Chevron/Anadarko… Financial Times

Ed Crooks, Financial Times, quoting Jarand Rystad, here…

“Jarand Rystad, the firm’s founder and chief executive, argues that the large companies also need to rethink their capital structures. Shale production is typically lower-risk than conventional oil and gas development: there are obviously many things that can go wrong, but you will not spend hundreds of millions of dollars to drill a well that turns out to be a dry hole, and you will not find your multibillion-dollar projects being expropriated by the government. As a result, returns can be expected to be lower too. But the lower risk makes it possible to enhance shareholder value by operating with more debt and less equity. The Anadarko deal “represents a golden opportunity for Chevron to achieve a more leveraged capital structure that is better suited for the lower risk energy projects of the future,” he said.”