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Glencore's GRail attracts 3 major coal carriers; Southern Co., KMI form gas pipeline JV

Coal M&A news

Glencore Plc'sA$1 billion Hunter Valley coal train network received separate bids during theJuly 11 auction from major coal carriers Aurizon Holdings Ltd., Asciano Ltd.'sPacific National and U.S.-listed Genesee & Wyoming Inc., The Australian Financial Review's StreetTalk reported July 12, citing sources.

Coal of AfricaLtd. or CoAL's extendedtakeover offerfor Universal Coal Plchas been called off due to unfulfilled conditions, including the failure tofinalize a coal sales contract with South African power utility Eskom.

Financial advisory and asset management firm, LazardAustralia, is running a strategic review and is assessing market appetite forPeabody Energy Corp.'sAustralian coal assets, The AustralianFinancial Review's Street Talk reported July 12. The firm called onpotential buyers for the assets, informing them that the review is likely tolead to the giant coal company's divestment of its metallurgical coal mines inAustralia.


Natural gas/midstreamM&A news

Midstream master limited partnerships, cash hungry given theprolonged slump in commodities prices, have become a coveted investment destinationfor electric utilities adjusting to surging natural gas demand and unabatedcoal plant retirements. SouthernCo.'s decisionto become a co-owner of KinderMorgan Inc.'s SouthernNatural Gas Co. LLC pipeline system is the latest in the trend.Analysts characterizedthe deal asSouthern Co.'s latest step toward growing its nonutility business through bothregulated and renewable energy acquisitions.

Investors are buying into Plains All American Pipeline LP's messaging that itssimplification dealwith general partner Plains GPHoldings LP and the related dividend cuts are more good news thanbad. Speaking the day after Plains announced the $7.2 billion transaction, CEOGreg Armstrong doubled down on the benefits of the simplification, saying itwill align shareholder interests effectively, lower costs of capital,strengthen distribution coverage and bolster the entity's credit profile.

Williams Cos.Inc.'s Canadian unit has garnered the interest of several big-namebidders for a deal that could fetch up to $2 billion, Reuters reported, citing "peoplefamiliar with the situation." The interested parties include , , and , and pensionfunds Canada Pension PlanInvestment Board, OntarioTeachers' Pension Plan Board and the ,according to the report.

Devon EnergyCorp. struck a deal to sell its 50% ownership interest in theAccess pipeline to Wolf Midstream for $1.1 billion, topping off Devon's programto unload assets for billions of dollars in cash. Devon said the agreement alsoincludes the potential for an incremental payment of approximately $120 millionwith the sanctioning and development of a new thermal oil project on Devon'sPike lease in Alberta.

EnterpriseProducts Partners LP has paid the $1 billion final installment toacquire all themembership interests in EFSMidstream LLC from affiliates of Pioneer Natural Resources Co. and The paymentwas made within a year of the initial $1.15 billion installment upon closing ofthe asset buy,as stipulated under the terms of the deal.

Valero EnergyCorp. subsidiary Valero Terminaling and Distribution Co. all of theremaining ownership interest in Parkway Pipeline LLC, its with Kinder Morgan. Valero'spurchase of Kinder Morgan's 50% membership interest in the 141-mile, 16-inchpipeline is effective June 30. The price of the cash transaction was notdisclosed.

Texas-based LuxeEnergy LLC has agreed to sell its southern Delaware Basin leaseholdinterests and related assets to an undisclosed third-party buyer for $560million. The agreement comes a year after the company's founding and receipt of$500 million funding commitments from NGP Natural Resources XI LP in May 2015.

Creditor firms are looking to take control of PermianResources LLC, a struggling E&P company founded by Aubrey McClendon, DowJones Newswires reported July 12, citing "people familiar with the matter."A deal is still under negotiation with some of Permian Resources owners —Energy & Minerals Group,First Reserve Corp.and McClendon's estate — according to the report. Any deal may also involve acash infusion, possibly from the company's owners or creditors.

The appeal of utilitysector mergers andacquisitions has notdiminished, but the deals themselves may be getting smaller as the industry'sbig players finalize their consolidations, one expert said recently. Growthopportunities in the utility sector continue to be increasingly gas-centric,which gives the more sluggishly growing electric companies both strategic andfinancial motivation to latch on to their gas-focused brethren, GerryYurkevicz, a partner with Oliver Wyman, said in a recent interview.

Following the recent completion of its $12 billiondeal for AGLResources Inc., Southern Co. has rolled out a new corporate logo, whilerenaming its newest subsidiary SouthernCompany Gas. The mergercreated the second-largest utility company in the U.S. in terms of customerbase.