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Energy M&A On Fire

A plethora of energy deals have been announced in recent weeks, and the phenomenon will continue, explains Jones Day partner Jeff Schlegel

A plethora of energy deals have been announced in recent weeks by strategic buyers and private equity firms, and the phenomenon will continue, explains Jones Day partner Jeff Schlegel. "There's something for everyone in the market right now," he says.

Schlegel has advised numerous energy transactions recently, including Access Midstream Partners LP's (NYSE: ACMP) acquisition of Chesapeake Midstream Operating LLC for $2.16 billion and Chevron Pipeline Co.'s selling its Northwest Products Pipeline System to Tesoro Logistics LP (NYSE:TLLP) for $400 million. Both transactions were unveiled on Dec. 12.

As 2013 approached, various energy deals were spotlighted over the course of Christmas week. There was Duke Energy International's acquisition of CGE Group's Iberoamericana de Energia Ibener SA subsidiary in Chile for $415 million on Dec. 26, which included two hydro-electric power plants in Chile, as well as the $76 million sale of ZaZa Energy Corp.'s (Nasdaq: ZAZA) French assets to Vermilion REP SAS on Dec. 27. On Dec. 24, Salt River Project Agricultural Improvement and Power District agreed to pay $371 million for Sempra U.S. Gas & Power LLC's 625-megawatt block of its Mesquite Power natural-gas power plant.

Also on Dec. 24, ClearEdge Power became set to buy Windsor, Conn.-based UTC Power, a subsidiary of United Technologies Corp. (NYSE: UTX) that develops fuel cells that aim to provide clean power for buildings, buses and cars. Not to be left out, Chevron Corp. (NYSE: CVX) agreed to pick up a 50 percent interest in the Kitimat liquified natural gas project and proposed Pacific Trail Pipeline-about 644,000 acres of petroleum and natural gas rights in the Horn River and Liard Basins in British Columbia. Terms for both of those deals remain undisclosed.

Oil company NuStar Energy LP (NYSE: NS) closed on its purchase of crude oil pipeline, gathering and storage assets in the Eagle Ford shale region for about $325 million on Dec. 14, while a day earlier, Plains All American Pipeline LP (NYSE: PAA) bought crude oil and gathering assets in the Eagle Ford area of South Texas for $125 million.

Such days of active energy M&A may be fleeting, at least in the short term. Deals might slow down at the start of 2013 because so many rushed to close before 2012 ended, Schlegel says, expecting the demand for energy assets to spark back after the lull.

 

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