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@ConocoPhillips $COP Seeking to Exit Alaska LNG Facility in 'Golden Age for LNG Buyers'

@ConocoPhillips $COP Seeking to Exit Alaska LNG Facility in 'Golden Age for LNG Buyers'

“There are a large number of sources of potential LNG supply,” added B&V’s Poduval. “It is currently a golden age for LNG buyers.” As U.S. natural gas prices have risen and oil prices have stayed low, it could cost at times more to buy Gulf Coast LNG linked to U.S. natural gas prices (closer to $9 per million Btu when the cost of the feed gas is around $3) than LNG priced at a percentage of a barrel of oil (around $7 to $8 per million Btu with oil at $50 per barrel). Japanese utilities are re-examining the move to U.S. gas-linked LNG pricing and looking for a mix of pricing variables, according to Poduval. Earlier this month, ConocoPhillips outlined the company’s strategy including several actions “for accelerating the company’s value proposition of a strong balance sheet, growing dividend and disciplined growth.” These actions include an initial $3 billion share repurchase program and “the initiation of a $5 to $8 billion divestiture program, which will focus primarily on North American natural gas.” “During the past two years, we have significantly transformed ConocoPhillips to succeed in a lower, more volatile price environment. We’ve lowered the capital intensity and breakeven price of the company, lowered the cost of supply of our investment portfolio, and created strategic flexibility for future price cycles,” said Ryan Lance, chairman and chief executive officer. Earlier this year, ConocoPhillips reportedly sold its stake in the Beluga River Gas field in Alaska’s Cook Inlet to the municipality of Anchorage and Chugach Electric Association, in a $152 million deal. In July, ConocoPhillips agreed to sell its Senegal offshore assets to Australia’s Woodside Petroleum (ASX: WPL) for $350 million. In 2015, Japan, South Korea and Taiwan imported 54 percent of the world’s LNG. By 2020, Black & Veatch estimates that will fall to 40 percent as total demand in the three countries holds flat. China and India are projected to double their LNG imports between 2015 and 2020, with emerging Asian nations to triple their imports. Total demand from China, India and emerging Asian nations could reach almost 80 percent of the annual consumption in Japan, Korea and Taiwan, according to the Kenai Peninsula Borough Mayor’s Office. ConocoPhillips had operations and activities in 20 countries, $94 billion of total assets, and approximately 14,900 employees as of Sept. 30, 2016. Production averaged 1,560 MBOED for the nine months ended Sept. 30, 2016, and proved reserves were 8.2 billion BOE as of Dec. 31, 2015. ConocoPhillips was created through the merger of American oil companies Conoco Inc. and Phillips Petroleum Co. in 2002. In 2012, ConocoPhillips’ spun off its downstream assets as a new, and separate company, Phillips 66.]]>

Calpine $CPN to Acquire Noble Americas Energy Solutions for $900M

Calpine $CPN to Acquire Noble Americas Energy Solutions for $900M

Calpine Corp. (NYSE: CPN) said it agreed to acquire San Diego-based Noble Americas Energy Solutions, one of the top energy retailers in the US, from Hong Kong-based Noble Group (SGX: N21), one of the top three independent global LNG traders, for $900 million, consisting of a purchase price of $800 million plus an estimated $100 million of net working capital at closing. Calpine is America’s largest generator of electricity from natural gas and geothermal resources. Its fleet of 84 power plants in operation or under construction represents more than 27,000 megawatts of generation capacity, serving customers in 20 states and Canada. The move comes after the resignation of Noble Group’s CEO Yusuf Alireza, and his replacement by William Randall and Jeff Frase, who were appointed as Co-CEOs, in late May, at which time Noble Americas was put up for sale, as previously reported by ExitHub. Alireza, the former co-president of Goldman Sachs in Asia, had joined Noble in 2012. Noble Group was accused last year, during his tenure, of overstating its assets by billions of dollars, seeing its market value drop by nearly 75%, and its debt downgraded to junk status. “The sale of Noble Americas substantially completes the $2 billion capital raising initiative that we announced in June,” said Frase and Randall. “With this divestiture, Noble will continue to reduce debt while also funding growth opportunities in our high return businesses.” “We are excited to be acquiring the best commercial and industrial direct energy sales platform in the U.S. The acquisition of this well-regarded organization known for providing sophisticated customers with highly customized products is a natural fit with Calpine’s customer-centric culture and will allow us to build upon the success we have experienced since our entry into retail last year through the Champion Energy platform,” said Thad Hill, Calpine’s president and chief executive. “In addition to expanding our retail customer sales channels and product offerings, we will more than double the volume of retail load we are capable of serving across the country from our complementary wholesale power generation fleet.” “Financially, this transaction is highly cash flow and credit accretive, given a rapidly amortizing bridge loan, the achievement of collateral synergies and the ongoing generation of stable and substantial cash flows,” concluded Hill. The deal is expected to close in December 2016, subject to approval by Noble shareholders, regulatory approvals, and customary closing conditions. The organization will remain headquartered in San Diego and will continue to operate under the leadership of Jim Wood, president of Noble Americas. Operating cash flows from Noble Americas will continue to accrue to Noble until closing. The divestiture also releases approximately $275 million in letters of credit and surety bonds representing additional working capital which will become available to Noble. Calpine expects to fund the acquisition with a combination of cash on hand and temporary bridge loan financing of up to $550 million. Calpine expects to recover approximately $200 million through collateral synergies and the runoff of acquired legacy hedges, substantially within the first year, resulting in expected net cash deployed of approximately $700 million, including working capital, or approximately five times Noble Americas’ recent and expected run-rate adjusted EBITDA. In March 2016, Noble Group completed the sale of its remaining 49% stake in Noble Agri to COFCO International Ltd. for US$750 million in cash, with the additional retention of upside participation in the future growth of Noble Agri, worth up to US$200 million. Noble is using the entire proceeds of the disposal to pay down debt. Noble Group manages a portfolio of global supply chains covering a range of industrial and energy products. Operating from over 60 locations, Noble facilitates the marketing, processing, financing and transportation of essential raw materials. Sourcing bulk commodities from low cost regions such as South America, South Africa, Australia and Indonesia, the group supplies high growth demand markets, particularly in Asia and the Middle East. The company is ranked No. 77 in the 2015 Fortune Global 500. Noble Americas is a leading power marketer focused on offering supply and risk management services to commercial and industrial customers. Strategically, the company acts as a conduit for customers to manage their price and energy risk exposure. It buys energy wholesale and repackages that energy into retail products. It continually develops products and risk management tools that change the manner in which customers think about, and manage, their energy expenditure. The company has grown its gross margin and EBIT nine of the last ten years and its retention rates are among the highest in the industry. Noble Americas has been recognized for changing the face of US deregulated power by providing an industry leading web-enabled risk management solution, PowerFolio3D. This platform provides customers with the ability to analyze their potential risk to produce strategies, and to mitigate that risk and enhance the value in their portfolios. It currently operates out of six locations – its headquarters are in San Diego, with regional offices in Boston, Michigan, Chicago, New Jersey and Houston. The company has 210 employees and is currently the fifth largest commercial and industrial retail marketer in the US according to DNV-GL, formerly Kema. It has approximately 1,300 consumer clients and over 100,000 meters with demand requirements of approximately 8,000 MW per year. Noble Americas provides retail electricity in all 19 deregulated states in the US and natural gas in the Western US, primarily California and Nevada. During 2015, on average, the company invoiced 85,500 accounts per month with a 99.95% accuracy rate. It was also awarded an extension to ISO 9001:2008 certification, which is a robust process and procedure audit.]]>