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PIPELINESTC Paying $1.5B to Buy Out Shares in Pipeline MLP
TC Energy Corp. on Monday announced a share swap offer, valued at $1.48 billion, to take over all 76% of the stock of affiliate TC PipeLines LP that is widely held on public financial markets.
The deal would transfer to TC all the master limited partnership (MLP) interests, ranging from 46-100%, in
eight pipeline systems that the Calgary firm operates across the United States.
The pipelines within the unit are Gas Transmission Northwest, North Baja, Bison, Tuscarora, Portland Natural Gas Transmission, Northern Border, Iroquois and Great Lakes.
ANALYSISM&A Among U.S. Natural Gas Operators Looks Poised to Climb on Optimism for Pricing, Says Enverus
Chevron Corp.’s $13 billion takeover of Noble Energy Inc., completed on Monday, was the largest US. upstream deal during a sluggish third quarter, according to Enverus.
The oil and gas analytics company in its summary of 3Q2020 merger and acquisition (M&A) activity outlined the highs and lows for what was another volatile three-month period.
“While the third quarter’s tempo of 28 deals with a disclosed value is tied with 1Q2020 for the worst showing in 10 years, a couple of big corporate
M&A NEWSCaterpillar Transforming Pressure Pumping Business with Takeover of Weir Oil, Gas Division
Caterpillar Inc., one of the world’s largest construc-tion and mining operators, has agreed to pay $405 mil-lion to buy the Texas-based oil and gas division of Weir Group plc.
Cat, as it is known, manufactures equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The takeover of Fort Worth-based Weir Oil & Gas from the Scotland-base global engineer-ing giant, would beef up the pressure pumping, pressure control and aftermarket services for upstream customers.
“Combining Weir Oil & Gas’s established pressure pumping and pressure control portfolio with
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Tuesday, October 6, 2020 - Vol. 11, No. 3
Navigator Testing Support to Move More Crude from Cushing. . . . . . . 2
Trade Date: Oct 05; Flow Date(s): Oct 06Basin/Region Range Avg Chg Vol Deals
Gulf CoastBarnett 1.300-1.450 1.405 0.390 117 18Eagle Ford 1.750-1.900 1.835 0.555 306 56Haynesville - E. TX 1.400-1.800 1.480 0.455 705 112Haynesville - N. LA 1.400-1.520 1.505 0.485 251 44Permian1 -0.150-0.950 0.065 0.050 1,789 287Tuscaloosa Marine Shale 1.565-1.700 1.600 0.455 766 137
MidcontinentArkoma - Woodford 1.150-1.500 1.455 0.345 146 29Cana - Woodford 1.250-1.330 1.295 0.325 212 38Fayetteville 1.140-1.560 1.530 0.510 131 34Granite Wash* 1.340-1.460 1.420 0.405 883 192
NortheastMarcellus - NE PA2 0.900-1.180 1.035 0.295 414 103Marcellus - NE PA: Other3 1.070-1.180 1.110 0.275 207 59Marcellus - NE PA: Tenn4 0.900-1.050 0.965 0.335 208 44Marcellus - SW PA/WV 0.900-1.450 1.115 0.340 782 151Utica5 1.000-1.400 1.255 0.335 329 62
Rocky Mountains / WestBakken -- -- -- -- --Green River Basin* 1.700-1.990 1.895 0.800 918 193Niobrara-DJ6 1.360-1.450 1.395 0.375 723 102Piceance Basin* 1.440-1.610 1.475 0.515 302 52Uinta Basin* 1.450-1.500 1.475 0.525 120 16San Juan Basin* 1.500-1.600 1.545 0.595 274 47
Notes: Table represents fixed-price delivered-to pipeline transactions in USD/MMBtu. These data are comprised of deals that NGI believe represent trading activity in the respective resource plays and may contain gas that was produced from conventional formations. * Denotes a tight sands formation. Volumes may not total due to rounding. For more information, please see NGI’s Shale Price Methodology.
’s SHALE DAILY TMTuesday, October 6, 2020
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OPEN SEASONNavigator Testing Support to Move More Crude from Cushing
Dallas midstreamer Navigator Borger Ex-press LLC has launched a binding open season on its planned Borger Express crude pipeline system from the Cushing hub in Oklahoma to Borger, TX.
The 90,000 b/d Borger Express would pro-vide transport services by utilizing 180 miles of an existing oil pipeline, and constructing nearly 200 miles of 16-inch diameter pipeline from Cleo Springs, OK, to Borger.
Borger Express is expected to be placed in service in early 2022.
The project would provide shippers transpor-tation services for numerous grades of light and heavy crude oil from the Cushing hub to third party storage and a regional refinery in Borger, according to Navigator.
Cushing is the delivery and pricing point for West Texas Intermediate oil futures contracts and is one of the key oil hubs in the Lower 48.
All potential shippers must execute by Nov. 5 confi-dentiality agreements and submit binding commitments for service.
Navigator Borger Express is an affiliate of Navigator
Energy Services, the largest private oil midstream provider in the Anadarko Basin. Navigator owns and operates 500 miles of crude pipeline, more than 1 million bbl of storage capacity, and it has a delivery capacity of 450,000 b/d.
Details of the open season are available on the web-site. More information is also available from Navigator Chief Commercial Officer Laura McGlothlin via email or at (214) 880-6003.
M&A Among U.S. Natural Gas Operators Looks Poised to Climb on Optimism for Pricing, Says EnverusContinued from Page 1acquisitions pushed total transaction value to $21 billion,” analysts said. “That is a strong quarterly deal total by historical standards.”
Through the rest of 2020, “there is the potential for additional corporate deals,” but the “market for asset deals is likely to remain sluggish.”
However, natural gas plays “seem poised to draw
more attention for asset acquisitions than their oilier counterparts as there is more optimism around the outlook for gas pricing.”
Whether M&A activity increases depends on com-modity prices, analysts said.
The acquisition of Noble was “a fraction of the cost” of Chevron’s attempted takeover of Anadarko Petro-
leum Corp. last year. However, the Noble purchase “is still tied for the fourth largest global upstream deal since 2014.”
The largest pure-play Lower 48 con-solidation between July and September was by
’s SHALE DAILY TMTuesday, October 6, 2020
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Devon Energy Inc., which announced it would merge with fellow Oklahoman WPX Energy Inc. The “merger of equals” carries an estimated $12 billion enterprise value.
Chevron’s acquisition of Noble, as well as Devon’s tie-up with WPX, were structured with “little premium and all-stock consideration,” according to Enverus.
“There is a broad consensus that consolidation is a net positive for the industry,” said senior M&A analyst Andrew Dittmar. “Including the corporate deals from 2019, that process looks to be well underway. There is room for further mergers, but it can be a challenge to find the right asset and balance sheet fits for accretive deals. It may take several more years for consolidation to play out.”
The Permian Basin “is likely to be the epicenter”
of Lower 48 M&A activity. However, exploration and production (E&P) companies working in other regions of the country should benefit from repositioning with larger operators.
For example, there was a “modest consolidation” in the Appalachian Basin during the quarter with Southwest-ern Energy Co.‘s takeover of Montage Resources Corp. for $874 million. That transaction also was structured as an all-stock deal.
“Regardless of the targeted play, mergers have so far focused on companies with reasonable debt loads,” Dittmar said. “Companies with impaired balance sheets are being left to find their own way, resulting in a spate of Chapter 11 filings.” …cont' pg. 4
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Cat’s engines and transmissions enables us to create ad-ditional value for customers,” said Vice President Joe Creed, who oversees Cat’s Oil & Gas and Marine Divi-sion. “This acquisition will expand our offerings to one
of the broadest product lines in the well service industry.”The acquisition requires approval by Weir sharehold-
ers and is subject to review by regulatory authorities. The transaction includes more than 40 Weir
Source: Tallgrass Energy LP, NGI calculations. For more info and daily 10am ET updates of this chart, go to natgasintel.com/rextracker.
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Dozens of U.S. E&Ps and oilfield services operators have sought voluntary restructuring since the start of the year. The “notable” filings in 3Q2020 included California Resources Corp., with $5.2 billion in debt; Oasis Petro-leum Inc., $2.8 billion in debt; and Denbury Resources Inc., $2.5 billion in debt.
“Nearly all public companies filing Chapter 11 are pursuing a reorganization, while a substantial number of private E&Ps that file Chapter 11 are choosing to exit via sales,” Enverus noted.
Private operators also were selling in 3Q2020, in-cluding Gulf of Mexico producer Arena Energy LP with a $466 million sale, and Midcontinent-focused Templar Energy LLC, with a $91 million sale.
“A pickup in deal flow likely requires an uplift in commodity prices that boosts cash flow for existing participants, plus an inflow of new capital. Often private equity has deployed capital during down markets but looks less willing to step in currently.”
A potential source of capital that has been used for the past few years is through special purpose acquisitions companies, or SPACs, Enverus noted.
“This model has been used before in oil and gas, most recently by Pure Acquisition Corp., which completed its previously announced deal during 3Q2020 to form High-Peak Energy. SPACs currently seem to be gaining broader acceptance in the investment community with rising use across industries.”
Caterpillar Transforming Pressure Pumping Business with Takeover of Weir Oil, Gas DivisionContinued from Page 1
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manufacturing and services locations and about 2,000 employees.
In 2011 and 2012 Weir began to beef up its Lower 48 oilfield services (OFS) business by acquiring a trio of U.S.-based operators. The unit then teamed up in 2016 with a unit of Rolls Royce plc to provide an integrated hydraulic
fracturing system.However, the Weir Group
in February announced it would sell the U.S. business to become a mining technology pure-play.
“Caterpillar is a great new home for Weir Oil & Gas, its world class people, products and services,” said Weir Group CEO Jon Stanton. “It will enable Weir Oil & Gas to continue to flourish, ensuring the business remains at the forefront of innovation and customer service in the future.”
Tudor, Pickering, Holt & Co. (TPH) analysts said it was “no se-cret” that Weir wanted to become a pure-play mining equipment manufacturer, and the sale of the OFS business “puts them right where they want to be.” The “be-leaguered (yet beloved) oilfield service space would benefit from (mucho) consolidation, as there are real synergies and competitive landscape benefits that’ll emerge as a result.
“To boot, as the global activ-ity outlook wanes, North Ameri-can drilling/completion activity is likely to remain well below prior cycle levels for the foreseeable future.”
In the oil and gas business, Cat is mostly known for its related engines and transmission busi-
ness, but it also owns Black Horse LLC, according to TPH. Black Horse “sells pumps (fluid and power ends), valves, and seats into the well servicing space.” Weir “is one of the (very) big dogs in the pump manufacturing game, so this deal clearly benefits industry structure…”
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TC Paying $1.5B to Buy Out Shares in Pipeline MLPContinued from Page 1
The offer rates units in the U.S. partnership as worth 0.65 of shares in TC at $27.31 each, a 7.5% premium over their 20-day trading average. TC is proposing to buy out all the investors with 35.2 million shares.
Industry analysts attributed the transaction to changed U.S. tax treatment of MLPs and a need among pipeline companies to make efficiency adaptations to low oil and natural gas prices as well as competitive delivery
’s SHALE DAILY TMTuesday, October 6, 2020
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Shale Daily is published daily, each business day by Intelligence Press, Inc. (703) 318-8848.For breaking natural gas and shale news and more detailed pricing data, please visit us at: naturalgasintel.comFor a listing of all our premium newsletters and data services, please visit: naturalgasintel.com/premiumservicesExecutive Publisher: Dexter Steis ([email protected]). Editor-In-Chief: Alex Steis ([email protected]). Managing Editor: Carolyn L. Davis ([email protected]). Analysts/ Price Editors: Patrick Rau, CFA ([email protected]), Nathan Harrison ([email protected]), Josiah Clinedinst ([email protected]). Senior Editor – Markets: Leticia Gonzales ([email protected]). Senior Editor – LNG: Jamison Cocklin ([email protected]). Senior Editor – Mexico and Latin America: Christopher Lenton ([email protected]). Associate Editor – Markets: Kevin Dobbs ([email protected]). Associate Editor: Andrew Baker ([email protected]). Markets Contributor: Jeremiah Shelor ([email protected]). Correspondents: Richard Nemec ([email protected]), Gordon Jaremko ([email protected]), Ronald Buchanan ([email protected]), Eduardo Prud'homme ([email protected]), Adam Williams ([email protected]), Ron Nissimov ([email protected]). Contact us: EDITORIAL: [email protected]; PRICING: [email protected]; SUPPORT/SALES: [email protected]; ADVERTISE: [email protected] Press, Inc. © Copyright 2020. Contents may not be reproduced, stored in a retrieval system, accessed by computer, or transmitted by any means without a site license or prior written permission of the publisher. DISCLAIMERS, LIMITATION OF WARRANTY AND LIABILITY: The Information contained in this newsletter (our Content) is intended as a professional reference tool. You are responsible for using professional judgment and for confirming and interpreting the data reported in our Content before using or relying on such information. OUR CONTENT IS PROVIDED "AS IS" AND WE DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR YOUR PARTICULAR PURPOSE. Although we believe our Content to be complete and accurate as described therein, we make no representations regarding completeness or accuracy. We will not be liable for any damage or loss of any kind arising out of or resulting from access or lack of access to or use of our Content, including but not limited to your reliance on it, errors in the data it contains, and data loss or corruption, regardless of whether such liability is based in tort, contract or otherwise. NGI’s full Subscriber Agreement is available here: naturalgasintel.com/TOS.
NGI's Shale Daily™
Tuesday, October 6, 2020
Vol. 11, No. 3
ISSN 2158-8023 (print)
service markets.The transaction follows TC’s announce-
ment at the end of September to negotiate own-ership stakes in infrastructure assets, including the Keystone XL oil pipeline with five Canadian indigenous tribes.
TC’s natural gas pipeline network spans 57,900 miles, supplying more than 25% of gas consumed daily across North America.
The company’s natural gas capital expen-diture program currently underway includes C$9.9 billion ($7.46 billion) of expansions to its Nova Gas Transmission Ltd. (NGTL) pipe-line system in Western Canada, $1.8 billion in U.S. pipeline capacity additions and $1.7 billion of pipeline projects in Mexico.
