For Energy companies…
Chief financial officers (CFOs) of energy and energy service companies have been forced to address a variety of challenges recently, including an increased cost of debt and reduced access to the capital markets, commodity price volatility and pressures to improve costs and liquidity. As a result, the industry is seeing changing priorities that need to be addressed.
Commodity price volatility
The unprecedented volatility in energy prices has created huge swings in energy companies’ cash flows, leading to an increasing emphasis on mitigating risk, smoothing cash flow and communicating with shareholders and analysts. With the price of oil rebounding, there is an increased pressure on working capital and counter-party limits.
Pressures on capital expenditure
Energy companies have been subject to analyst, stakeholder, government and public pressure to invest in clean, efficient extraction methods and to embark on investment programmes in renewable and alternative energy sources. Major capital expenditure projects put further pressure on already stressed working capital and may require complex financing to align project timelines with debt maturities.
Mergers and acquisitions
With many firms seeking acquisition and divestment opportunities, CFOs need visibility across the enterprise to understand where cash is located and how to unlock it. In addition, consistency and automation of financial processes across the business enables efficient divestments and the rapid incorporation of acquisitions.
Cash is king
With continued volatility and uncertainty in the market, investors are placing increasing emphasis on companies with stronger liquidity (i.e. cash/assets ratio) as a key driver for higher stock returns, as compared to EPS growth. Therefore, the focus on efficient financial processes and working capital to release cash, manage risk and deploy other funding techniques to preserve cash and drive share value has never been so important.
The Citi Advantage
At Citi, we understand the challenges faced by today’s Energy companies. And we invite you to benefit from our 140+ years of experience in the Energy industry. We can provide you with innovative products and creative solutions to meet your financing needs. With dedicated Energy industry expertise and focus, Citi is a global leader in e-business services offered in 100 countries and a leading-edge provider of Internet-based banking solutions.
We are an established top-tier player in accommodating the multinational nature of our clientele. And we draw heavily upon our own global operations to provide you with tailored financing and advisory solutions.