{"id":47184,"date":"2015-05-27T07:08:02","date_gmt":"2015-05-27T13:08:02","guid":{"rendered":"http:\/\/www.businesspundit.com\/?p=47184"},"modified":"2020-09-21T13:33:48","modified_gmt":"2020-09-21T17:33:48","slug":"jim-chanos-warns-devastating-disaster-oil-and-gas-industries","status":"publish","type":"post","link":"https:\/\/www.businesspundit.com\/jim-chanos-warns-devastating-disaster-oil-and-gas-industries\/","title":{"rendered":"Jim Chanos Warns Of Devastating ‘Disaster Waiting To Happen’ In Oil And Gas Industries"},"content":{"rendered":"

\"Failing<\/a><\/p>\n

Hedge fund manager Jim Chanos wants us to know that the gas and oil industries are on the verge of a major disaster. The famed businessman warns that companies are working more inefficiently than ever to produce an ever increase demand for their products.<\/p>\n

\u201c[W]e\u2019re just seeing that \u2026 these guys like Exxon and Chevron and Royal Dutch Shell are simply replacing $20 [per barrel] oil with $80 oil,\u201d Chanos said May 24 on the PBS television program \u201cWall Street Week.\u201d \u201cSo high return-on-capital businesses are becoming more mundane return-on-capital businesses.\u201d<\/p>\n

His warning arrives after oil plummeted from $110 per barrel 11 months ago, to the mid-$60 range.<\/p>\n

Chanos, the president and founder of the New York investment adviser Kynikos Associates, said the reason that operating expenses are racking up is because oil majors have to \u201cdeal with Mr. Putin\u201d \u2013 while \u201chaving to do things like drill in the Arctic.\u201d<\/p>\n

The hedge fund manager also notes that energy companies are now being forced to \u201cconstruct these enormously expensive LNG \u2013 liquefied natural gas \u2013 plants and increasingly add \u2026 risk to the portfolio where it just used to be much simpler. You know, drill somewhere and pull the oil out.\u201d<\/p>\n

Jim Chanos says he and fellow hedge fund managers are now feeling “really negative” about integrated oil companies. Kynikos is already short-selling some of its most prominent energy giant holdings. Chanos says the surplus of oil and gas is a “disaster waiting to happen” in the energy industry.<\/p>\n

Chanos further notes that he has become “leery of the very leveraged guys in any company that\u2019s running negative cash flow after capital spending. So they\u2019re not covering their dividends or their buybacks.”<\/p>\n

Chanos even names a few of the big companies he is most worried about. \u201cSo names like Chevron, names like British Gas-slash-Royal Dutch, and then of course some of the big national companies, the Petrobrases of the world.\u201d<\/p>\n

This is hardly the first time that Kynikos has spoken negatively about the big oil and gas producers. During the May 5-8 Skybridge Alternatives Conference in Las Vegas, he said his company was betting against shares of Chevron as well as both Shell and British Gas, now known as BG Group.<\/p>\n

Interviewer Anthony Scaramucci, the founder of Sky Bridge Capital, asked Chanos if he could offer an \u201cactionable idea\u201d for investors. Chanos replied he would \u201cshort the North American frackers,\u201d whose oil and gas extraction process is so expensive. He calls fracking an incredibly \u201cflawed business model.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Hedge fund manager Jim Chanos wants us to know that the gas and oil industries are on the verge of a major disaster. The famed businessman warns that companies are working more inefficiently than ever to produce an ever increase demand for their products. \u201c[W]e\u2019re just seeing that \u2026 these guys like Exxon and Chevron […]<\/p>\n","protected":false},"author":33,"featured_media":47186,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25],"tags":[7624,7622,7621,7623],"class_list":{"0":"post-47184","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-fracking","9":"tag-gas-industry","10":"tag-jim-chanos","11":"tag-oil-industry"},"acf":[],"wps_subtitle":"","_links":{"self":[{"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/posts\/47184","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/users\/33"}],"replies":[{"embeddable":true,"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/comments?post=47184"}],"version-history":[{"count":1,"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/posts\/47184\/revisions"}],"predecessor-version":[{"id":72028,"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/posts\/47184\/revisions\/72028"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/media\/47186"}],"wp:attachment":[{"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/media?parent=47184"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/categories?post=47184"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.businesspundit.com\/wp-json\/wp\/v2\/tags?post=47184"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}