Australia’s Santos has won a court case that was brought against it five years ago by environmentalists, alleging that the company misled its shareholders about its net-zero intentions. A federal judge in Sydney dismissed the case this week, with details about the motives for her decision to be published next week. The litigation story began in 2021, when a shareholder advocacy dubbed the Australasian Centre for Corporate Responsibility alleged that Santos had made misleading claims about its plans to ...

Core Insights - Air quality is deteriorating globally due to rising emissions from transportation, heavy industry, and urbanization, leading to a focus on cleaner fuels and sustainable technologies [1] - Exxon Mobil Corporation (XOM) is expanding its carbon capture and storage (CCS) operations along the U.S. Gulf Coast as part of its Low-Carbon Business strategy [1][8] Group 1: Carbon Capture and Storage (CCS) Initiatives - XOM plans to launch multiple CCS projects in Texas and Louisiana by 2026, in partnership with Linde and Nucor [2][8] - The company aims to supply electricity for data centers using natural gas while capturing carbon emissions, with a decision on a low-carbon data center expected by the end of 2026 [3][8] Group 2: Industry Comparisons - Other energy companies like Chevron (CVX) and BP are also investing in low-carbon initiatives, with BP operating CCS facilities in the U.K. and CVX having major projects in Australia [4] - Chevron has injected over 11 million tons of CO2 into underground storage by November 2025 [4] Group 3: Financial Performance - XOM's shares have increased by 24.8% over the past year, outperforming the industry average of 17.2% [5] - The company's trailing 12-month enterprise value to EBITDA (EV/EBITDA) is 8.71X, higher than the industry average of 5.43X [6]

Core Viewpoint - Air Products and Chemicals, Inc. (NYSE:APD) is facing mixed analyst sentiments, with recent downgrades reflecting ongoing sector challenges, while the company is also positioning itself as a leader in energy and environmental solutions, particularly in hydrogen projects [2][4]. Analyst Ratings and Price Targets - Wells Fargo downgraded Air Products to Equal Weight from Overweight and reduced the price target to $250 from $330, citing "trough-like conditions" in the chemical sector expected to persist into the first half of 2026 [2]. - Mizuho lowered its price target on Air Products to $290 from $300 but maintained an Outperform rating, indicating a cautious outlook for the chemicals sector due to weak market conditions [3]. Sector Challenges - Analysts highlighted several pressures on the chemical sector, including a muted recovery in China and slow housing markets in the US and Europe, which are contributing to a challenging environment for chemical stocks [2]. - The March quarter is anticipated to start weak, similar to the December quarter, as rising exports from China continue to impact basic chemical markets [3]. Strategic Positioning and Projects - Air Products is focusing on solutions related to energy and environmental challenges, with significant investments in gasification, carbon capture, and clean hydrogen technologies [4]. - The NEOM Green Hydrogen Project in Saudi Arabia is about 80% complete and is expected to begin production by 2027. Additionally, the company is advancing an $8 billion blue hydrogen project in Louisiana and a $3.3 billion blue hydrogen project in Canada, along with a smaller $360 million green hydrogen project in Arizona expected to start in 2026 [5]. Industry Leadership - Air Products remains a global leader in industrial gases and liquefied natural gas processing technology and equipment, indicating its strong market position despite current sector headwinds [6].

Core Insights - BP plc has canceled its "H2Teesside" hydrogen and carbon capture project in favor of developing a large AI data center at the same location [1][8] - The new AI data center is planned to cover almost 500,000 square meters, making it the largest in Europe, and has government backing [2][3] - The UK government introduced "AI growth zones" to promote AI infrastructure, offering benefits like simplified planning and energy access [3] Project Viability - The decision to scrap the H2Teesside project was influenced by weaker demand for low-carbon hydrogen and the closure of a nearby Sabic facility, which was a potential customer [4] - Initially, BP aimed for the project to produce 20% of the UK's hydrogen target by 2030, but high production costs and reduced demand undermined its viability [4] Future Commitments - Despite abandoning the hydrogen project, BP remains committed to the Teesside region and plans to engage in other energy initiatives, including a new gas-fired power station with carbon capture technology [5] - BP is also involved in developing carbon dioxide pipelines and a carbon storage site in the area [5]

Core Insights - Exxon Mobil Corporation has paused its plans for the construction of the blue hydrogen facility in Baytown, Texas, due to weak customer demand for blue hydrogen [1][9] - The facility was intended to produce 1 billion cubic feet per day of blue hydrogen, which is a cleaner fuel produced from natural gas with carbon dioxide captured and stored underground [1][2] - The higher costs associated with blue hydrogen production have led to insufficient customer willingness to pay, further exacerbated by economic uncertainty in Europe [2][3] Company Challenges - The company has struggled to secure offtake agreements from customers, which are essential for advancing the hydrogen project [4] - Previous delays and setbacks in the construction of the hydrogen production facility highlight broader challenges faced by oil and gas companies transitioning to lower-carbon businesses [4][9] - The potential for resuming the project in the future is contingent on a strengthening demand for blue hydrogen [3]

Market Overview - Global equity markets experienced positive returns in Q3, driven by progress in U.S. tariff negotiations and expectations of Federal Reserve rate cuts, with the MSCI World Growth Index up 8.6% compared to 7.3% for the MSCI World Index and 5.8% for the MSCI World Value Index [2] - Emerging markets showed notable strength, particularly in China, Mexico, and Brazil, with China's tech giants like Tencent and Alibaba contributing to optimism in AI development [5][6] - Developed markets saw Japan leading returns due to clarity on trade policy and confidence in economic resilience, while the eurozone lagged due to political volatility and infrastructure spending debates [6] Quarterly Performance - The ClearBridge Global Value Improvers Strategy generated positive absolute returns but underperformed its benchmark, with industrials and energy holdings detracting from performance [7][19] - Negative stock selection in industrials was primarily due to CNH Industrial's decline amid weaker agricultural demand, while Hitachi remained a strong performer in Japan [8] - Energy stock selection faced challenges from declining commodity prices, with EQT's shares affected by high storage inventories and concerns over demand growth [9] - IT sector stock selection was a strong contributor, particularly Oracle, which gained market share among hyperscalers [10] - In healthcare, CVS and AstraZeneca saw strong performance due to better-than-expected earnings and reduced tariff concerns [11] Portfolio Positioning - New positions were initiated in Lloyds Banking Group, expected to deliver higher normalized returns and a double-digit shareholder yield, and Alphabet, which is positioned to benefit from generative AI developments [13][14] - The strategy exited its position in Novo Nordisk due to lowered full-year guidance and management changes [15] Outlook - Market confidence is bolstered by clarity around tariffs and fiscal policy, although valuations have returned to elevated levels [16] - The focus remains on undervalued companies with distinct growth drivers or restructuring catalysts [16] Energy Sector Insights - Structural shifts in energy demand and efficiency present compelling opportunities, particularly in renewables and energy storage [17] - Companies like Vertiv and Johnson Controls are positioned to benefit from rising energy costs and net-zero goals, with efficiency becoming a competitive advantage [26] ESG Highlights - Carbon capture and sequestration (CCS) technologies are critical for heavy industries, with ClearBridge holdings actively developing CCS capabilities [22][23] - Linde is well-positioned in clean hydrogen production, leveraging its technology to drive emissions savings and business growth [24][30] - Green Plains is focusing on carbon capture initiatives to decarbonize its biorefineries, partnering on projects to sequester significant CO2 emissions [38][40]

Core Insights - Air Products and Chemicals, Inc. (APD) is leveraging its project investments, productivity initiatives, and new business deals despite challenges from a sluggish Chinese economy and reduced helium demand [1][7] - The company has faced project cancellations and the divestment of its liquefied natural gas (LNG) business, which are expected to negatively impact performance [1][8] Investment and Growth Strategies - APD is well-positioned to benefit from investments in high-return industrial gas projects and productivity measures, focusing on its gasification strategy and executing growth projects that are expected to enhance earnings and cash flows [2][3] - Major projects include the NEOM green hydrogen project in Saudi Arabia, expected to start production in 2027, and the Louisiana Clean Energy Complex, anticipated to commence in 2028 or 2029 [3][4] Productivity and Cost Management - The company is implementing productivity actions to improve its cost structure, with expected productivity benefits of at least $75 million in fiscal 2025 and annual savings of $185-$195 million from global cost-reduction plans [5][6] - Air Products is also focused on improving pricing strategies in an inflationary environment [5] Financial Performance and Shareholder Returns - The board of Air Products increased its quarterly dividend to $1.79 per share, marking the 43rd consecutive year of dividend increases, with an operating cash flow of approximately $2 billion for the nine months ending June 30, 2025 [6] - The company updated its full-year adjusted earnings per share guidance for fiscal 2025 to a range of $11.90 to $12.10, with fourth-quarter expectations between $3.27 and $3.47 [9] Market Challenges - A slower economic recovery in China and lower helium demand are significant concerns, with no material improvement expected in the near term [7] - The cancellation of several large projects is projected to create a 3% year-over-year headwind in full-year fiscal 2025, while the divestment of the LNG business is expected to result in a 4% headwind [8]

Core Insights - Exxon Mobil Corporation (XOM) reported second-quarter 2025 earnings that exceeded expectations, driven by record production levels and strong performance in high-return assets like Permian and offshore Guyana [1][9] Financial Performance - Earnings per share (EPS) for Q2 2025 were $1.64, surpassing the Zacks Consensus Estimate of $1.49, although it declined from $2.14 in the previous year [2] - Total revenues for the quarter were $81.5 billion, falling short of the Zacks Consensus Estimate of $82.8 billion and down from $93.06 billion year-over-year [2] Production and Assets - ExxonMobil achieved its highest second-quarter production since the merger of Exxon and Mobil over 25 years ago, with significant contributions from offshore Guyana and the Permian Basin [1][9] - The company discovered nearly 11 billion barrels of oil off the coast of Guyana, marking the largest oil discovery globally in the last 15 years, with current production at approximately 650,000 barrels per day [6] - ExxonMobil expects to ramp up production in Guyana to 1.7 million barrels of oil equivalent per day by 2030, with eight projects planned [6] - In the Permian Basin, ExxonMobil aims to increase production from 1.6 million barrels of oil equivalent per day to 2.3 million by the end of the decade through advanced recovery technologies [7] Strategic Acquisitions - The acquisition of Pioneer Natural Resources Company has been pivotal, with ExxonMobil revising its annual synergy estimates from this deal upward to over $3 billion, enhancing its outlook for the Permian Basin [8][10] Industry Context - Other integrated energy companies like Chevron and BP have also reported their earnings, with Chevron posting adjusted EPS of $1.77, while BP is set to report soon [4][11] - The overall market sentiment remains cautious due to trade tensions, which may impact stock performance despite positive developments in ExxonMobil [13]

Group 1: Chevron's Strategic Shift - Chevron Corporation is actively changing its energy mix by developing renewable fuels and solutions for carbon emissions management, integrating sustainability into its core operations [1][2] - The company has formed partnerships with CalBio, Brightmark, and Bunge to enhance its production of renewable diesel and renewable natural gas (RNG), with new projects like the Geismar biorefinery and an oilseed processing plant in Louisiana indicating significant growth in these sustainable efforts [1][9] - Chevron's strategy includes embedding renewable solutions into its operations, expanding raw material usage for fuels, and establishing a presence in hydrogen production and carbon capture technology [2][9] Group 2: Long-term Outlook and Competitive Edge - These initiatives are viewed as a long-term safety net rather than immediate replacements for Chevron's traditional energy business, providing a competitive edge as government policies and energy pricing evolve [3] - The company's low-carbon infrastructure includes early examples such as electrolyzers in Utah and carbon dioxide storage facilities at Bayou Bend [2] Group 3: Industry Comparisons - Other energy giants like ExxonMobil and Shell are also investing heavily in cleaner energy, with ExxonMobil planning to spend up to $30 billion by 2030 on emission-reducing projects and Shell planning to invest $10-15 billion in low-carbon solutions by 2025 [4][5] - ExxonMobil's Baytown facility is becoming a major "blue hydrogen" production site, while Shell's Holland Hydrogen I project in Rotterdam is a key part of its green strategy [4][5] Group 4: Market Performance - Chevron's shares have increased by more than 6% this year, outperforming the Oil/Energy sector's increase of 3% [6] - The stock is currently trading at a premium in terms of price-to-book value compared to the industry average [8]