Gillian Rich


Oil prices rose Monday, a month after U.S. futures fell into negative territory for the first time, as economies start opening up amid the coronavirus pandemic.

West Texas Intermediate futures for June delivery, which expire Tuesday, settled 8% higher at $31.82 a barrel, after earlier climbing 12% to a two-month high of $32.85 per barrel. Brent oil prices, which have already rolled into July contracts, also pared gains to finish 7% higher at $34.81 per barrel.

“We’ve gone full 180 and rather than plunging to new depths, the rally is only gaining momentum, with the June contract up almost 10% and above $32 a barrel,” Oanda analyst Craig Erlam wrote in his morning note.

“The supply cuts of the last month combined with gradual reopening of various countries around the world has put a significant dent in the supply/demand imbalance and alleviated capacity concerns that led to last month’s panic.”

Oil Prices Lift Oil Stocks

Exxon Mobil (XOM) shares jumped 8% on the stock market today. Chevron (CVX) climbed 5.3%. Among top U.S. shale producers, EOG Resources (EOG) surged 10%, Pioneer Natural Resources (PXD) soared 13% and Parsley Energy (PE) was up 9.7%.

The OPEC+ production cuts took effect on May 1 and Saudi Arabia announced deeper cuts last week in an effort to help balance oil markets and boost oil prices.

Meanwhile, travel has started to pick up again as Europe and America ease Covid-19 restrictions, boosting demand for fuel.

“America is facing a very tight gasoline market. Gasoline prices are already on the rise, and refiners are dragging their feet as U.S. demand starts to make a comeback,” Phil Flynn, senior market analyst for the Price Group, wrote in his daily energy report.

Author: Gillian Rich

Source: Investors: Oil Prices Have ‘Gone Full 180’ As Rally Gains Momentum

A SpaceX IPO of its space-based internet business reportedly could be in the works as the service will go live in a limited fashion this summer.

SpaceX plans to start delivering internet services to customers via Starlink this summer, Chief Operating Officer Gwynne Shotwell said at a private investors meeting hosted by JPMorgan, according to Bloomberg.

“Right now, we are a private company, but Starlink is the right kind of business that we can go ahead and take public,” Shotwell told investors. “That particular piece is an element of the business that we are likely to spin out and go public.”

She didn’t provide a timeline, but sources told CNBC that the Starlink business could go public in the next several years.
SpaceX has already launched over 240 satellites in the Starlink constellation, Shotwell said Thursday, and the company plans an aggressive pace of launches this year. SpaceX has said it needs 400 Starlink satellites for “minor” broadband internet coverage and 800 for “moderate” coverage.

Based on recent International Telecommunication Union filings, the company eventually plans to deploy over 40,000 satellites to offer space-based internet service.

Starlink has already drawn interest from the government. In October, Shotwell said the company is in talks with the Army about using the Starlink satellites. Also last year, the Air Force Strategic Development Planning and Experimentation office gave SpaceX a $28 million contract to see how the service could use Starlink.

The possible Starlink SpaceX IPO comes as founder Elon Musk’s Tesla (TSLA) stock hit a record high Tuesday. Musk previously has maintained that a SpaceX IPO won’t happen until after it begins regular service to Mars. But he also has said that money from Starlink would help launch the Mars missions.

Tesla shares climbed 1.9% to close at 748.96 on the stock market today. Among other space stocks, tourism company Virgin Galactic (SPCE), which has soared since the start of the year, fell 0.9%.

Boeing (BA), which is a Virgin Galactic investor and has its own plans for a satellite internet business, jumped 3.6% on hopes for its 737 Max returning to service soon. Lockheed Martin (LMT), which is partners with Boeing on launch-services joint venture United Launch Alliance, was up 0.9%.

Valuing A SpaceX IPO Of Starlink

SpaceX has been raising huge sums on private markets. It raised $486.2 million from eight investors via an equity offering in December 2018, and $535.7 million from five investors in an offering that started in April 2019. The latest deal valued SpaceX at $33 billion.

Last year, Morgan Stanley analysts said they valued SpaceX at $52.7 billion in a base-case scenario and $121.2 billion in a bull case, if it can take a greater share of the broadband market via Starlink. The high-end estimate would make SpaceX the No. 2 most valuable aerospace/defense stock.

But that values all of SpaceX’s segments. Morgan Stanley’s note said SpaceX could be seen as effectively three companies in one: a launch services provider, a deep-space exploration company, and a broadband company (Starlink).

But a SpaceX IPO of Starlink would face a number of competitors in the space-based internet space, where analysts say there is room for only one or two constellations.

Amazon (AMZN) CEO Jeff Bezos is planning Project Kuiper, to put 3,236 satellites in orbit. OneWeb has its own 600-satellite constellation in the works that is expected to operational by 2021. Facebook (FB) is working on its Athena satellite after shutting down its Aquila drone internet project in 2018.

Author: Gillian Rich

Source: Investors: SpaceX Plans IPO Of Satellite Internet Business After Spinoff

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