A look back at successes and setbacks in the energy industry.
Highs
SEMPRA — Sempra Energy on March 9 completed its acquisition of Energy Future Holdings Corp. and its 80% ownership interest in Oncor Electric Delivery Co. LLC. The deal closure came about 24 hours after the Public Utility Commission of Texas' landmark decision to approve the San Diego-headquartered energy company's purchase of bankrupt Energy Future Holdings' prized electric utility. Sempra's $9.45 billion cash bid succeeded after efforts by other companies, including Hunt Consolidated Inc., NextEra Energy Inc. and Berkshire Hathaway Energy, came up short. "They heard what this commission said, as opposed to trying to not listen. They just came willing to listen," Commissioner Brandy Marty Marquez said at the PUCT's pivotal March 8 meeting.
SHARE BUYBACKS — Devon Energy Corp. and Hess Corp. signaled that they are getting serious about "returns to shareholders" through billion-dollar share buyback plans. Hess Corp. announced March 8 that its board of directors approved a $1 billion share repurchase program for its common stock by the end of 2018. "We are pleased to be in a position to increase cash returns to shareholders, which remains one of our top priorities and is reviewed regularly by the management team and board," Hess CEO John Hess said in a news release. Devon Energy said it plans to start a share buyback program as it looks to divest $553 million worth of Barnett Shale assets, increase its dividend and repurchase debt. "This release surprises on timing as well as magnitude. The $1 [billion] stock buyback program represents over 6% of the company's market cap," Guggenheim Securities LLC said on Devon's stock buyback plan.
Between
RATE FREEZE — The three-year freeze on electric rate reviews for Dominion Energy Virginia and Appalachian Power Co. was lifted March 9 by Virginia Gov. Ralph Northam. Legislation signed by the governor reinstates rate reviews for American Electric Power Co. Inc. subsidiary Appalachian Power in 2020 and Dominion Energy Virginia, known legally as Virginia Electric and Power Co., in 2021. The Dominion Energy Inc. subsidiary and Appalachian Power will be required to make more than $1 billion in investments in energy efficiency and energy assistance programs over the next decade. The legislation also supports the integration of 5,000 MW of new solar generation, including rooftop solar and storage installations with an aggregate capacity of 50 MW, and 16 MW of offshore wind generation.
CERAWEEK — Executives representing coal, oil and gas sectors laid out largely optimistic views for their respective industries at the CERAWeek energy conference in Houston. "From our standpoint, you look at 190 GW and look at where the coal fleet was a few years ago and that seems to us like a glass two-thirds full rather than one-third empty," Paul Bailey, president and CEO of American Coalition for Clean Coal Electricity, said March 7. The heads of Pioneer Natural Resources Co. and XTO Energy Inc. hailed the growth and profit potential from the Permian Basin. "What we have under our feet in the Permian Basin can't be replicated anywhere in the United States," Pioneer CEO Timothy Dove told industry observers. "We have the golden goose right before us." There are concerns, however, that the global oil and gas industry may not have the capital to keep pace with demand.
Lows
TARIFFS — President Donald Trump on March 8 signed orders enacting tariffs of 25% on global steel imports and 10% on aluminum in a move hailed by some U.S. steel producers but criticized by energy industries. The tariffs initially will not apply to imports of steel and aluminum from Mexico and Canada while the U.S. renegotiates the North American Free Trade Agreement with the two countries.
