Wobbly U.S. pipeline deal could do with less cash 8 Feb 2016 Energy Transfer’s planned takeover of Williams has shrunk to a third of its original $33 bln value. The buyer can’t obviously wriggle out of a bid made amid plunging oil prices. With big customer Chesapeake ailing, too, revisiting the mix of cash and stock would help both sides.
Energy partnerships lack immunity to oil price flu 14 Jan 2016 Many so-called MLPs were supposed to be relatively safe from crude swings, notably U.S. pipeline firms with revenue largely based on throughput rather than price. Energy Transfer Equity’s once-$33 bln deal to buy Williams is Exhibit A for the unraveling of that conceit.
TransCanada $15 bln pipeline claim a worthy gamble 7 Jan 2016 The Canadian energy group is suing the Obama administration for nixing the Keystone project, seeking damages worth over half the company’s value. Investors seem skeptical, and the case could take years to resolve. But the suit seems justified, despite the long odds of a payoff.
Chesapeake makes for lousy canary in pipeline 21 Jul 2015 The gas producer cited low prices as it suspended quarterly payouts, the first large U.S. energy company to do so. Heavy debt and expensive contracts mean Chesapeake is a poor proxy for the industry, however. For now at least, other big drillers can avoid the same painful step.
Energy deal treadmill has bounce left in it yet 13 Jul 2015 Marathon Petroleum’s pipeline unit will pay $15.6 bln for gas processor MarkWest. It’s fresh evidence that energy-sector partnerships crave big deals that lower capital costs and boost payouts - despite two prominent rivals’ attempts to pull the plug on the structure.
Williams may get too twisted avoiding complexity 25 Jun 2015 The U.S. natural gas pipeline operator wants to absorb its MLP offshoot in the hope of growing faster. A $53 bln takeover by Energy Transfer would put it in a more sprawling partnership web. Absent a Plan C, Williams could have a hard time showing greater value in simplicity.
An $18 bln deal straightens out twisted pipelines 26 Jan 2015 The convoluted structure at Energy Transfer Equity isn’t doing it any favors. Combining two master limited partnerships it controls may generate some savings. More importantly, it makes the company slightly easier for increasingly skeptical oil and gas investors to understand.
Kinder Morgan’s large-number solution: get bigger 11 Aug 2014 Energy boss Richard Kinder’s master class in financial engineering is back in session with $71 bln of deals to unite his sprawling pipeline empire. Various partnerships had reached a scale that was limiting returns. The new structure should benefit everyone but Uncle Sam.
Energy partnership leak in U.S. tax pipe needs fix 17 Jun 2014 Williams and Access Midstream plan a $50 bln union that, like all MLPs, won’t pay taxes. Such entities may cost Uncle Sam some $7 bln in lost revenue over the next five years – near the estimated loss from firms moving overseas for lower levies. Both loopholes could use a look.
Williams digs deep in M&A playbook to exit a hole 16 Jun 2014 A complex series of deals including buying more of Access Partners and a merger turn Williams into a $100 bln pipeline titan. Its cost of capital should drop and an infusion of cash will help the MLP arm, which has been borrowing to pay investors. The price also looks right.
Canada rail crash adds green hue to oil pipelines 8 Jul 2013 No way of transporting crude is perfectly safe. But a fatal train accident in Quebec draws attention to the dangers of blocking pipelines – which are about five times safer than trains. Without lines like Keystone XL, oil producers will resort to riskier and dirtier methods.
Oil patch excesses tar all players with same brush 14 May 2013 Continental’s board reckons it struck the best deal possible when committing $96 mln to a pipeline its own CEO is building. But rival firms’ governance abuses make that hard to swallow. Eschewing all side deals with company bosses is the best way to avoid the taint of conflicts.
ETE’s $30 bln pipeline empire still too tangled 21 Mar 2013 Not since Chesapeake have energy investors had to wrap their heads around such a convoluted structure as the Energy Transfer family. A $3.75 bln deal eliminates one company from this four-headed beast. But the group still pays a high price for being too impenetrable.
Canada-U.S. oil pipe beats shipping options 8 Feb 2013 Washington is stalling on the Keystone pipeline, so Canada is exploring alternatives for its oil-sands crude. But exporting it on tankers would be more polluting and riskier. American NIMBY opposition to Keystone is bad for the planet as well as for the nation’s energy supplies.
Cut-price Canada crude makes producers look cheap 29 Jan 2013 At $64 a barrel, the nation’s oil is the cheapest on the planet. A lack of pipelines, exacerbated by delays to Keystone XL and a drought along the Mississippi, is the cause. But the sell-off in shares of the likes of Canadian Natural Resources looks overdone.
Big Oil and MLPs on verge of beautiful friendship 23 Jan 2013 The likes of BP own mature wells that often don’t generate a decent return. Until now they had few options for offloading them. But the emergence of tax-exempt partnerships that pump oil and gas provides buyers that can pay top dollar and extract fat returns for investors.
Governance fixes don’t let Chesapeake CEO off hook 9 Jan 2013 New directors are cutting back outsized pay and perks at the U.S. gas driller. But cleaning house is separate from holding boss Aubrey McClendon to account for dodgy personal dealings. The only credible result of a lengthy board probe into conflicts of interest would be his exit.
Conoco’s $5 bln Kazakh sale is the easy part 26 Nov 2012 The U.S. oil giant’s investors should be happy to see the costly Asian project go. The cash also will help fund lavish capex plans and the generous dividend. But Conoco’s real chore is to prove it can boost sluggish output while retreating from promising, if risky, regions.
No need to dress up Exxon gas deal as an oil play 17 Oct 2012 The energy titan says it is buying Celtic to spur crude production. But the Canadian firm’s assets are 75 pct gas. The feint is understandable, given investor grumbling over Exxon’s splurge on gas producer XTO. With exports to Asia looking up, though, the $2.6 bln deal makes sense.
New look U.S. MLPs riskier, but may be worth it 20 Sep 2012 The $350 bln tax-privileged master limited partnership sector mostly involves safe, fee-based energy assets like pipelines. Newcomers like Texas-based Susser Petroleum, a fuel distributor, aren’t so predictable. But high yields - 8.5 pct for Susser - can make up for the dangers.