Here are five things you need to know this morning:
Chevron’s big deal with CNQ: U.S. oil major Chevron has agreed to sell some of its oilsands and shale assets in Canada to Canadian Natural Resources Inc. for US$6.5 billion. The deal announced this morning is all in cash and while it is effective as of Sept. 1, it won’t be finalized on paper until the current fourth quarter. For Chevron, the appeal is simple: selling assets to raise cash while being able to focus more on its core assets in the Permian basin and other expensive acquisitions it is currently trying to make around the world. For Canadian Natural, meanwhile, the oilsands maker is getting an even bigger stake in the Athabasca Oil Sands Project it already dominates, plus a 70 per cent holding in Alberta’s Duvernay shale project. CNQ is already putting that extra cash flow to work, announcing a seven per cent hike to its quarterly dividend.
Caisse says it will back Couche-Tard in a 7-Eleven deal: Quebec’s pension plan says it will financially back convenience store chain Couche-Tard if it makes an offer for Japan’s 7-Eleven, according to Bloomberg. In an interview with the news agency, a senior executive with the Caisse says the fund “will always accompany them in these endeavours if necessary.” While well short of a blank cheque, that must come as reassuring news to Couche-Tard, who are going to need some financial muscle if they are able to complete their pursuit of 7-Eleven. The company offered US$39 billion for the chain this summer but has so far not gotten a warm reception. Having underlying support from a backer as big as the Caisse is a good thing to have in their back pocket.
Rio Tinto offers to buy Arcadium Lithium: Mining major Rio Tinto has made a takeover approach to lithium company Arcadian Lithium that values the latter at more than US$3 billion. U.S.-based Arcadium is one of the biggest suppliers in the world of lithium, a critical component in next generation batteries. The company has operations in Argentina, China, Canada and Australia.
Hurricane Milton takes aim at Florida: Hurricane Milton is moving east across the Gulf of Mexico, doubling its strength in the past 24 hours and expected to get even stronger before making landfall on Florida’s west coast on Wednesday. The storm is now a Category 4 on the five-step Saffir-Simpson scale and is expected to reach the Tampa area in a little over 48 hours. While the region in question is not much of a factor industrially, the insurance industry is already warning that insured losses could be in the tens of billions. When Hurricane Ian hit along a similar trajectory and intensity in 2022, the insured losses were US$65 billion, Bloomberg Intelligence’s Matthew Palazola noted this morning.
Gold bars flying off the shelves at Costco: It’s hard to think of a better metaphor for the popularity of gold right now than its status as the must-have item at Costco. The chain started selling gold bars in its stores last year and sold more than US$100 million worth of them during their first quarter of availability. The chain hasn’t disclosed sales ever since, but there’s every indication that figure has only gotten bigger. About three quarters of the stores polled by Bloomberg at the start of this month reported they were sold out. And that’s as the retail price has risen to $2,699.99 an ounce.