Pipeline operators Enbridge Inc. (NYSE: ENB) and The Williams Cos. (NYSE: WMB) are consolidating their respective pipeline assets after a U.S. energy regulator proposed a tax overhaul in March that removes certain benefits for master limited partnerships.
Enbridge said on May 17 it would bring its independent units and liquids and gas pipeline assets under a single listed entity in stock deals valued at $8.94 billion.
Separately, Williams also said it would buy out the remaining stake in its MLP, William Partners LP (NYSE: WPZ), in a $10.5 billion all-stock deal.
Cheniere Energy Inc. (NYSE: LNG) also said it has submitted a proposal to the board of directors of Cheniere Energy Partners LP Holdings LLC (NYSE: CQH) to acquire the publicly held shares not already owned by Cheniere in a stock-for-stock exchange. The proposal represents a value of $28.24 per common share of Cheniere Partners Holdings based on the closing price of Cheniere's shares as of May 16.
The U.S. Federal Energy Regulatory Commission (FERC) had said MLPs, largely oil and natural gas pipeline firms, will no longer be allowed to recover an income tax allowance as part of the fees they charge to shippers under a “cost of service” rate structure.
“Under the newly changed FERC tax policy, holding certain interstate pipelines in MLP structures is highly unfavorable to unitholders and is no longer advantageous,” Enbridge said in a statement.
Read Alerian’s Maria Halmo’s take on the FERC ruling.
Enbridge said it would buy outstanding shares of its various corporate units, including Spectra Energy Partners LP (NYSE: SEP) and Enbridge Energy Partners (NYSE: EEP).
The transaction will not hurt its three-year financial outlook, the company said. It also added that the restructuring will not affect the stakes held by shareholders in its corporate units.
Enbridge, which has been trying to recast itself as a pipeline utility, has been under pressure to sell non-core assets and reduce its debt pile of $60.87 billion as of Dec. 31.
The company has been saddled with debt following its $28 billion takeover of U.S.-based Spectra Energy last year. Earlier this month, it sold some assets worth $2.5 billion.
Recommended Reading
Mexico Pacific Appoints New CEO Bairstow
2024-04-15 - Sarah Bairstow joined Mexico Pacific Ltd. in 2019 and is assuming the CEO role following Ivan Van der Walt’s resignation.
BP Pursues ‘25-by-‘25’ Target to Amp Up LNG Production
2024-02-15 - BP wants to boost its LNG portfolio to 25 mtpa by 2025 under a plan dubbed “25-by-25,” upping its portfolio by 9% compared to 2023, CEO Murray Auchincloss said during the company’s webcast with analysts.
Weatherford M&A Efforts Focused on Integration, Not Scale
2024-04-25 - Services company Weatherford International executives are focused on making deals that, regardless of size or scale, can be integrated into the business, President and CEO Girish Saligram said.
Kimmeridge Fast Forwards on SilverBow with Takeover Bid
2024-03-13 - Investment firm Kimmeridge Energy Management, which first asked for additional SilverBow Resources board seats, has followed up with a buyout offer. A deal would make a nearly 1 Bcfe/d Eagle Ford pureplay.
M4E Lithium Closes Funding for Brazilian Lithium Exploration
2024-03-15 - M4E’s financing package includes an equity investment, a royalty purchase and an option for a strategic offtake agreement.