Posted on

Oil Industry Turns to Mergers and Acquisitions to Survive

HOUSTON — The once mighty oil and gas industry is flailing, desperately trying to survive a pandemic that has sharply reduced demand for its products.

Most companies have cut back drilling, laid off workers and written off assets. Now some are seeking out merger and acquisition targets to reduce costs. ConocoPhillips announced on Monday that it was acquiring Concho Resources for $9.7 billion, the biggest deal in the industry since oil prices collapsed in March.

The acquisition, days after the completion of Chevron’s takeover of Noble Energy, would create one of the country’s biggest shale drillers and signals an accelerating industry consolidation as oil prices languish around $40 a barrel, just above the levels many businesses need to break even. Just last month Devon Energy said it would buy WPX Energy for $2.6 billion.

But many investors are not sure such deal making will be enough to protect the industry from a sharp decline. The share prices of ConocoPhillips and Concho closed down by about 3 percent on Monday. The big problem is that the fortunes of oil companies are fundamentally tied to oil and natural gas prices, which remain stubbornly low. Few experts expect a full recovery of oil demand before 2022, and some analysts have gone so far as to declare that oil demand might have peaked in 2019 and could slide in the years to come as the popularity of electric cars grows.

“There’s a lot more red ink than there is black gold,” said Michael Lynch, president of Strategic Energy and Economic Research, who periodically advises the Organization of the Petroleum Exporting Countries. “Companies are trying to hunker down and weather the storm. Most people don’t think the oil price will recover for a couple of years.”

More than 50 North American oil and gas companies with debts totaling more than $50 billion have sought bankruptcy protection this year. Among the casualties was Chesapeake Energy, a shale pioneer based in Oklahoma City. More failures could come in the next two years as companies are required to repay tens of billions of dollars in debt.

Oil companies are facing daunting uncertainties, particularly as concerns over climate change mount and governments impose tougher regulations to reduce greenhouse gas emissions caused by the burning of fossil fuels. Small companies fear a crackdown on methane leaks and tightening regulations, especially if former Vice President Joseph R. Biden Jr. becomes president and Democrats take control of the Senate.

European oil companies have already begun pivoting away from oil and gas, plotting investments in renewable energy like wind and solar to attract new investors. While those companies have had limited success so far, American companies have for the most part stuck with their traditional businesses. They have adapted to low oil and gas prices by slashing investments by 30 percent or more. The oil and gas rig count has dropped by 569 since last fall, to only 282 operating across the country.

Oil companies are hoarding cash and renegotiating contracts with service companies that drill and complete wells. Rig rental rates are down roughly 10 percent, pressuring the companies that do the field work. More than 100,000 American oil workers have lost their jobs in recent months.

ConocoPhillips, the largest American independent oil company, has been something of an outlier, recently raising its dividend and buying back shares. Nevertheless, ConocoPhillips’s stock price has dropped by roughly half so far this year.

The company is a major producer in the Bakken shale field of North Dakota and the Eagle Ford shale field in South Texas. By acquiring Concho, it will become a major player in the world’s most lucrative shale field, the Permian Basin, which straddles West Texas and New Mexico.

With Concho’s 550,000 acres in the Permian, ConocoPhillips will more than triple its 170,000-acre position in the basin, which became the world’s most productive oil field last year.

Concho is little known outside Texas but became a major oil producer after it bought RSP Permian for $9.5 billion in 2018. Concho produced more than 300,000 barrels in the second quarter.

“Together ConocoPhillips and Concho will have unmatched scale and quality,” said Ryan M. Lance, ConocoPhillips’s chairman and chief executive, referring to their joint balance sheet, resource reserves and personnel.

The deal would help make ConocoPhillips one of the largest players in the Permian, putting it in the same league as companies that are much bigger than it over all.

“The combination is remarkable,” said Robert Clarke, a vice president and oil analyst at Wood Mackenzie, a research and consulting firm. “Just in regards to scale, ConocoPhillips is adding enough Permian production to nip at the heels of ExxonMobil’s massive program.”

As the shale industry grew over the last decade or so, many smaller companies poured billions of dollars into the Permian and other parts of the country. Now, the process appears to be headed in the opposite direction as the industry retrenches and becomes smaller.

Investment in U.S. shale oil has dropped to an estimated $45 billion this year from roughly $100 billion annually in 2018 and 2019, according to the International Energy Agency. In its annual report released this month, the Paris-based organization said a shakeout was underway.

“The influence of large players is set to grow as acreage is consolidated by larger industry players, and the focus on growth is set to be supplanted over time by a focus on returns,” the report said. “The exuberance and breakneck growth of the early years may be replaced by something a little steadier.”

American oil production fell to 11.2 million barrels a day in September from 13 million at the beginning of the year. The Energy Department expects production to fall an additional 200,000 barrels a day by mid-2021 as companies drill fewer new wells to replace older ones.

The industry has no choice but to cut back. Americans drove 12.3 percent fewer miles in August than they did a year earlier, according to the Transportation Department.

Globally, daily oil consumption was down more than 6 percent in September from a year earlier, according to the Energy Department. Oil production continues to outpace demand, keeping inventory levels high and prices low.

And the pandemic is not yet under control in many parts of the world. If sustained, the recent increase in coronavirus infections in the United States, Europe and elsewhere could reduce demand for oil and gas even further in the coming months.

Posted on

Chevron’s Purchase Could Unlock Israel’s Natural Gas Bonanza

Chevron, the American oil giant, wrapped up the acquisition on Monday of a relatively small Houston-based company called Noble Energy, paying about $4 billion.

Until recently, the deal would have been unlikely, if not unthinkable — because what distinguishes Noble is the large natural gas business it has built in the eastern Mediterranean Sea, especially in Israel, an area that major oil companies had until now avoided.

Chevron’s move is the latest milestone in a remarkable shift in perceptions about a relatively new region for the petroleum industry in the eastern Mediterranean. Once a dead sea for the oil industry, this area, reaching from the Nile Delta in Egypt up to Israel and Lebanon and around Cyprus, has come alive with exploration vessels, drilling rigs and production platforms in recent years thanks to a series of large natural gas discoveries.

Those finds are drawing major oil companies into the area, attracted not only by the prospect of further undiscovered resources but by improving relations between Israel and its former foes Egypt and Jordan.

“This is an area that looks as if it could have the resource quality and the scale to become a pretty significant energy province,” said Mike Wirth, Chevron’s chief executive, in an interview.

International oil giants previously steered clear of Israel, partly, it has been assumed, to avoid alienating large Arab oil producers like Saudi Arabia. The move by Chevron, which this week edged ahead of Exxon Mobil to become America’s largest oil company by market value, indicates that the days when Persian Gulf states bristle about business with Israel may be over. Recently, the United Arab Emirates and Bahrain established relations with Israel with apparent Saudi blessing.

Image
Credit…Toru Hanai/Reuters

“It is opening up the Israeli market to the world,” Nati Birenboim, a former Israeli energy official who is now a consultant, said of Chevron’s arrival. “Everyone knows when they bought Noble, they bought Israel.”

There are no guarantees that recent progress on energy and other fronts won’t face setbacks. Longstanding differences between Israel and its neighbors are not forgotten; expansionist moves by Turkey and its president, Recep Tayyip Erdogan, to claim some of the underwater riches have alarmed its NATO allies and recently prompted the United States to deploy a massive Navy ship at a base it shares with Greece.

More than 20 years ago, Noble helped put the region on the energy industry’s map. Delek Drilling, an Israeli firm, brought the company to Israel to hunt for petroleum. The partnership, which began in 1999, has produced major natural gas finds that not only reduced Israel’s dependence on imported coal and oil but turned Israel — with some helpful nudging from American diplomats — into an exporter with long-term contracts worth an estimated $25 billion to help power the neighboring economies of Jordan and Egypt.

“I think what Chevron sees is the opportunity” to buy into “massive natural gas resources located in the center of a region with a lot of demand,” said Yossi Abu, Delek’s chief executive and now Chevron’s partner, in an interview.

Along with the drilling sites off the coast of Israel, a major discovery called the Zohr gas field, found by the Italian energy company Eni in Egyptian waters in 2015, has drawn development in the area. Total, the French oil firm, and Eni have even extended the hunt into the sea off strife-torn Lebanon — although the first well the partners drilled, this year, turned out to be a dry hole.

From a geological point of view, the eastern Mediterranean has what oil giants like Chevron are looking for: very large volumes of gas, which many in the industry view as likely to have a better future than oil as climate change concerns grow.

Image

Credit…Tamir Kalifa for The New York Times

“It is a very attractive region,” said Wayne Ackerman, a former executive at Royal Dutch Shell and an adviser on gas to Saudi Aramco, who has studied the area’s geology. “I am convinced there will be more discoveries there,” added Mr. Ackerman, who now heads gas research at Rapidan Energy Group, a consulting firm.

The energy business has been shaken by plummeting demand during the coronavirus pandemic and worries about the viability of fossil fuels. But the resources that these big fields hold are unlikely to be left in the ground, because they are already earning substantial revenues by powering the economies of Israel and its neighbors. Some of the fields in the region, including the largest Israeli field, in which Chevron now holds a nearly 40 percent stake, could also be expanded relatively cheaply for exports.

“Gas is an important part of any future energy transition scenario,” Mr. Wirth said. “Proximity to growing markets with demand is a real advantage for a gas resource.”

What Chevron is buying in Noble — very cheaply, because Noble’s shares had been pummeled by the pandemic and worries about the company’s high debt and the industry’s future — is a combination of a profitable regional gas business and the opportunity to expand to serve markets farther afield. Noble also has substantial shale-drilling properties in the United States and some production in Equatorial Guinea in central West Africa.

Mr. Abu of Delek said he thought the American company would bring the capital, technology and marketing clout to allow further expansion of the gas fields as well as new exploration. Delek and Noble, along with Royal Dutch Shell, also share a large find off Cyprus, called Aphrodite, that they have so far not succeeded in developing.

The riches lurking beneath the region’s waters have brought their share of problems.

Turkey has so far been unable to benefit from the prospecting because the gas fields are in zones claimed by other countries under the U.N. Law of the Sea Convention. It has responded by muscle-flexing: In recent months, Mr. Erdogan has sent vessels to drill in waters around Cyprus, including in territory that the island’s government has already awarded to companies like Eni and Total.

Image

Credit…Baz Ratner/Reuters

“It’s quite a novel way of applying pressure,” said Robert Morris, an analyst at Wood Mackenzie, an energy research firm.

Tensions rose in August when a Greek warship collided with a Turkish warship that was escorting a survey vessel. Greece called it an accident; Turkey described it as a provocation. France, Greece, Cyprus and Italy later took part in military exercises involving ships and planes off the Cypriot coast.

Turkey is not a signatory to the Law of the Sea, and says its neighbors have divided the waters unfairly.

“Their aim,” Mr. Erdogan said in a recent magazine interview, “was to confine our country — which has the longest shore in the Mediterranean — to coastline where only fishing with a rod is possible.”

Turkey’s actions have slowed exploration work around Cyprus — as has the coronavirus pandemic.

The wider region, though, is likely to continue to attract interest and investment, analysts say.

“There are just a few places in the world where you can get into large gas assets,” said Gerald Kepes, an independent energy consultant who has worked in Egypt. “These are what big companies are made for.”

Despite Turkey’s efforts, the lure of gaining access to relatively cheap energy has pushed former foes like Egypt, Israel and Jordan more toward cooperation than discord.

Mr. Wirth said recent developments suggested that the region was an “area where we can expect to see regional ties improve in the coming years,” a trend likely to promote economic growth and, consequently, demand for gas.

Image

Credit…Amir Cohen/Reuters

If such trends continue, there is even the possibility of exporting natural gas to countries in the Persian Gulf, like Saudi Arabia, that are rich in oil but poor in gas needed for electric power and industry. There is also a longer-term hope: that gas from the region can help ease Europe’s dependence on energy imports from Russia.

“I think when you’ve got a large, low-cost resource base like this proximate to large economies, we will find ways to move the gas to market in a manner that’s competitive,” Mr. Wirth said on a call with analysts.

Read More

Posted on

U.S. and European Oil Giants Go Different Ways on Climate Change

HOUSTON — As oil prices plunge and concerns about climate change grow, BP, Royal Dutch Shell and other European energy companies are selling off oil fields, planning a sharp reduction in emissions and investing billions in renewable energy.

The American oil giants Chevron and Exxon Mobil are going in a far different direction. They are doubling down on oil and natural gas and investing what amounts to pocket change in innovative climate-oriented efforts like small nuclear power plants and devices that suck carbon out of the air.

The disparity reflects the vast differences in how Europe and the United States are approaching climate change, a global threat that many scientists say is increasing the frequency and severity of disasters like wildfires and hurricanes. European leaders have made tackling climate change a top priority while President Trump has called it a “hoax” and has dismantled environmental regulations to encourage the exploitation of fossil fuels.

As world leaders struggle to adopt coordinated and effective climate policies, the choices made by oil companies, with their deep pockets, science prowess, experience in managing big engineering projects and lobbying muscle may be critical. What they do could help determine whether the world can meet the goals of the Paris agreement to limit the increase of global temperatures to below 3.6 degrees Fahrenheit above preindustrial levels.

The big American and European oil and gas companies publicly agree that climate change is a threat and that they must play a role in the kind of energy transition the world last saw during the industrial revolution. But the urgency with which the companies are planning to transform their businesses could not be more different.

“Despite rising emissions and societal demand for climate action, U.S. oil majors are betting on a long-term future for oil and gas, while the European majors are gambling on a future as electricity providers,” said David Goldwyn, a top State Department energy official in the Obama administration. “The way the market reacts to their strategies and the 2020 election results will determine whether either strategy works.”

To environmentalists and even some Wall Street investors, the American oil giants are clearly making the wrong call. In August, for example, Storebrand Asset Management, Norway’s largest private money manager, divested from Exxon Mobil and Chevron. And Larry Fink, who leads the world’s largest investment manager, BlackRock, has called climate change “a defining factor in companies’ long-term prospects.”

European oil executives, by contrast, have said that the age of fossil fuels is dimming and that they are planning to leave many of their reserves buried forever. They also argue that they must protect their shareholders by preparing for a future in which governments enact tougher environmental policies.

BP is the standard-bearer for the hurry-up-and-change strategy. The company has announced that over the next decade it will increase investments in low-emission businesses tenfold, to $5 billion a year, while shrinking its oil and gas production by 40 percent. Royal Dutch Shell, Eni of Italy, Total of France, Repsol of Spain and Equinor of Norway have set similar targets. Several of those companies have cut their dividends to invest in new energy.

BP tried a transition in the late 1990s and early 2000s under the leadership of John Browne, then chief executive, but financial results from renewables were disappointing and the company eventually dropped its moniker “Beyond Petroleum.”

In an interview, Mr. Browne said this time would be different. “There are many more voices now,” he said, adding that the Paris agreement was a watershed, the economics of renewables have improved and investor pressure was building.

This month BP and Equinor announced a partnership to build and operate wind projects along the coasts of New York and Massachusetts. The governors of those states want to reduce their reliance on natural gas, which this effort will aid.

American oil executives say it would be folly for them to switch to renewables, arguing that it is a low-profit business that utilities and alternative energy companies can pursue more effectively. They say it is only a matter of time before oil and gas prices recover as the pandemic recedes.

Image
Credit…Alana Paterson for The New York Times

For now, Exxon and Chevron are sticking to what they know best, shale drilling in the Permian Basin of Texas and New Mexico, deepwater offshore production and trading natural gas. In fact, Chevron is acquiring a smaller oil company, Noble Energy, to increase its reserves.

“Our strategy is not to follow the Europeans,” said Daniel Droog, Chevron’s vice president for energy transition. “Our strategy is to decarbonize our existing assets in the most cost-effective way and consistently bring in new technology and new forms of energy. But we’re not asking our investors to sacrifice return or go forward with three decades of uncertainty on dividends.”

Chevron says it is increasing its own use of renewable energy to power its operations. It also says it is reducing emissions of methane, a powerful greenhouse gas. And the company has invested more than $1.1 billion in various projects to capture and sequester carbon so it isn’t released into the atmosphere.

Its venture capital arm, Chevron Technology Ventures, is investing in new-energy start-ups like Zap Energy, which is developing modular fusion nuclear reactors that release no greenhouse gases and limit radioactive waste. Another, Carbon Engineering, removes carbon dioxide from the atmosphere to convert into fuel.

All told, Chevron Technology Ventures has two funds with a total of $200 million, about 1 percent of the company’s capital and exploration budget last year. The company has a separate $100 million fund to support a $1 billion investment consortium that aims to reduce emissions across the oil and gas industry.

“We need breakthrough technology, and my job is to go find it,” said Barbara Burger, president of Chevron Technology Ventures, which employs 60 of Chevron’s 44,000 employees. “The transition is not an 11:59-on-Tuesday event. It’s going to be gradual, and evolving and continual over decades.”

Exxon has also largely steered away from renewables and has instead invested in roughly one-third of the world’s limited carbon-capture capacity, which has been so expensive and energy intensive that few companies have been willing to underwrite large-scale projects.

It spends about $1 billion a year on research and development, much of which goes to developing new energy technologies and efficiency improvements that reduce emissions.

One project involves directing carbon emitted from industrial operations into a fuel cell that can generate power. That should reduce emissions while increasing energy production.

In a separate experiment, Exxon recently announced a “big advance” with scientists at University of California, Berkeley, and the Lawrence Berkeley National Laboratory for developing materials that help capture carbon dioxide from natural-gas power plants with less heating and cooling than previous methods.

Image

Credit…Alana Paterson for The New York Times
Image

Credit…Sandy Huffaker for The New York Times

The company is also working on strains of algae whose oils can produce biofuel for trucks and airplanes. The plants also absorb carbon through photosynthesis, which Exxon scientists are trying to speed up while producing more oil.

“Step 1, you have to do the science, and it is impossible to put a deadline on discovery,” said Vijay Swarup, Exxon’s vice president for research and development.

Research into fusion, algae and carbon capture has been going on for decades, and many climate experts say those technologies could take decades more to commercialize. That’s why many scholars and environmentalists feel the American oil companies are not serious about tackling climate change.

“Oil companies don’t do things that put themselves out of business,” said David Keith, a Harvard professor of applied physics who founded Carbon Engineering. “That is not the way the world works.”

But some energy analysts argue that the American oil companies are right not to rush to change their businesses. They argue that U.S. lawmakers have simply not given them enough incentives to make a radical break.

“If this is the sunset time for oil and gas, someone forgot to tell consumers,” said Raoul LeBlanc, a vice president at IHS Markit, a research and consulting firm. He said while sales of electric cars may have picked up, it will take decades to replace the more than a billion internal-combustion cars on the road now.

It will probably take just as long, if not longer, to replace the large fleets of trucks, airplanes and ships that run on fossil fuels. There ought to be enough demand for oil over the next 30 to 40 years for Exxon and Chevron to exploit their reserves and make money, though the profits will decline over time, said Dieter Helm, an Oxford economist who studies energy policy.

“Investors can invest in Tesla or any renewable or electric company,” he said. “Why should an oil firm with the skills for large-scale hydrocarbon developments be able to compete against these new players?”

But Mr. Helm, who published the book “Burn Out: The End Game for Fossil Fuels” in 2017, said he believes that all oil companies have a dim future beyond the next few decades because technology advances will make them obsolete in a world economy dominated by electricity, battery storage, three-dimensional printing, robotics and other breakthroughs. “These companies, in the end, will die.”

Posted on

Stocks Are Rising as Economic News Worsens

The government said on Wednesday that the U.S. economy had suffered its worst contraction since the last recession. The head of the Federal Reserve later said he didn’t know how bad this downturn would be, or how long it would last.

Yet by the end of the day, the S&P 500 stock index had risen 2.7 percent.

That’s been the pattern lately. The drumbeat of grim news — one million known coronavirus cases in the United States, businesses are collapsing, the unemployment rate could reach 16 percent — has done little to deter stocks’ upward march.

Since March 23, when the Federal Reserve announced plans to make unlimited purchases of financial assets to prop up Wall Street, the S&P 500 has soared by more than 31 percent. The unlikely rally created more than $5 trillion of stock market wealth, allowing investors to reclaim more than half of their losses from a steep sell-off earlier this year, in the early days of the pandemic.

Why are stocks climbing when news about the economy isn’t getting much better, and the severity of the public health crisis has barely abated? There are two main reasons: First, trillions of dollars of stimulus money from the Fed and Congress come with an implicit guarantee that the government will limit investors’ risk no matter how bad it gets. Second, the periodic glimmer of positive news fuels investors’ optimism that things can only get better.

Wednesday delivered on both fronts, after officials said that an antiviral drug made by Gilead Sciences showed promise in treating Covid-19, the disease caused by the coronavirus. Also, the Federal Reserve said it would hold interest rates near zero and continue to do everything it could to stabilize the economy.

“What the market is rallying on is the expectation that whatever the world looks like nine or 12 months down the road, it’s going to look better than it does now,” said Scott Clemons, chief investment strategist for private banking at Brown Brothers Harriman.

“On any given day the market might latch onto a particular piece of good information,” Mr. Clemons added. “Today it’s the Gilead press release and the market focused on that. But tomorrow’s another day.”

The direction of the stock market is always determined by a complicated mix of hard data and investor psychology. The price of a stock is based on how much money investors think a company can make in the future. So investors care less about the actual facts reflected in today’s headlines, and more about what kind of picture those facts paint about the coming year.

To investors, it’s abundantly clear that the American economy is already in a deep recession. More than 20 million jobs have been wiped out in little more than a month. Corporate profits are widely expected to collapse.

So when fresh economic reports emerge, such as Wednesday’s announcement from the Commerce Department that first-quarter gross domestic product fell at a 4.8 percent annual rate, they provide little new information to investors.

“The market has mostly written off 2020,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. “What they’re looking for is for the recovery to start.”

Over the last month investors have latched on to a series of indications that the worst-case scenarios for the economy could be mitigated.

The federal government has acted quickly, with the passage of a roughly $2 trillion stimulus bill, the largest ever economic rescue legislation, in late March. Markets have also been given a lift by the Fed, which has pumped more than $2 trillion into financial markets.

“Stimulus has been the engine that has stabilized and driven asset prices higher,” said Julian Emanuel, chief equity and derivatives strategist at the brokerage firm BTIG.

Another slug of positive news that investors are factoring in comes from the health data. The pace of new infections has slowed sharply as lockdowns continue around the country. Some states, such as Tennessee, Georgia and South Carolina, are beginning to open up and others, including New York and California, are laying out their criteria for doing so.

Other updates, such as Wednesday’s hopeful statements on the potential of Gilead’s remdesivir drug, have reinforced the narrative that things are improving. Shares of Gilead rose 5.7 percent after the company said it was “aware of positive data” from a federal trial of its experimental coronavirus drug. Already, speculative bits of news about the drug’s potential had twice lifted the market in recent weeks.

Later in the day, the National Institute of Allergy and Infectious Diseases issued a statement saying its study of the drug showed that it sped up recovery in hospitalized patients with advanced Covid-19.

“The evidence is continuing to mount that remdesivir is having a true treatment effect,” said Dr. Brian Abrahams, co-head of biotechnology equity research at RBC Capital Markets in New York. Dr. Abrahams stressed, however, that it remained unclear what the magnitude of that benefit would be to patients.

It was clear on Wednesday that investors extrapolated this shred of good news into a brighter outlook for the economy. The Russell 2000 index of small capitalization stocks soared nearly 5 percent. Such smaller stocks tend to be less globally diversified than larger companies, meaning they’re more reliant on the U.S. domestic economy.

Some of the biggest jumps were in parts of the market that have been hardest hit by the virus. Norwegian Cruise Line Holdings rose more than 20 percent. Royal Caribbean and Carnival also rose more than 15 percent each. The energy giants Exxon Mobil and Chevron — hard hit by the 70 percent collapse in crude prices this year — were both up more than 5 percent.

Technology giants also climbed after Alphabet, Google’s parent company, reported better-than-expected sales results after the close of trading on Tuesday. Since Microsoft, Apple, Amazon, Facebook and Alphabet are among the most highly valued companies in the United States, their heft gives them outsize sway in market-cap-weighted stock market indexes such as the S&P 500.

“A lot of it really is about hope,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors, an investment company. “You’re getting little hints of hope.”

Read More

Posted on

1,000 Workers, Go Home: Companies Act to Ward Off Coronavirus

An oil company and a media group have told hundreds of employees in London to work from home. A television giant is stopping people who have visited certain countries from entering its offices in Europe. A German airline has asked workers to take unpaid leave.

For weeks, the coronavirus outbreak in China rattled global supply chains, exacting a toll on major businesses around the world, though often in indirect ways.

Now, as it spreads across Europe and Asia, the virus is becoming a more immediate threat to all types of businesses. From Milan to Berlin to London, companies in practically every industry are refining their emergency protocols or sending employees home to try to prevent an outbreak.

This week, Chevron instructed 300 workers at one of its London offices to work from home after an employee returning from Italy developed flulike symptoms. The media group OMG has taken the same step in the Fitzrovia district of London, sending home around 1,000 employees after a staff member who recently passed through Singapore began showing symptoms.

The British pay-television company Sky has begun screening visitors at several of its European offices, telling employees that guests who have recently traveled in “higher risk” countries like China and Japan would be barred. Germany’s flagship airline, Lufthansa, has frozen hiring and offered employees unpaid leave as it braces for the economic impact of the virus to grow. And on Tuesday, the advertising agency Dentsu instructed all the employees at its headquarters in Tokyo to work from home.

For the most part, these disruptions to daily work life have been confined to Europe and Asia. In China, most businesses ground to a halt in January as the government worked to contain the outbreak, which has sickened tens of thousands of people and killed over 3,000.

The Coronavirus Outbreak

  • Answers to your most common questions:

    Updated Feb. 26, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.
    • What if I’m traveling?
      The C.D.C. has warned older and at-risk travelers to avoid Japan, Italy and Iran. The agency also has advised against all non-essential travel to South Korea and China.
    • Where has the virus spread?
      The virus, which originated in Wuhan, China, has sickened more than 80,000 people in at least 33 countries, including Italy, Iran and South Korea.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is probably transmitted through sneezes, coughs and contaminated surfaces. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • Who is working to contain the virus?
      The World Health Organization officials have been working with officials in China, where growth has slowed. But this week, as confirmed cases spiked on two continents, experts warned that the world is not ready for a major outbreak.

fbpx