Houston-based Hercules Offshore Inc., which emerged from Chapter 11 in late 2015, has formed a special committee to explore strategic alternatives, which may include a sale or merger. The offshore driller contractor, which operates a fleet of 27 jackups, including one rig nearing completion, and 19 liftboats, completed voluntary restructuring in early November (see Daily GPI, Nov. 9, 2015). The special committee, composed of all the independent members of the board, was not formed in response to any proposals, management said. It would be authorized, however, "to explore, review, and evaluate any potential strategic transaction" or any other alternatives, including a sale, merger or share exchange. No more details are being provided until a definitive agreement, if any, is completed. Hercules has about $514 million of cash, excluding $200 million in escrow for the newbuild Hercules Highlander nearing completion. It also has $450 million of total debt outstanding and 20 million shares of common stock outstanding.
In a filing at the Federal Energy Regulatory Commission, the WEC Cos. -- Wisconsin Electric Power Co., Wisconsin Public Service Corp., Wisconsin Gas LLC, The Peoples Gas Light and Coke Co., North Shore Gas Co. and Michigan Gas Utilities Corp. -- are protesting a system-wide general rate increase proposed by ANR Pipeline Co. [RP16-440]. ANR, whose current rates were established in 1997, has proposed an overall rate of return of 11.89% with a capital structure of 35% debt at 7.63%, and 65% equity at 14.19%, to go into effect March 1. The companies are asking FERC to suspend the proposed rates and "investigate the justness and reasonableness of ANR's proposal."
Chesapeake Energy Corp.'s corporate credit rating was cut to "CCC" from "CCC+" with a "negative" outlook by Standard & Poor's Ratings Services (S&P) following reports that the company is working with Kirkwood & Ellis LLP to improve its balance sheet and address upcoming maturities (see Shale Daily, Feb. 8). "The downgrade reflects the potential that Chesapeake could pursue a further debt exchange over the next 12 months and that we would view a transaction as distressed rather than opportunistic, and which we would consider a selective default," said credit analyst Paul Harvey. The financial picture appears "very weak over the next 24 months based on our natural gas and crude oil prices assumptions. Under these challenging conditions, we expect debt leverage to exceed 12 times on average. Additionally, liquidity is likely to be challenged under these low prices, both from diminished cash flows and potential reductions in the company's borrowing base."
Anadarko Petroleum Corp. has cut its quarterly dividend by 81% to 5 cents/share from 27 cents, payable March 23 to stockholders of record on March 9. "We believe this adjustment to our dividend is the appropriate action to take in the current environment," said CEO Al Walker. "On an annualized basis, this action provides approximately $450 million of additional cash available to enhance our operations and financial flexibility. Our board will continue to evaluate the appropriate dividend on a quarterly basis." The super independent reduced 2016 capital spending by 50% year/year after recording a $1.25 billion loss (minus $2.45/share) in 4Q2015 and a full-year loss of $6.69 billion (minus $13.18) (see Shale Daily, Feb. 2). Revenue in 4Q2015 fell to $2.05 billion from $3.18 billion, while cash flow from operating activities plunged to $257 million from $1.95 billion.
The European Union has approved the $14.8 billion takeover of Houston-based Cameron International Corp. by Schlumberger Ltd., clearing the way for completing the merger by the end of March (see Shale Daily, Jan. 22; Aug. 27, 2015). The proposed acquisition "would raise no competition concerns given the very limited overlaps between the companies' activities and the modest increment in market shares brought about by the transaction," said the European Commission, which regulates antitrust issues. The firms have said their merger would create an energy technology powerhouse. No. 2 oilfield services provider Schlumberger's expertise is focused underground to help producers build reserves. Cameron's business mostly is for topside equipment. Shareholders and regulators in the United States, Canada, Brazil and Russia have already approved the merger.
Consol Energy Inc. reported proved reserves at year-end 2015 of 5.6 Tcfe, down from 6.8 Tcfe at year-end 2014. The reduction, Consol said, is mainly related to negative price revisions. The company added 934 Bcfe of proved reserves through extensions and discoveries, replacing 284% of its 2015 production, which was 329 Bcfe. About 10.3% of the company's proved reserves include oil, condensate and liquids that are primarily located in the Marcellus Shale. The company's proved, probable and possible reserves (3P) were 38.3 Tcfe, an increase of 1.7 Tcfe from year-end 2014. The increase in 3P reserves is primarily attributed to "more certainty in the success" of the Ohio Utica Shale, as well as "continued success and optimization" in the Marcellus, the company said.
Venture Global LNG Inc. unit Venture Global Calcasieu Pass LLC has entered into a sales and purchase agreement (SPA) with Shell NA LNG LLC under which Shell has agreed to purchase one million tonnes per annum (mtpa) of liquefied natural gas (LNG) from Venture Global Calcasieu Pass's LNG export facility under development in Cameron Parish, LA (see Daily GPI, Sept. 8, 2015). The SPA has a term of 20 years commencing on the commercial operation date of the facility with a Shell option to extend the term. Shell will purchase LNG on a free on board basis (FOB) at a price indexed to the monthly Henry Hub price, plus a facility fee indexed to inflation. Venture Global LNG is developing both the 10-mtpa Venture Global Calcasieu Pass facility on a 1,000-acre site at the intersection of the Calcasieu Ship Channel and the Gulf of Mexico, and the 20-mtpa Venture Global Plaquemines LNG LLC facility in Plaquemines Parish, LA, on a 630-acre site on the Mississippi River about 30 miles south of New Orleans (see Daily GPI, July 7, 2015).