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Voya Asia Pacific High Dividend Equity Income Fund T.IAE


Primary Symbol: IAE

Voya Asia Pacific High Dividend Equity Income Fund (the Fund) is a diversified, closed-end management investment company. The Fund’s investment objective is total return through a combination of current income, capital gains and capital appreciation. The Fund seeks to achieve its investment objective by investing primarily in a portfolio of dividend yielding equity securities of Asia Pacific companies. The Fund will seek to achieve its investment objective by investing at least 80% of its managed assets in dividend producing equity securities of, or derivatives having economic characteristics similar to the equity securities of Asia Pacific Companies that are listed and traded principally on Asia Pacific exchanges. The Fund will invest in approximately 60-120 equity securities and will select securities through a bottom-up process that is based upon quantitative screening and fundamental analysis. Voya Investments, LLC is an investment adviser of the Fund.


NYSE:IAE - Post by User

Post by Doug2Bon Sep 15, 2016 9:22am
154 Views
Post# 25239610

Telegraph on Oil Supply

Telegraph on Oil Supply

Oil investment crashes to 60-year low, incubating next energy shock 

Oil
Investment in North Sea oil and gas has collapsed eightfold
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Oil discoveries have slumped to the lowest level since 1952 and the global economy is becoming dangerously reliant on crude supply from political hotspots, the world’s energy watchdog has warned.

Annual investment in oil and gas projects has fallen from $780bn to $450bn over the last two years in an unprecedented collapse, and there is no sign yet of a recovery next year.

The International Energy Agency said wells are depleting at an average rate of 9pc annually. Drillers are not finding enough oil to replace these barrels, preparing the ground for an oil price spike in the future and raising serious questions about energy security.  

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“There is evidence that cuts in exploration activities have already resulted in a dramatic decline in new oil discoveries, dropping to levels not seen in the last 60 years,” said the IEA’s World Energy Investment 2016 report.

The drop is so drastic that the effects are likely to overwhelm slow gains from fuel efficiency and the switch to electric cars, at least for the rest of this decade.

Much of the steepest fall in spending is in stable political areas. Britain’s North Sea investment has shrivelled to £1bn from an average of £8bn over the last five years.  Spending in Canadian fields has plummeted by 62pc.

This decline tightens the future stranglehold of the OPEC cartel and Russia on global oil supplies, although the consequences will not be obvious until it is too late. The big national oil companies in the Gulf have costs of $10 a barrel or less, and most have kept up investment. 

Saudi Arabia seems determined to keep raising output and push for market share, even though low prices caused by its own policy are playing havoc with its public finances. The budget deficit is 16pc of GDP. 

It is drawing down foreign exchange reserves and tapping the global bond markets to makes end meet, a high-risk strategy but one that can probably work for another two years. 

oil pump
The sun appears to be setting on plentiful oil supplies CREDIT: ALAMY

Russia’s oil industry has higher costs but it has been cushioned by a cheaper ruble. The Kremlin has an Achilles Heel, however. It is is burning through its Reserve Fund to cover a fiscal deficit, drawing down $6bn in August alone.

There is only $32bn left. Russia can probably muddle through until mid-2017 but then it will face stark choices. The Saudis may calculate that they can outlast Russia in this grueling war of attrition.

The IEA said global spare capacity is wafer-thin at just 1.7m barrels a day (b/d), stripping out idle capacity in the war-torn trio of Libya, Iraq, and Nigeria. This implies that the market will swing from glut to scarcity with lightning speed once the energy cycle turns. 

For now the world is still swimming in oil, and iron law of the oil cycle is that the longer this goes on, the greater the rise in crude prices later. Brent contracts have slipped 6pc to $47 a barrel over the last three trading sessions, giving up the short-lived gains from vague talk of an output freeze by OPEC and Russia later this month.

The IEA said the oil market is behaving strangely. “With the price of oil at current levels, one would expect supply to contract and demand to grow strongly. However, the opposite now seems to be happening,” it said.

Nigeria oil 
Nigeria's oil industry faces instability on a regular basis CREDIT: AFP/GETTY

Growth in global demand slumped to a two-year low of 800,000 b/d in the third quarter, upsetting the fine calculus of supply and demand. The glut is now likely to persist until mid-2017, and this will be extremely painful for Nigeria, Algeria, Angola, Venezuela, and Iraq.

OPEC is still adding supply into a depressed global market. Both Iran and Saudi Arabia and have added 1m b/d each over the last two years, more than offsetting the 1.4m b/d fall in other parts of the world. 

The Iranians have lifted exports more quickly than expected to their pre-sanctions level of 2.2m b/d, though output has leveled off over the last four months . It is clear that this one-off effect is largely exhausted.

The Saudis have ramped up their giant Wasit gas plant, freeing 215,000 b/d of output that was being used for power. But the bigger picture is that the Kingdom is sticking to its master plan to kill off high-cost projects in the Arctic, in African deep waters, in the Canadian oil sands, and Venezuela’s Orinoco basin.

Saudi Arabia has largely given up trying to knock out the US shale industry, reluctantly accepting that it will have to live with this troublesome upstart. North America’s frackers are becoming low-cost producers and are tough opponents, able to survive and thrive at $40 to $50 a barrel due to leaps in technology.

arctic oil
Saudi Arabia looks to be sticking to its plan of killing off high cost oil projetcs, such as those in the arctic

Although 90 companies have gone bankrupt since oil prices crashed, this has not stopped the juggernaut. Some have done deals with creditors, clearing debts. In other cases, private equity groups with deep pockets have scooped up the distressed assets.

Frackers have added 98 new rigs since May. The epicentre of fresh output is in the Permian basin of West Texas, a region that could ultimately produce 6m b/d and surpass Saudi Arabia’s Ghawar field.

The IEA said costs for shale drillers fell 30pc in 2015, and will fall a further 22pc this year. The price of completing a well has dropped by up to 65pc since 2014.

Lower costs are not confined to fracking. Spot day-rates for land rigs globally have dropped from $25,000 to $16,000. Drill ships for deepwater fields have fallen from $650,000 to $400,000 a day.  This means that the actual damage from falling investment is not as bad as it looks, but it is still serious.

The great question is how quickly the industry can crank up output once the market tightens. Shale drillers are nimble, but even they need one to two years to recruit expert staff, and reach full momentum, and they are not big enough to make up for cancelled mega-projects across the world.

The Saudis may ultimately win their gamble, flushing out rivals so thoroughly in a three-year purge that the ground is prepared for an unstoppable surge in crude prices later this decade.

But if that reminds the world that oil is a highly volatile commodity controlled by political cartels, it may trigger the final and definitive push for home-grown renewable energy.  Such are Pyrrhic victories.


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