Houston-based Eagle Rock Energy Partners LP agreed to pay $236 million to acquire privately held Millennium Midstream Partners LP (MMP), a natural gas gathering and processing business whose operations are based in Texas. MMP, based in The Woodlands, TX, a Houston suburb, is backed by Kayne Anderson Energy Development Co., Tortoise Capital Resources Corp., WFC Holdings Corp. (an affiliate of Wells Fargo Bank NA) and an entity controlled by the partnership’s original founders, all of which would receive Eagle Rock units as partial consideration. The largest of MMP’s gathering systems is in East Texas, with more than 260 miles of gathering pipelines in Polk, Angelina, Nacogdoches, Cherokee, Rusk and Smith counties. MMP’s Central Texas system has more than 235 miles of gathering pipelines in Grimes, Waller, Harris, Washington and Austin counties. Its West Texas system is spread across more than 100 miles of gathering pipes in Crockett County. The East Texas assets are near to and connect with Eagle Rock’s Indian Springs and Camp Ruby assets, the partnership noted. Together the assets in East Texas would encompass 1,114 miles of gathering and processing assets, Eagle Rock stated. Of the purchase price, $181 million is to be paid in cash, and the remainder would be covered by issuance of Eagle Rock common units to the sellers at an implied value of $13.75/unit. The transaction is to close in October pending financial conditions.
Iberdrola SA‘s acquisition of Portland, ME-based Energy East Corp. for an estimated $4.5 billion has closed, marking the largest industrial transaction ever carried out by a Spanish company in the United States. The deal grows Iberdrola’s U.S. assets to around $20 billion. The company said it expects U.S. operations to contribute 10% to total group earnings before interest, taxes, depreciation and amortization within three years. Energy East distributes and markets power and natural gas in New York, Maine, New Hampshire, Massachusetts and Connecticut. It has 1.83 million electricity customers and 919,000 gas customers. Sales last year were 39,000 GWh and 5.7 billion cubic meters, respectively. The acquisition grows Iberdrola’s volume of electricity distributed by 24.7% to 198.4 TWh and its customers by 8.1% to 24 million, while raising the number of gas customers by 42.9% to 3 million. Overall installed generating capacity rises 0.2% to 42,650 MW. The companies obtained all the authorizations required for the acquisition, both at the state level — the state public service commissions of Maine, New Hampshire, Connecticut and New York — as well at the federal level (the Federal Energy Regulatory Commission, the Federal Communications Commission, the Committee on Foreign Investment in the United States, the Department of Justice and the Federal Trade Commission). The deal, announced in June 2007, took 15 months to complete.
Swift Energy Co. has closed the previously announced acquisition of property interests from privately held Crimson Energy Partners LP with an effective date of May 1, 2008. The interests in Crimson’s Briscoe “A” lease and wells are in Dimmit County, TX, on 5,140 acres adjacent to existing Swift Energy production in its Cotulla area. Production is approximately 90% natural gas and natural gas liquids and averaged approximately 3.7 MMcfe/d net to the purchased working interests for the first seven months of 2008. The final purchase price of the property interests closed was $46.4 million, including the initial deposit, and is subject to post-closing adjustments. This acquisition was funded with bank borrowings under the company’s credit facility.
Due to “dramatic” declines in wholesale natural gas prices for its Colorado combination utility operations, Minneapolis-based Xcel Energy asked state regulators to approve a 14%, or $109 million, retail electric rate decrease effective Oct. 1. Xcel in August asked the Colorado Public Utilities Commission (PUC) to lower retail residential and small business gas utility rates by 54%. On Aug. 15 Xcel told the PUC that based on the anticipated trend in gas prices, for September its retail commodity rate for gas, which changes monthly, would drop 54%, compared to the August charge ($0.4381/th vs. $0.9576/th in August). In September 2007 the rate was lower still than this year ($0.4076/th), the utility said. Xcel files the ECA rider quarterly with the PUC to reflect increases or decreases associated with generation fuel costs and purchased power. The new ECA rate, if approved, for residential and small business customers would be 3.303 cents/kWh for October through December, compared with 4.925 cents/kWh in the current quarter.
BP Canada Energy Marketing Co. and Secure Energy Inc. have struck a long-term natural gas sales agreement whereby BP will purchase up to 67 MMcf/d of gas from the proposed Secure Energy Decatur Gasification Plant to be built in Illinois once the plant becomes operational. Secure Energy will have the option to separately sell gas to industrial customers in the Decatur, IL, area for a portion of its production, and BP has agreed to purchase any gas not sold locally. The Decatur plant would convert 1.4 million tons of high-sulfur Illinois coal into more than 20 Bcf of gas each year. The projected plant construction cost is estimated to be $550 million. The plant is expected to be in operation in the summer of 2011.
Fidelity Exploration & Production Co., an indirect subsidiary of MDU Resources Group Inc., estimated that its total proved reserves have reached 800 Bcfe. The producer also estimated that it holds 950 Bcfe of proved and possible reserves, which is 19% more than it estimated in July 2007. The increase, it said, was driven by exploration plays in the Bakken and Paradox basins, as well as acquisitions in East Texas. Half of the probable and possible reserves estimate is classified as probable, with 85% of the total within the Rocky Mountain region. The reserve estimates were prepared by the company’s technical staff. “These vast reserves, combined with the fact that we have over 1.8 million acres held with lease agreements, means we are well-positioned for strong growth,” said CEO Terry D. Hildestad.
Spokane, WA-based Avista Utilities told the Idaho Public Utilities Commission (PUC) that it was lowering its pending purchased gas cost adjustment (PGA) rate increase request from 14% to 4% for its 72,000 natural gas utility customers in the northern part of the state. In August Avista asked the PUC for the rate increase to cover its current and future wholesale costs of gas, effective Oct. 1. The revised request lowers Avista’s requested increase in annual revenues to $3.3 million from the original $11.6 million in its filing. The PUC said that its public comment period ends Monday (Sept. 23). Under the Idaho PUC PGA process, the utilities file annually to reflect changes in purchased gas costs. A portion of the PGA is a projection of what costs will be during the next year, but since the projections are never exact, the PGA is adjusted every 12 months to match projected and actual costs. For the average Avista gas customer using about 65 therms monthly, the lowered PGA increase would add about $3/month to bills.
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