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Sept. 26-30: DTE, Rice Energy kick off week with big midstream deals

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Sept. 26-30: DTE, Rice Energy kick off week with big midstream deals

A brief lookback at successes and setbacks in the energy industry.

Highs

DTE — DTE EnergyCo. kicked off the week with news of a to acquire Appalachiangas gathering assets from M3Midstream LLC and Vega Energy Partners Ltd. "The acquired assets are in a productive area ofthe Southwest Marcellus/Utica region and have expansion potential,"DTE CEO Gary Anderson said. Macquarie Capital Inc. in a research note,writing, "We trust management's conservatism and discipline, and believethat the risk-adjusted growth from these assets should be well received."DTE also announced plans to build1,000 MW of natural gas capacity to replace planned coalretirements through 2023.

RICE — Rice EnergyInc. announced Sept. 26 a $2.7 billion deal to buy and Vantage EnergyII LLC, which includes 85,000 core acres in the Marcellus Shale, 52,000 acres inthe deeper Utica Shale and 37,000 net acres in the Barnett Shale. Rice said the deal raises its 2017 naturalgas production volumes 70% above the firm's previous guidance, toroughly 1.3 Bcfe/d. Riceintends to use its Rice Midstream Partners LP affiliate to gather all thoseflows. Analysts said the deal is particularly good for Rice Midstream, which is55% owned by Rice, in addition to Rice's general partnership interest.

DUKE — Duke Energy Corp. is poised to close its ofPiedmont Natural Gas Co.Inc. Oct. 3 after clearing its final regulatory hurdle. NorthCarolina regulators issued an order approving the merger Sept. 29. The North CarolinaUtilities Commission rejected motions by public interest groups that raisedconcerns the deal would increase risks for Duke ratepayers by leading to anoverreliance on gas. "We have enjoyed an excellent relationshipwith Piedmont's team for years, and we are eager to welcome them to Duke Energyin the coming days," Duke Chairman, President and CEO Lynn Good said.

CHENIERE — CheniereEnergy Inc. on Sept.30 proposed a $1.01 billion buyout of all remaining it does not already own, in a stock-for-stock deal at a premiumof about 3% for the share price of each entity. Cheniere shares up0.53% and Cheniere Energy Partners jumped 6.96%. If the deal goes through, Cheniere Partners Holdings will become awholly owned subsidiary of Cheniere. "We believe the proposed transactionis attractive to investors in Cheniere Partners Holdings who, as new LNGshareholders, would have the opportunity to participate in the future successof the entire Cheniere complex," said Jack Fusco, president and CEO ofCheniere.

Between

CLEAN POWER PLAN — The U.S. Court of Appeals for the District ofColumbia Circuit held nearly seven hours of oral arguments Sept. 27 as it considers demands byopponents of the U.S. EPA's Clean Power Plan to vacate the Obamaadministration's signature carbon-cutting rule. How the court might rule, in adecision not expected to occur until early 2017, is anyone's guess, since bothsupporters and detractors of the Clean Power Plan where the courtseemed to agree with their side. Jeff Holmstead, a Bracewell LLP attorneyrepresenting the American Coalition for Clean Coal Electricity, said most ofthe judges seemed to regard the rule as "transformative," which meansthe EPA must show it is authorized by a "clear statement" fromCongress. FBR & Co.,however, mentioned comments from Harvard Law professor Richard Lazarus that hesaw at least five votes from the D.C. Circuit in favor of the EPA, suggestingmore support for the agency than for petitioners.

Lows

CHESAPEAKE — Shares of Chesapeake Energy Corp. in heavy trading Sept. 29after disclosing the U.S. Justice Department was subpoenaing the company forinformation on accounting practices related to oil and gas leases. Chesapeake previously received separatesubpoenas on its purchase and lease of oil and natural gas rights and royaltypayment practices, the companysaid. In recent years, the company has faced multiplelawsuits from landowners.

ACT 13 — ThePennsylvania Supreme Court onSept. 28 struck down as unconstitutional several portions of thestate's Act 13, which governs the natural gas industry in the state,reaffirming the right of towns and villages to use their own zoning codes toregulate the industry. The decision also conferred more rights on individuals,ruling that private gas storage operators cannot exercise eminent domain forprojects, and doctors cannot be forced to sign nondisclosure agreements totreat patients exposed to fracking chemicals, among other changes. "We'redisappointed in aspects of the court's ruling, which will make investing andgrowing jobs in the commonwealth more — not less — difficult without realizingany environmental or public safety benefits," David Spigelmyer, presidentof the industry's state trade group, the Marcellus Shale Coalition, said.

FERRELLGAS — Shares of Ferrellgas Partners LP hit a Sept. 28 after thepartnership got hit with an impairment charge of $628.8 million that increasedits fiscal fourth-quarter loss. Ferrellgas' overall net loss was $661.4 million for the quarter.During the year-ago period, the company's net loss was $58.8 million. Theimpairment charge was in the crude oil logistics segment. Ferrellgas isconsidering lowering its quarterly distribution to help get its leverage ratiodown. The company also reported a fiscal 2016 net loss attributable to thepartnership of $665.4 million, compared to net earnings of $29.6 million duringthe year-ago period.

EPA — In a report, the U.S. Commission on Civil Rightscriticized the EPAfor a final coal ash rule that it described as "disproportionately"impacting racial minorities and low-income communities. "EPA continues to struggle to provide proceduraland substantive relief to communities of color impacted by pollution," thecommission wrote. "EPA does not take action when faced with environmentaljustice concerns until forced to do so. When they do act, they make easychoices and outsource any environmental justice responsibilities ontoothers." The commission argued that coal ash should be classifiedas "special waste" with federal funding earmarked for research intothe health impact of coal ash exposure.