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Halliburton/Baker Hughes merger collapses; EFH files alternative Chapter 11 plan

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Halliburton/Baker Hughes merger collapses; EFH files alternative Chapter 11 plan

Top news

FERC'sdecision to revokewaivers of affiliate power sales restrictions for American Electric Power Co. Inc. and subsidiaries was metwith stock downgrades and disappointment. The news is expected to have a much biggerfinancial impact on FirstEnergy than AEP, which has it will either sell itsgeneration assets or pursue re-regulation in Ohio.

and terminatedtheir proposedmerger. The deal termination, anticipated by analysts and announced by the companiesMay 1, resulted from challenges in obtaining remaining regulatory approvals andgeneral industry conditions that, according to Halliburton Chairman and CEODave Lesar, "severely damaged deal economics."

FERCdemanded that TotalSA, its affiliates and employees prove why they are not liable fornearly $217 million in civil penalties and should not be forced to disgorgeunjust profits of more than $9 million for manipulation of natural gas pricesbetween June 2009 and June 2012.

Whiledecreased domestic demand due to regulatory constraints, cheap natural gas, andwarmer weather have impacted the coal sector's bottom line, the largestindustry bankruptcies, like Peabody Energy Corp., came after multi-billion-dollar,debt-fueled bets on the market for metallurgical coal, used in steel making.Now, just as the latest and largest U.S. company that made a major investmentin met coal has succumbed to bankruptcy, the international met coal benchmark pricefinally ticked up for the second quarter. Prompt-month Australian coking coalfutures have also been on the rise, climbing 17.3% year-to-date to $92.75/tonneas of April 21.

Power

* has fileda new bankruptcy exitplan for the company, indicating room for NextEra Energy Inc. or other strategic investors toinvest in itselectric transmission and distribution arm Oncor Electric Delivery Co. LLC, TheWall Street Journal reported. EFH indicated last week that the sale ofits 80% interest in Oncor Electric to a group of investors led by — asproposed under the original chapter 11 plan — will not close.

* Under the threat of Arizona legislative counterpunches,the Yes on AZ Solar political action committee to drop its voter initiative topreserve net energy metering and instead enter negotiations with the state's utilities.Solar PAC Chair Kristin Mayes rushed a message to the Senate from the secretaryof state's office proving the initiative had been withdrawn in order to keepthe Senate majority from taking a final vote on resolutions that would haverequired competing voter initiatives to appear on the November ballot topreserve the Arizona Corporation Commission's power to set rooftop solar rates.

* Abill to broaden the regulatory role of Connecticut's Department of Energy andEnvironmental Protection could allow Dominion Resources Inc.'s Millstone nuclear plant to bypass dailywholesale auctions in favor of long-term contracts. The state Senate hasalready signed off on the bill which now heads to the state House forconsideration, TheConnecticut Mirror reports.

*Several parties, including Oklahoma Attorney General Scott Pruitt, arecriticizing Oklahoma Gas andElectric Co.'s $92.5 million rate case to double monthly customerservice charges and place a separate demand charge on bills, TheOklahoman reports. A hearing before the administrative law judge at theOklahoma Corporation Commission is scheduled to start May 3 and could last for"several weeks."

Natural gas/midstream

*Delays in approvingTransCanada Corp.'sC$15.7 billion Energy East pipeline has cost "billions of dollars" toCanada's economy, CEO Russ Girling was quoted as saying by Reuters."Those are the kinds of numbers that have already come out of the economybecause we haven't gotten these things done over the last few years," Girlingsaid.

* Alawsuit from investorJohn Bumgarner against WilliamsCos. Inc. and EnergyTransfer Equity LP's proposed merger has been dismissed by the U.S.District Court for the Northern District of Oklahoma, TulsaWorld reports. The lawsuit stated that the ETE undervalued Williams.

*Many independent U.S. natural gas producers, particularly in Appalachia,haven't seen banks trim their credit like their shale oil peers during thisspring's bank redetermination season because of a discipline instilled through years ofliving with low commodity prices, an industry analyst said at a Washington,D.C., think-tank.

*Chevron Corp. has increasedthe number of jobs it plans to cut this year by 1,000 — now aiming to cut 8,000positions, or 12% of its workforce, as a drop in oil prices results in a first-quarter2016 loss of $725 million, or 39 cents per share, compared with earnings of$2.6 billion, or $1.37 per share, in the comparable quarter of 2015, the HoustonChronicle reports.

*St. Anselm Exploration Co. filed for voluntary Chapter 7 bankruptcy and liquidationin the Denver federal court, listing $1.2 million in assets and $65.5 millionin unsecured debt, the DenverBusiness Journal reports.

Coal

*After a number ofdelays, theWashington state Department of Ecology and Cowlitz County, Wash., environmental impactstatement for the proposed Millennium Bulk Terminals-Longview project.

*Cloud Peak EnergyInc.'s pure-play Powder River Basin and low-debt businessmodel has kept itfrom the worst punishments being doled out in the coal sector, but the companyis still bracing fora fundamentally altered marketplace. President and CEO ColinMarshall said that in the foreseeable future, coal will now compete withnatural gas on marginal power demand "rather than providing reliable lowcost base load power as historically done."

Commodities

*The propane market fellmore than 2 cents per gallon in the week ended April 29 as production of thecommodity rose to a newrecord, but stronger action in crude oil was able keep prices fromfalling further.

*Recent efforts to synchronize the natural gas and electricity markets mark animprovement but could stand tosee further adjustments, according to one natural gas marketerspeaking at the North American Energy Markets Association's spring conferencein Orlando.

*Power dailies could unwind in the week's opening session Monday, May 2, asexpectations for demand erosion in much of the country as the workweek unfoldsconspire with a renewed downdraft at the natural gas futures arena. Climbing 10cents on April 29 on news of a gas pipeline blast in Pennsylvania, front-monthJune natural gas futures were extending lower early Monday ahead of the openingbell. At last look, the contract was down 4.4 cents to trade near $2.134/MMBtu.

New from RRA

* subsidiaryJersey Central Power & LightCo. filed with the New Jersey Board of Public Utilities for a$142.1 million rateincrease representing an 8.55% increase over test-year revenues,SNL Energy affiliate Regulatory Research Associates explores.

*Spire, formerly Laclede Group Inc., announced that it intends to acquire 100% of the outstanding equity ofEnergySouth, the parent company of Alabama local gas distribution companyMobile Gas ServiceCorp., from SempraEnergy for $344 million, RRA explores.

Quoted

"Weare still assessing whether or not we want to continue with the PPA stipulationcommitments in light of the FERC order that would not allow the PPA to goforward," American Electric Power spokeswoman Melissa McHenry .

The day ahead

* At4:30 p.m. ET, EdisonInternational will holdits first-quarter 2016 earnings call.

*Early morning futures indicators pointed to a higher opening for the U.S.equity markets. To view more SNL equity market indexes, click here.To view more SNL Energy commodities prices, click here.