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Oct. 8-12: Antero rolls up MLP; Westmoreland files for bankruptcy

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Oct. 8-12: Antero rolls up MLP; Westmoreland files for bankruptcy

A look back at successes and setbacks in the energy industry.

Highs

ANTERO — Appalachian shale driller Antero Resources Corp. on Oct. 9 announced a stock-and-cash merger between pipeline entity Antero Midstream Partners LP and its general partner Antero Midstream GP LP. Under the agreement, Antero Midstream GP will acquire all of Antero Midstream Partners' outstanding common units, including units held by Antero Resources. Antero Midstream GP will then convert into a corporation named Antero Midstream Corp. Wall Street welcomed clarity from the deal, which also will eliminate Antero Midstream Partners' required cash payments to its general partner. Antero now joins the wave of companies converting from MLPs to corporations in the wake of federal tax policy changes. The simplification plan, scheduled to close in the first quarter of 2019, would result in Antero Resources owning about 31% of the new midstream company.

DRILLER DEAL — London-headquartered Ensco PLC and Houston-headquartered Rowan Cos. PLC jointly announced Oct. 8 that the offshore drilling companies have agreed to merge in an all-stock transaction expected to provide $150 million in cost savings amid an oil market recovery. Based on Ensco's Oct. 5 closing price on the New York Stock Exchange of US$8.48 and Rowan's closing price of $18.78, the combined entity has an enterprise value of $12 billion. The companies said they expect the cost savings to come from corporate and regional overlaps, supply chain efficiencies and the standardization of systems, policies and procedures across the combined organization. "Simply put, this is a beautiful combination from a strategic perspective," Tudor Pickering Holt & Co. analysts wrote in an Oct. 8 note.

Between

BATTERY STORAGE — Duke Energy Corp. said Oct. 10 it plans to invest $500 million to add nearly 300 MW of battery storage to its portfolio in the Carolinas over the next 15 years. Duke Energy subsidiaries Duke Energy Carolinas LLC and Duke Energy Progress LLC initially outlined the potential to deploy the battery storage projects in their integrated resource plans filed in early September with the North Carolina Utilities Commission. As part of this plan, Duke Energy Progress on Oct. 8 filed an application with North Carolina regulators for a certificate of public convenience and necessity for a microgrid solar and battery storage facility in Madison County, N.C. The Hot Springs microgrid project will consist of a 2-MW (AC) solar array and about 4 MW of lithium-based battery storage.

Lows

MICHAEL — Hurricane Michael caused widespread power outages and "unimaginable destruction" from the Florida panhandle to the mid-Atlantic. More than 1 million electricity customers in six states were still without power on Oct. 12, the second full day after the Category 4 storm made landfall on Oct. 10 just northwest of Mexico Beach, Fla. At the peak of the storm, Southern Co. utilities Gulf Power Co., Alabama Power Co. and Mississippi Power Co. experienced 530,000 outages. Duke Energy Florida LLC indicated the rebuilding of its electrical infrastructure severely damaged by Hurricane Michael could take months. Duke Energy Corp. also experienced damage and about 500,000 power outages in the Carolinas. In Virginia, Dominion Energy Inc. said about 600,000 customers were affected by Michael, which spawned several deadly tornadoes and flash flooding.

WESTMORELAND — Westmoreland Coal Co. and its master limited partnership, Westmoreland Resource Partners LP, on Oct. 9 filed for Chapter 11 bankruptcy protection. The Colorado coal producer proposes to sell mines in the U.S. and Canada to company debt holders as part of a plan to emerge from bankruptcy in February 2019. Westmoreland may also sell "substantially all of the assets" of subsidiary Western Energy Co., which owns and operates the Rosebud mine near Colstrip, Mont. In addition, Westmoreland indicated in an Oct. 9 federal filing that it intends to market noncore mines in Montana, North Dakota, Ohio, Wyoming and Texas. Moody's on Oct. 11 downgraded Westmoreland's probability of default rating and withdrew all its ratings for the coal producer, while the New York Stock Exchange suspended trading of Westmoreland Resource Partners' common units.