acquisitions in addition to horizontal wells, called laterals, Concho Chief Executive Tim Leach said this week.

“Long laterals and (avoiding) the parent-child relationship” where close well spacing reduces output, drove the deal, said Leach. “Large, contiguous blocks of acreage are strategic,” he told investors.

After dropping 8.7 percent on the steep purchase price, Concho shares on Thursday retraced much of the fall, rising 5 percent to $150.33.

“The investment community has consistently espoused the merits of consolidation within a highly fragmented business,” said Simmons Co analyst David Kistler in a note to clients praising the Concho-RSP deal.

Still, MA is not the only way to get more adjacent land. Chevron Corp (CVX.N) last year swapped or sold more than 60,000 acres in the Permian Basin.

The deals, Chevron CEO Mike Wirth said in a February earnings call, “create value by consolidating land positions, allowing longer laterals and other infrastructure efficiencies.”

Reporting by Ernest Scheyder; Editing by Andrea Ricci

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ssX6UwWjmMI/as-shale-wells-grow-longer-buyouts-attract-hemmed-in-oil-producers-idUSKBN1H61FW

Singapore watchdog says Uber-Grab deal may have infringed competition

SINGAPORE (Reuters) – Singapore’s competition watchdog said it had reasonable grounds to suspect competition had been infringed by Uber Technologies Inc’s [UBER.UL] deal to sell its operations in Southeast Asia to rival ride-hailing firm Grab.

FILE PHOTO: The Uber logo is seen on a screen in Singapore August 4, 2017. REUTERS/Thomas White/File Picture

In a rare move, the Competition Commission of Singapore (CCS) has begun an investigation into the deal and proposed interim measures that will require Uber and Grab to maintain their pre-transaction independent pricing, the watchdog said in a statement on Friday.

The proposal also requires Uber and Grab not to take any action that might lead to the integration of their businesses in Singapore, a move likely to pose a major hurdle to the U.S. company’s attempt to improve profitability by exiting the loss-making Southeast Asian market.

It is the first time the commission has issued interim measures on any business in the country.

“To address consumer concerns, we have voluntarily committed to maintaining our fare structure and will not increase base fares. This is a commitment we are prepared to give the CCS, and to the public,” Lim Kell Jay, head of Grab Singapore, told Reuters in a statement.

Uber was not immediately available for comment.

Uber and Grab announced the deal on Monday, marking the U.S. company’s second retreat from an Asian market.

Under the deal, Uber will take a 27.5 percent stake in Grab, which is valued at around $6 billion, and Uber CEO Dara Khosrowshahi will join the Singapore-based company’s board.

FILE PHOTO: A Grab vehicle is pictured in Singapore March 26, 2018. REUTERS/Edgar Su

CCS proposals also require both Grab and Uber not to obtain from each other any confidential information including pricing, customers and drivers.

The two firms will be given an opportunity to make written representations to the CCS upon receipt of the proposed interim measures, it said.

Singapore has a voluntary merger notification regime, and CCS has yet to receive the notification from Uber and Grab as of Friday, although the companies have indicated their intention to file a formal merger notification, CCS said.

“We had engaged with the CCS prior to signing and continue to do so,” Lim said.

“We have informed the CCS that we are making a voluntary notification no later than 16 April 2018 to continue to cooperate and engage with the CCS,” he added.

The deal is the industry’s first big consolidation in Southeast Asia, home to about 640 million people, and is widely expected to give Uber more firepower to focus on other markets including India, as it prepares for an IPO in 2019.

Uber lost $4.5 billion last year and is facing fierce competition at home in the United States and across Asia, as well as a regulatory crackdown in Europe. The firm has invested $700 million in its Southeast Asian operations.

Reporting by Miyoung Kim, additional reporting by Fathin Ungku; Editing by Himani Sarkar, Jacqueline Wong and Gareth Jones

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/6XEnzNvGgGI/singapore-watchdog-says-uber-grab-deal-may-have-infringed-competition-idUSKBN1H60KG

Middle men key to management makeover

Mining executives have the power and responsibility to better engage with middle-management for an improved success rate across their transformation programmes, according to international management consultant, Proudfoot.

Article source: http://www.mining-journal.com/future-of-mining/news/1335110/middle-men-key-to-management-makeover

How Seoul raced to conclude U.S. trade deal ahead of North Korea talks

SEOUL (Reuters) – South Korean trade officials braved snowstorms, ate instant noodles to save time and spent weeks hotel-hopping in Washington as they raced to overcome major trade hurdles with their U.S. ally ahead of high-stakes nuclear discussions with North Korea.

FILE PHOTO: Rolled steel are seen at a Hyundai Steel plant in Dangjin, about 130 km (81 miles) southwest of Seoul June 15, 2011. REUTERS/Lee Jae-Won

What was meant to be a week-long trip to Washington stretched into a four-week marathon, as dozens of Seoul officials sought to wrap up talks aimed at amending the six-year-old U.S.-Korea Free Trade Agreement known as KORUS, according to several South Korean officials with direct knowledge of the matter.

U.S. plans announced earlier this month to impose hefty tariffs on steel and aluminum imports added urgency to the trade negotiations. As the third-largest steel exporter to the United States, South Korea had a lot to lose from 25 percent tariffs.

Seoul also felt it couldn’t afford a protracted trade dispute with its most important ally at a time when the two need to work together to contain a nuclear-armed North Korea, the officials told Reuters.

“This had to work well,” a senior official at South Korea’s presidential Blue House told Reuters. “It was right to settle this as soon as possible because if this remains ahead of inter-Korean talks and U.S.-North Korea talks, it could unnecessarily complicate our relationship.”

U.S. President Donald Trump initially welcomed the breakthrough as a “great deal for American and Korean workers”, a marked turnaround from a year ago when he told Reuters he would either renegotiate or scrap what he called a “horrible” trade deal.

But Trump said on Thursday he may hold up signing it until after an agreement is reached with North Korea on denuclearisation, saying such a deal was “a very strong card” to ensure fairness on the new trade pact.

Trump is expected to meet with North Korea’s Kim Jong Un in May after the two Koreas hold their first summit in more than a decade in late April. All parties are expected to discuss the denuclearisation of North Korea.

“FINALLY WITHIN REACH”

Whenever South Korean President Moon Jae-in had a phone call with Trump to discuss the North Korean nuclear issue in recent months, Moon also raised the trade agenda, the Blue House official said.

In their latest call on March 16, while the two countries’ trade representatives were holding a third round of trade talks in Washington, Moon asked Trump to have a “keen interest” in the matter and work toward a speedy trade agreement before their respective summit meetings Kim, the Blue House said at the time.

Around that time, South Korean negotiators started to see a glimmer of hope they could save the trade pact, which has seen the U.S. goods trade deficit with South Korea double since 2012 when it took effect.

“The negotiations started to make progress around March 17, and that’s why our trade team decided to stay longer because they thought agreement was finally within reach,” said a South Korean senior trade ministry official.

The official and another trade official said nearly 30 South Korean negotiators had to move hotels repeatedly in Washington when their trip took longer than expected, at times finding themselves crammed into one hotel room to work on their negotiation strategy for the next day.

“We mostly lived off on instant noodles and quick seaweed rice wraps bought from Korean supermarkets to save time,” the official said.

The efforts culminated in a revised pact the two countries announced this week that gives U.S. automakers and pharmaceuticals more access to the South Korean market.

It also lifted the threat of a 25 percent U.S. tariff on South Korean steel in exchange for quotas that will cut imports of Korean steel by about 30 percent.

“We swiftly removed potential conflicts between the two countries at a time when close cooperation between South Korea and the United States is more important than ever,” a second senior Blue House official said.

All the South Korean officials interviewed by Reuters asked not to be named due to the sensitivity of the issue.

“AS COLD AS SIBERIA”

The talks didn’t get off to a good start as the United States “kept asking us to make concessions unilaterally,” South Korean Trade Minister Kim Hyun-chong said in an interview broadcast live to the Blue House’s Facebook account on Thursday.

“When we first met to talk, the mood was as cold as Siberia and our meeting only lasted for 21 minutes,” Kim said, referring to U.S. Trade Representative Robert Lighthizer. “Later on, we got closer and our relations developed to something like a bromance.”

From the start, South Korea saw that for the deal to survive, concessions were inevitable in autos, which made up over 70 percent of its 2017 trade surplus with the United States.

“If the free trade deal got terminated and 8 percent tariffs revived on South Korean auto exports, that would have been an absolute nightmare. Problem was, how do we sell a deal that doesn’t do anything good for us?,” a senior South Korean government official said.

“The steel issue effectively provided an opening. We make concessions in autos that we saw as inevitable anyway, and in return become the first country to be exempt from steel tariffs. This suddenly became a win-win.”

(GRAPHIC: Nuclear North Korea – tmsnrt.rs/2lE5yjF)

Reporting By Jane Chung and Christine Kim. Additional reporting by Cynthia Kim. Editing by Soyoung Kim and Lincoln Feast

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Kx4lhlOQr7w/how-seoul-raced-to-conclude-u-s-trade-deal-ahead-of-north-korea-talks-idUSKBN1H60I9

Amazon cuts ties with top Washington lobbying firms: Bloomberg

(Reuters) – Online retailing behemoth Amazon.com Inc (AMZN.O) has cut ties with Washington lobbying firms Akin Gump Strauss Hauer Feld LLP and Squire Patton Boggs, Bloomberg reported on Friday.

FILE PHOTO: An Amazon.com Inc driver stands next to an Amazon delivery truck in Los Angeles, California, U.S., May 21, 2016. REUTERS/Lucy Nicholson/File Photo

The changes took place about a week before U.S. President Donald Trump accused Amazon in a tweet on Thursday of not paying enough tax, taking advantage of the U.S. postal system and putting small retailers out of business.

Amazon had cut ties from the lobbying firms last Friday and in their place hired Paul Brathwaite of Federal Street Strategies LLC and Josh Holly of Holly Strategies Inc, both of whom have previously worked as outside lobbyists for Airbnb Inc and Oracle Corp (ORCL.N), the report said, citing a source.

Neither of the parties were immediately available for comment outside regular business hours.

The e-commerce giant employs about 15 lobbyists, according to earlier disclosures submitted to the U.S. Senate, with another 15 outside lobbying firms who each assign more lobbyists to work on behalf of the company.

The retailer spent $15.4 million in 2017 on lobbying in Washington, up from $12 million a year earlier.

Reporting by Kanishka Singh in Bengaluru; Editing by Sunil Nair

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/r8I1aL20U6g/amazon-cuts-ties-with-top-washington-lobbying-firms-bloomberg-idUSKBN1H60IO

Global mergers and acquisitions reach record high in first quarter

NEW YORK/LONDON (Reuters) – Global mergers and acquisitions (MA) had their strongest start ever in the first quarter of 2018, totaling $1.2 trillion in value, as U.S. tax reform and faster economic growth in Europe unleashed many companies’ dealmaking instincts.

FILE PHOTO: The logos of RWE and E.ON are seen before a joint news conference of the two German utilities after unveiling plans for an asset swap deal which will break up RWE’s Innogy unit in Essen, Germany March 13, 2018. REUTERS/Wolfgang Rattay

Strong equity and debt markets and swelling corporate cash coffers also helped boost the confidence of chief executives, convincing them that now is as good a time as ever to pursue transformative mergers, dealmakers said.

“The clarity on tax has unclogged some of the MA activity that was strategically imperative, but companies were waiting for the right financial timing,” said Anu Aiyengar, head of North America MA at JPMorgan Chase Co (JPM.N).

While the value of MA deals globally increased 67 percent year-on-year in the first quarter of 2018, the number of deals dropped by 10 percent to 10,338, preliminary Thomson Reuters data show, reflecting how deals on average are getting bigger.

Among the largest deals clinched this quarter were U.S. health insurer Cigna Corp’s $67 billion deal to acquire U.S. pharmacy chain Express Scripts Holding Co (ESRX.O) and German utility E.ON SE’s (EONGn.DE) $38.5 billion deal to acquire RWE AG’s (RWEG.DE) renewable energy business Innogy SE (IGY.DE).

FILE PHOTO: Press materials of E.ON and RWE are pictured on a desk before a joint news conference of the two German utilities after unveiling plans for an asset swap deal which will break up RWE’s Innogy unit in Essen, Germany March 13, 2018. REUTERS/Wolfgang Rattay

MA volumes doubled in Europe in the first quarter, while the United States was up 67 percent and Asia was up 11 percent.

“The better macro-economic environment in Europe has created greater confidence to get things done. Deals that have been in the works for a long time are now coming to fruition and some industries like utilities are being completely reshaped by the latest wave of consolidation,” said Borja Azpilicueta, head of EMEA Advisory at HSBC Holdings Plc (HSBA.L).

In the United States, the stock market rally was thwarted in the first quarter by U.S. President Donald Trump’s announcements on trade tariffs on Chinese imports. Corporate valuations are still elevated, but market volatility has increased.

“Companies have become more aggressive in pursuing deals that make strong strategic sense. But valuations remain high and boards have recently become more cautious on large acquisitions, as it is more difficult to convince their investors of the potential for value creation at such price levels,” said Gilberto Pozzi, co-head of global MA at Goldman Sachs Group Inc (GS.N).

Regulatory risk has also increased. Trump’s dramatic intervention that blocked Singapore-based Broadcom Ltd’s (AVGO.O) $117 billion hostile bid for U.S. chip maker Qualcomm Inc (QCOM.O) on grounds of national security earlier this month underscored heightened U.S. concerns about losing out to China in the race for new technologies.

“While every auction used to see at least one Chinese participant, now people are questioning their ability to deliver and are conscious of the political pushback that Chinese bidders could face,” said Johannes Groeller, a partner at PJT Partners Inc (PJT.N).

On the antitrust front there is also some uncertainty. The U.S. Department of Justice has sued to block U.S. telecommunications company ATT Inc’s (T.N) $85 billion deal to buy media company Time Warner Inc (TWX.N) over concerns about how the two companies would consolidate their sectors.

“The antitrust environment for MA transactions seems favorable today though certain deals, which catch the attention of regulators or politicians for one reason or another, can be problematic,” said Jack Levy, a partner at Centerview Partners Holdings LP.

“One should resist the temptation to conclude from those specific deals that the antitrust regime has become more difficult,” Levy added.

Reporting by Greg Roumeliotis in New York and Pamela Barbaglia in London; Editing by Jacqueline Wong

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Dt71RsPr9m4/global-mergers-and-acquisitions-reach-record-high-in-first-quarter-idUSKBN1H60EC

KPMG hit by Hong Kong High Court in $400 million China Medical fraud

BEIJING (Reuters) – Global accounting firm KPMG has suffered a major setback in its battle against liquidators of former U.S.-listed healthcare firm China Medical Technologies Inc, whose executives have been charged in the U.S. with defrauding investors out of over $400 million.

FILE PHOTO: The KPMG logo is seen at their offices at Canary Wharf financial district in London, Britain, March 3, 2016. REUTERS/Reinhard Krause

The China Medical case is the most high-profile and closely watched contest in years over the production of Chinese audit work papers, an issue that has put Hong Kong and U.S. regulators at loggerheads with China – and at one point threatened to leave U.S.-listed Chinese firms unaudited and in danger of delisting.

In a previously unreported ruling made last week, Hong Kong’s High Court rejected a KPMG procedural request that would limit the time in which China Medical liquidators can pursue claims against KPMG for losses and damages for its audits of the now-defunct company.

The ruling also paves the way for proceedings on a contempt summons brought against 91 KPMG partners and former partners issued in November for refusal to comply with a High Court order to produce China Medical’s audit work papers.

A substantive hearing on that action is widely expected later this year.

KPMG and mainland associate KPMG Huazhen have refused to comply with a 2016 Hong Kong High Court order to provide copies of audit work papers to Borrelli Walsh Ltd, China Medical’s liquidator, arguing it would violate China’s national security laws.

Deputy High Court Judge Anthony To, in last week’s decision, wrote that KPMG’s refusal to hand over the papers made it “extremely difficult” for liquidators “to determine whether or not to commence proceedings against KPMG”.

KPMG in Hong Kong, that signed off the audits, has claimed it does not have the papers. KPMG Huazhen has allowed liquidators to examine some of China Medical’s papers on site under the supervision of the auditor’s personnel and attorneys, a situation Judge To characterized as “unworkable”.

KPMG did not respond to telephone calls and emails seeking comment. Borrelli Walsh declined to comment.

China Medical was placed into liquidation in 2012 by courts in the Cayman Islands, New York and Hong Kong, following accusations the NASDAQ-listed firm was a fraud.

Company liquidators have presented evidence showing the company’s former management had stolen at least $355 million through fake technology acquisitions. Reuters has been unable to contact the accused or their representatives for comment.

KPMG was China Medical’s auditor between 2005 to 2009, and provided unqualified audit opinions for financial statements of the firm and its subsidiaries during that period.

KPMG faces a myriad of legal and regulatory problems, said Paul Gillis, professor of practice at Peking University’s Guanghua School of Management.

“KPMG used its letterhead on the audit report and they didn’t do the work,” Gillis said, referring to KPMG signing off audit work by KPMG Huazhen. “By claiming they did the (sign-off) work, they made it impossible to argue they don’t have access to work papers.”

Judge To, in his judgment provided a stinging rebuke of KPMG’s refusal to cooperate with the liquidators.

“It is disingenuous for KPMG to argue that it cannot comply with the court orders because its associate KPMG Huazhen will not comply with KPMG’s request,” Judge To wrote.

Reporting by Matthew Miller; Editing by Jennifer Hughes and Christopher Cushing

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/HFX9OblXL48/kpmg-hit-by-hong-kong-high-court-in-400-million-china-medical-fraud-idUSKBN1H60E0

Zuckerberg disavows memo saying all user growth is good

SAN FRANCISCO (Reuters) – A Facebook Inc executive said in an internal memo in 2016 that the social media company needed to pursue adding users above all else, BuzzFeed News reported on Thursday, prompting disavowals from the executive and Facebook Chief Executive Officer Mark Zuckerberg.

Facebook CEO Mark Zuckerberg speaks on stage during the Facebook F8 conference in San Francisco, California April 12, 2016. REUTERS/Stephen Lam

The memo from Andrew Bosworth, a Facebook vice president, had not been previously reported as Facebook faces inquiries over how it handles personal information and the tactics the social media company has used to grow to 2.1 billion users.

Zuckerberg stood by Bosworth, who goes by the nickname “Boz,” while distancing himself from the memo’s contents. Bosworth confirmed the memo’s authenticity but in a statement he disavowed its message, saying its goal had been to encourage debate.

Facebook users, advertisers and investors have been in an uproar for months over a series of scandals, most recently privacy practices that allowed political consultancy Cambridge Analytica to obtain personal information on 50 million Facebook members. Zuckerberg is expected to testify at a hearing with U.S. lawmakers as soon as April.

“Boz is a talented leader who says many provocative things. This was one that most people at Facebook including myself disagreed with strongly. We’ve never believed the ends justify the means,” Zuckerberg said in a statement.

Bosworth wrote in the June 2016 memo that some “questionable” practices were all right if the result was connecting people.

Facebook CEO Mark Zuckerberg speaks on stage during the Facebook F8 conference in San Francisco, California April 12, 2016. REUTERS/Stephen Lam

“That’s why all the work we do in growth is justified. All the questionable contact importing practices. All the subtle language that helps people stay searchable by friends,” he wrote in the memo, which BuzzFeed published on its website.

He also urged fellow employees not to let potential negatives slow them down.

“Maybe it costs a life by exposing someone to bullies. Maybe someone dies in a terrorist attack coordinated on our tools. And still we connect people,” he wrote.

Bosworth said Thursday that he did not agree with the post today “and I didn’t agree with it even when I wrote it.

“Having a debate around hard topics like these is a critical part of our process and to do that effectively we have to be able to consider even bad ideas, if only to eliminate them,” Bosworth’s statement said.

Reporting by David Ingram; editing by Grant McCool

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/LKfhZ3Xz9vw/zuckerberg-disavows-memo-saying-all-user-growth-is-good-idUSKBN1H602S

Under Armour says 150 million MyFitnessPal accounts breached

(Reuters) – Under Armour Inc (UAA.N) (UA.N) said on Thursday that data from some 150 million MyFitnessPal diet and fitness app accounts was compromised in February, in one of the biggest hacks in history, sending shares of the athletic apparel maker down 3 percent in after-hours trade.

The MyFitnessPal app is seen on a smartphone in Golden, Colorado in this February 5, 2015 photo illustration. REUTERS/Rick Wilking

The stolen data includes account user names, email addresses and scrambled passwords for the popular MyFitnessPal mobile app and website, Under Armour said in a statement. Social Security numbers, driver license numbers and payment card data were not compromised, it said.

It is the largest data breach this year and one of the top five to date, based on the number of records compromised, according to SecurityScorecard.

Larger hacks include 3 billion Yahoo accounts compromised in a 2013 incident and credentials for more than 412 million users of adult websites run by California-based FriendFinder Networks Inc in 2016, according to breach notification website LeakedSource.com.

Under Armour said it is working with data security firms and law enforcement, but did not provide details on how the hackers got into its network or pulled out the data without getting caught in the act.

While the breach did not include financial data, large troves of stolen email addresses can be valuable to cyber criminals.

Email addresses retrieved in a 2014 attack that compromised data on some 83 million JPMorgan Chase customers was later used in pump-and-dump schemes to boost stock prices, according to U.S. federal indictments in the case in 2015.

Under Armor said in an alert on its website that it will require MyFitnessPal users to change their passwords, and it urged users to do so immediately.

“We continue to monitor for suspicious activity and to coordinate with law enforcement authorities,” the company said, adding that it was bolstering systems that detect and prevent unauthorized access to user information.

Under Armour said it started notifying users of the breach on Thursday, four days after it first learned of the incident.

Under Armour bought MyFitnessPal in 2015 for $475 million. It is part of the company’s connected fitness division, whose revenue last year accounted for 1.8 percent of Under Armour’s $5 billion in total sales.

(This story has been refiled to correct byline to Nivedita Balu instead of Nivedita Bhattacharjee)

Reporting by Nivedita Balu in Bengaluru and Jim Finkle in Toronto; Editing by Leslie Adler

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/uwSI1SVQrN4/under-armour-says-150-million-myfitnesspal-accounts-breached-idUSKBN1H532W