Saudis Take Big Stakes European Oil Companies
April 08 2020 - 6:15PM
Dow Jones News
By David Hodari , Summer Said and Rory Jones
Saudi Arabia's sovereign-wealth fund has amassed stakes worth
roughly $1 billion in four major European oil companies, according
to people familiar with the matter, buying assets it perceives as
undervalued in a market depressed by the coronavirus pandemic and
low oil prices.
The stakes in Equinor ASA, Royal Dutch Shell PLC, Total SA and
Eni SpA were all bought by the Public Investment Fund on the open
market in recent weeks, said the people, who added that the fund
may continue to make stock purchases.
"The PIF is getting active again in the market..I would not be
surprised if we see similar deals again," said a Saudi
official.
The investments mark a significant tactical shift for the
roughly $300 billion Public Investment Fund, tasked by Crown Prince
Mohammed bin Salman with diversifying the country's economy away
from oil by largely investing in companies and industries
untethered to hydrocarbons.
The purchases also come at a precarious financial moment. Saudi
Arabia's budget deficit is expected to widen this year as oil
revenue falls and the kingdom increases spending to fund a stimulus
package to combat economic damage caused by a countrywide
coronavirus lockdown.
PIF bought a stake worth around $200 million in
majority-state-owned Norwegian oil giant Equinor in the days around
a sharp rally in oil prices last week. A Saudi-based nominee
account with JPMorgan Chase & Co. accrued around 14.5 million
shares -- or 0.43% of the total shares -- between March 30 and
April 6, according to data from Oslo Market Solutions. The move
made that account Equinor's 12th largest shareholder.
It couldn't be determined what size stakes PIF had bought in
Royal Dutch Shell, Total and Eni, but people familiar with the
investments said the combined stakes were worth about $1
billion.
Spokespeople from Equinor, Royal Dutch Shell, Eni and J.P.
Morgan declined to comment while the Saudi Public Investment Fund
and Total didn't respond to a request for comment.
The purchases came during a tumultuous few weeks in the oil
markets. Petroleum prices have fallen nearly 30% since early March,
when Saudi Arabia mounted a price war with Russia, but staged
historic rallies last week.
U.S. crude oil notched its largest ever daily percentage gain
last Thursday after President Trump and the Saudi regime expressed
optimism about the possibility of a deal between the Organization
of the Petroleum Exporting Countries and other oil-exporting
nations to address a global oil glut.
The $300 billion Saudi sovereign-wealth fund is controlled by
Prince Mohammed and run by Yasir al-Rumayyan -- who is also
chairman of majority-state-owned Saudi Aramco. On Monday the fund
disclosed an 8.2% stake in Carnival Corp., the world's largest
cruise operator, whose shares have dropped more than 75% this
year.
That investment came after high-profile deals in recent years,
including a $3.5 billion stake in Uber Technologies Inc. and a $45
billion commitment to SoftBank Group Corp.'s Vision Fund.
Stocks in the travel and energy sectors have been among those
hammered by government-imposed lockdowns and travel bans motivated
by the coronavirus pandemic. Equinor shares pared some of their
heavy losses so far this year last week, but remain down 23% for
2020. Shares closed 0.3% lower at 135.80 Norwegian kroner
Wednesday.
Shell, Total and Eni have respectively shed 35%, 31% and 33% of
their value in 2020, while Brent crude, the global benchmark, is
down 52%.
OPEC and other oil-producing countries including Russia are due
to convene a teleconference Thursday, before the Group of 20
nations host an energy ministers meeting Friday to debate the
conclusions of the OPEC+ meeting.
Write to David Hodari at David.Hodari@dowjones.com, Summer Said
at summer.said@wsj.com and Rory Jones at rory.jones@wsj.com
(END) Dow Jones Newswires
April 08, 2020 18:00 ET (22:00 GMT)
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