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2016-03-22 19:00:00

TRANSCANADA DEAL: $13 BLN

TRANSCANADA DEAL: $13 BLN

TransCanada, which had hoped to build the controversial Keystone XL oil pipeline, has found another path to growth in the US by agreeing an all-cash $13bn deal to buy Columbia Pipeline Group, a gas transmission company.

The deal will give Calgary-based TransCanada a strategic position in the Marcellus and Utica shales of Pennsylvania, Ohio and West Virginia, the most promising regions in the US for gas production growth.

Columbia has a set of growth projects worth $5.6bn under way in the US, where TransCanada previously had only limited scope for expansion.

The offer values Columbia's equity at about $10.2bn, and TransCanada will also be taking on about $2.8bn in debt, to give an enterprise value of about $13bn.

Buying Columbia will raise the proportion of Transcanada's earnings that are governed by regulators, from 57 per cent to 62 per cent.

It is following several other North American utility companies that have done deals in recent years to increase their dependence on regulated operations, which generally have more stable revenues and profits.

The combined group will be one of the largest regulated gas transmission companies in North America, with almost 57,000 miles of pipelines.

The deal offers $25.50 in cash for every Columbia share, a premium of about 30 per cent above the price before news that the two companies were in talks emerged last week.

Russ Girling, Transcanada's chief executive, said the deal represented "a rare opportunity" to invest in regulated natural gas pipelines and storage assets in the Marcellus and Utica shale regions.

TransCanada has already financed part of the purchase price with a $4.2bn sale of subscription receipts, which can be converted into TransCanada shares when the deal closes. Until then, holders of the receipts will be paid dividends the same as shareholders.

They were sold in a bought deal at a price of C$45.75 each to RBC Capital Markets and TD Securities, which will then sell them to the public. The price paid by the banks represents a discount of about 7 per cent to the TransCanada closing share price of C$49.42 on Thursday evening.

TransCanada also plans to sell its five power generation facilities in the north-eastern US, including the large Ravenswood gas and oil-fired plant in New York City, and its minority stake in gas pipelines in Mexico.

The plunge in oil and gas prices since the summer of 2014 has damaged many pipeline companies. Even though they are less affected than the oil and gas producers, they may still bear some commodity price risk, and if low prices deter production growth then the pipeline businesses will also have less opportunity to expand.

That is less of a concern in the Marcellus and Utica shales, however, because they are among the lowest-cost sources of production in the US.

The Utica has been booming, despite the price slump, and its gas output has risen 30 per cent over the past year.

The deal, which is expected to close by the end of the year, will end a brief period of independence for Columbia, which was spun out of the utility NiSource only last year.

Bankers at Lazard, which advised Columbia, said in a statement that the takeover "further highlights the potential for separation transactions to create significant value for the separated entities".

ft.com

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More: 

EUROPE: ALTERNATIVE SUPPLIERS $12 BLN 

MARKET FEARS SHALE GAS

 

 

 

Tags: TRANSCANADA, PIPELINE, USA, COLUMBIA

Chronicle:

TRANSCANADA DEAL: $13 BLN
November, 20, 09:05:00

INDIA'S GAS WILL UP

REUTERS - India’s natural gas consumption is expected to rise to 70 billion cubic metres (bcm) by 2022 and 100 bcm by 2030, according to a government think tank and the Oxford Institute of Energy Studies, up from 50 bcm now. India burns just 7 percent of what top user the United States consumes in a year with about a quarter of India’s population.

TRANSCANADA DEAL: $13 BLN
November, 20, 09:00:00

NORWAY SELLS OIL & GAS

Norway, which relies on oil and gas for about a fifth of economic output, would be less vulnerable to declining crude prices without its fund investing in the industry, the central bank said Thursday. The divestment would mark the second major step in scrubbing the world’s biggest wealth fund of climate risk, after it sold most of its coal stocks.

TRANSCANADA DEAL: $13 BLN
November, 20, 08:55:00

OIL PRICES UP

WSJ - Light, sweet crude for December delivery rose $1.41, or 2.6%, to $56.55 a barrel on the New York Mercantile Exchange, snapping a three-session losing streak. Brent, the global benchmark, advanced $1.36, or 2.2%, to $62.72 a barrel.

TRANSCANADA DEAL: $13 BLN
November, 20, 08:50:00

U.S. RIGS UP 8 TO 915

U.S. Rig Count is up 327 rigs from last year's count of 588, with oil rigs up 267, gas rigs up 61, and miscellaneous rigs down 1 to 1. Canada Rig Count is up 24 rigs from last year's count of 184, with oil rigs up 9 and gas rigs up 15.

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