Merger

Adding to a busy week for the New York Mercantile Exchange (Nymex) that included new product offerings (see Daily GPI, Dec. 21) and accusations of merger interference (see Daily GPI, Dec. 22), as well as grumblings surrounding its scaled-down 2007 holiday schedule (see Daily GPI, Dec.21), the exchange reported Thursday that it will launch its first energy index futures contract, 3-2-1 Plus as part of the Nymex iPort suite of index futures contracts beginning on Jan. 21 for trade date Jan. 22.

In a “very significant step-change” that will double its natural gas-heavy reserves, Houston-based independent Edge Petroleum Corp. has obtained a package of wells, natural gas pipelines and related infrastructure, mostly located in its core area of South Texas, for $320 million cash. Together, the wells are producing at a rate of 31 MMcfe/d, of which about 86% is gas.

With many of the majors and large independent oil and natural gas producers on tap to deliver their 2Q2006 earnings this week, analysts believe that record cash levels and historically low levels of debt should fuel strong exploration and production (E&P) earnings and perhaps encourage more mergers and acquisitions (M&A) within the energy sector through the rest of the year. However, energy analysts also warned that if natural gas prices remain low, producers weighted toward gas may see a slowdown in earnings.

With rapid payout and strong cash flow, the Gulf of Mexico (GOM) has emerged as the “epicenter” of merger and acquisition (M&A) activity, accounting for half of the top 10 deals involving U.S.-based exploration and production (E&P) companies year-to-date, Raymond James analysts wrote in their latest “Stat of the Week.” Overall, M&A activity within the oil and gas sector continues to heat up, with more than $18 billion in announcements involving U.S.-based E&Ps so far this year.

With rapid payout and strong cash flow, the Gulf of Mexico (GOM) has emerged as the “epicenter” of merger and acquisition (M&A) activity, accounting for half of the top 10 deals involving U.S.-based exploration and production (E&P) companies year-to-date, Raymond James analysts wrote in their latest “Stat of the Week.” Overall, M&A activity within the oil and gas sector continues to heat up, with more than $18 billion in announcements involving U.S.-based E&Ps so far this year.

Duke Energy, which completed its merger with Cinergy in April, said Friday it will sell its commercial marketing and trading business to lower its risk profile. The affected operations include Cinergy Marketing and Trading LP and Cinergy Canada Inc., along with some subsidiaries and affiliates.

Merger/acquisition target NorthWestern Corp., the Sioux Falls, SD-based utility holding company, received a boost in its credit ratings to “BB+” by Standard & Poor’s Ratings Services Friday, while the rating agency kept its CreditWatch with a “developing implications” designation.

After a lull following the post-Enron credit crisis, corporate merger and acquisition (M&A) activity once again is on the rise, driven by interest in regional market scale and rising cost pressures among several other factors, according to a new report by Merrill Lynch analysts Steve Fleishman, Jonathan Arnold and Elizabeth Parrella.

The rumor that ConocoPhillips has its eye on Burlington Resources shows that the acceleration of merger and acquisition activity this year is likely to continue, according to analysts at Raymond James & Associates. High commodity prices and low reserve valuations in the equity markets continue to drive interest in purchasing domestic exploration and production assets and companies.