Cheniere Energy shares jumped 9% last Thursday to $31.25 after the company said in a filing with the Securities and Exchange Commission that Chevron has elected to retain its capacity agreement for 700 MMcf/d of throughput at the proposed Sabine Pass LNG terminal in Louisiana. Chevron had an option to scale back its capacity at the terminal to 500 MMcf/d under a 20-year deal it signed with Cheniere last November. Cheniere also said Thursday that Chevron still has the option until December of raising its capacity stake to 1 Bcf/d. Chevron entered a contract to become a long-term capacity holder at Sabine Pass after backing out of a deal to buy a stake in the terminal. Sabine Pass, which is under construction on the Gulf Coast of Louisiana. That project is expected to have a peak vaporization of 2.6 Bcf/d and storage capacity for 480,000 cubic meters of LNG.
National Fuel Gas said its subsidiary, Horizon Energy Development BV, has agreed to sell its majority interest (85%) in United Energy for US$116.3 million to Czech Energy Holding, a company owned by Patrik Tkac, founder and partner of the J&T Group. United Energy is a district heating and electric generation business in the Bohemia region of the Czech Republic. The company expects the transaction to be completed before the end of its fiscal year. "We remain pleased with what we've accomplished in the Czech Republic, but given the strong value of the Czech currency and the number of unsolicited offers that we were receiving for our Czech assets, this appeared to be a good time to bring a successful end to our activities there," said National Fuel CEO Philip C. Ackerman. National Fuel began its operations in the Czech Republic in 1996, when it first acquired a small district heating company and a project development company. After a number of additional acquisitions and mergers, United Energy, based in the city of Komorany, grew to be one of the largest independent producers of heat and electricity in the Czech Republic. National Fuel expects to realize a net nonrecurring gain of US$25 million, or $0.30 per diluted share, from the sale.
Standard & Poor's Ratings Services affirmed its A- rating on Coral Energy Holding LP, reflecting the company's closely intertwined relationship with its ultimate parent, Royal Dutch/Shell Group (AA/Stable/A-1+) and its U.S. parent Shell Oil Co. (AA/Stable/A-1+). S&P said Coral would not be rated investment grade as a stand-alone entity. Coral Energy's rating is below that of the parent because Shell and Coral Energy are considered separate entities and Shell does not explicitly guarantee all of Coral's trading obligations. The outlook is stable. "Coral Energy's rating evaluation revolves around RD/Shell's limited business motivation to withdraw continuing financial support to Coral Energy," said Standard & Poor's credit analyst Tobias Hsieh. Coral Energy acts as the face of the market for RD/Shell and Shell Oil for all their liquefied natural gas (LNG), gas production, and power-related trading transactions in North America. RD/Shell's reputation and standing in the marketplace would be greatly damaged if it withdraws financial support for Coral Energy, S&P said. RD/Shell would have difficulty reentering the North American market, considering the adverse effect of such an action on their counterparties. This would definitely hurt Shell's large gas production operation and undermine its ambition to grow an LNG business in North America, S&P added. The stable outlook is supported by the lack of major trading losses and a reasonable level of cash flow generation outside of the power tolls.
TransCanada Corp. has agreed to sell its 11% stake in PT Paiton Energy to subsidiaries of Tokyo Electric Power for US$103 million. Paiton Energy owns two 615 MW coal-fired power plants in East Java, Indonesia. The transaction is expected to close in the third quarter of 2005. TransCanada's CEO Hal Kvisle said the sale of one of the company's few remaining international assets is an example of TransCanada's plan to divest noncore assets and redeploy the proceeds into core businesses of gas transmission and power services in North America. TransCanada acquired its interest in Paiton Energy in 1996 and has retained that interest until favorable conditions for a sale were available. TransCanada expects to realize an after-tax gain of C$115 million.
Inter Pipeline Fund said last Wednesday that its Empress V gas processing plant in Alberta, which was among six processing facilities damaged by a thunderstorm last week, resumed full production on June 28 (see NGI, June 27). Empress V, a straddle plant on the TransCanada mainline, processes 1.1 Bcf/d of natural gas and produces 17,000 b/d of ethane and 13,000 b/d of propane. Inter Pipeline said repairs to the damage at its Empress II facility as a result of last week's severe weather are underway and service is expected to resume in 10 days. Empress II processes 2.6 Bcf/d and produces 40,000 b/d of ethane and 20,000 b/d of propane. Inter Pipeline said the service disruptions would have a negligible impact on cash flow and no impact to monthly cash distributions. Inter Pipeline owns 100% of the Empress II and 50% of the Empress V facility. Both extraction facilities are operated by BP Canada Energy Resources.
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