Centrica plc subsidiary Direct Energy has completed its $300 million acquisition of Pittsburgh-based Strategic Energy LLC, a subsidiary of Great Plains Energy Inc. Direct Energy said its commercial and industrial business unit, Direct Energy Business, is now positioned as a top-three competitive retailer of gas and electricity to commercial and industrial customers in North America. The deal was announced in April (see Daily GPI, April 3).
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Direct Energy to Pay $300M for Strategic Energy
Direct Energy, a subsidiary of Centrica plc, has signed an agreement to acquire Pittsburgh-based Strategic Energy LLC, a subsidiary of Great Plains Energy Inc., for a total cash consideration of $300 million, the company said last Wednesday. The transaction is debt-free and includes an amount of working capital that will be subject to a subsequent true-up.
Direct Energy to Pay $300 Million for Strategic Energy
Direct Energy, a subsidiary of Centrica plc, has signed an agreement to acquire Pittsburgh-based Strategic Energy LLC, a subsidiary of Great Plains Energy Inc., for a total cash consideration of $300 million, the company said Wednesday. The transaction is debt-free and includes an amount of working capital that will be subject to a subsequent true-up.
Debate Over LNG-Fueled Power’s Merits Proves Combustible
Researchers at Pittsburgh’s Carnegie Mellon University are raising doubts about the long-term effectiveness of liquefied natural gas (LNG) in meeting the nation’s energy needs while reducing greenhouse gas (GHG) emissions, but an industry trade group claims their analysis is hopelessly flawed.
Carnegie Mellon Researchers Cast Doubts on LNG for Power Generation
Researchers at Pittsburgh’s Carnegie Mellon University are raising doubts about the long-term effectiveness of liquefied natural gas (LNG) in meeting the nation’s energy needs while reducing greenhouse gas (GHG) emissions.
Industry Briefs
Pittsburgh-based independent Linn Energy LLC said it paid Blacksand Energy LLC $291 million for about 31.3 million boe of proved oil reserves located in the Los Angeles Basin and paid Kaiser-Francis Oil Co. $125 million for 55 Bcfe of proved Midcontinent gas reserves. The Blacksand assets located in the Brea Olinda Field in Orange County, CA, include 270 producing wells and are 90% crude oil. The Kaiser assets, located in North Central Oklahoma, include 411 producing wells and are 84% natural gas. The purchases will substantially diversify the company’s assets, which currently are located primarily in the Appalachian Basin and are 99% natural gas. Linn said it expects to increase it annual cash distribution to $1.72/unit beginning in the third fiscal quarter and plans to recommend another distribution increase in the fourth quarter.
Industry Brief
Reporting its production statistics for April 2004, Pittsburgh, PA-based Consol Energy said its natural gas production was up 12% over April 2003 due to additional producing wells drilled, while electricity production in the 2004 month fell significantly due to lower peak demand and higher natural gas prices. Consol produced a net 4 Bcf for April 2004, compared to 3.6 Bcf for April 2003. As one of the largest U.S. producers of coalbed methane, Consol produces approximately 146.2 MMcf/d from wells in Pennsylvania, Virginia and West Virginia. The company also has joint ventures that produce natural gas in Virginia and Tennessee, while producing electricity from coalbed methane at a joint-venture generating facility in Virginia. The company’s electricity production went from 425 MWh in the 2003 month to 124 MWh in April 2004. Coal production increased from 5.4 million tons in April 2003 to 6.2 million tons in the 2004 month.
Despite Higher Reserve Value, Consol Energy Lowers Guidance
With natural gas prices up, Pittsburgh-based Consol Energy Inc. recalculated its future net cash flows of proved coalbed methane gas (CBM) reserves, estimating a current value of $1.09 billion before taxes, and assuming a 10% discount rate, as of Dec.31, 2002. The value is nearly two-and-one-half times 2001’s reserve value of $432 million.
Financial Briefs
Pittsburgh, PA-based Equitable Resources announced record core earnings per diluted share (EPS), excluding earnings from Westport Resources, of $2.12 for 2001 compared to a core EPS of $1.46 in 2000, an improvement of 45%. Reported 2001 earnings, including Westport, were $2.30 per share. Despite the record annual earnings, Equitable reported fourth quarter core EPS of $0.39 compared to fourth quarter 2000 EPS of $0.45. The decrease was attributed to lower gas prices, unusually warm weather and increased bad debt reserves at Equitable Utilities. Reported fourth quarter 2001 earnings, including Westport, were $0.37 per share. “Equitable Resources is extremely pleased with the financial results for 2001. Return on capital exceeded our benchmark and is an industry-leading performance. Earnings were at record levels,” said Murry S. Gerber, CEO. “In addition, we have largely mitigated the impact of lower commodity prices for 2002 and beyond through significant hedging of natural gas sales. We believe the proactive approach we have taken to managing the natural cycles in our business will lead to competitively superior growth and high return on capital.” Due in part to mild weather, Equitable Utilities had earnings before interest and taxes (EBIT) of $79.0 million for 2001, compared with $93.0 million for 2000. Equitable Production recorded EBIT of $178.7 million in 2001, compared to $113.9 million for 2000, excluding EBIT from Gulf operations. The company said the positive results were primarily attributable to higher realized sales prices, higher operating volumes and lower expenses. Going forward, Equitable forecasts that 2002 full-year core EPS will be between $2.35-2.40 per share, subject to a one cent change for each ten cent change in the NYMEX natural gas price at the Jan. 3, 2002 price of $2.65. Equitable used approximately $133 million of its $175 million 2001 capital budget. During the year the company committed an additional $40 million, which is expected to be spent in 2002. Equitable said it has established a capital budget of $166 million for 2002. Actual capital spending, including the $40 million carryover from 2001 commitments, is expected to total $173 million. For 2002, the company said it has hedged 33 Bcf at an average of $4.15/Mcf. This is in addition to 14 Bcf in prepaid forward sales at approximately $4.00/Mcf.
Consol Energy Beefs Up CBM Production Capacity in Mid-Atlantic
Pittsburgh, PA-based Consol Energy Inc., the second largest U.S. coal producer based on revenues, has entered into a deal to buy coalbed methane (CBM) gas production and pipeline gathering assets from Conoco Inc. to serve the expanding gas needs of power generators in the Pennsylvania, Virginia and West Virginia areas.