Power & Energy Q2 2020
Industry Trends
BP PLC sells Petrochemical Business to Ineos Ltd.
English energy giant, BP PLC, has agreed to sell off its petrochemicals business to fellow British chemicals company, Ineos Ltd., for $5 billion. This deal will be this largest by an oil giant since the coronavirus was deemed a global pandemic in early March. BP believes it would have taken considerable investment to grow the division to compete with peers such as Royal Dutch Shell PLC and Exxon Mobil Corp. BP believes this sale will help reduce company debt and further separates the company from its competition.1
Chesapeake Energy Corp. Files for Bankruptcy
Oklahoma City-based, Chesapeake Energy Corp., is the largest oil-and-gas company to file for bankruptcy protection during the coronavirus pandemic. Chesapeake Energy is the second-largest natural gas producer in the United States. The energy giant was said to be already struggling with heavy debt and depressed energy prices before the pandemic proved to be the final blow. Analysts predict that more than 200 shale companies may file for bankruptcy over the next two years if prices remain around current levels.2 3
Royal Dutch Shell Takes a $22 billion Hit Due to COVID-19
Royal Dutch Shell PLC has notified shareholders that it will be writing down the value of its assets by $22 billion due to depressed energy prices induced by the COVID-19 pandemic. Some of Shell’s largest write-downs are within its gas business, where the company currently faces around a $9 billion charge. The oil and gas giant is just one of many companies in the energy industry experiencing turbulence during the pandemic. European rival, BP PLC, has also stated that it will write down as much as $17.5 billion.4 5
Amazon Combats Climate Change
Amazon.com Inc. becomes the latest tech giant to join the fight against climate change. The company recently announced that it would launch a $2 billion internal venture-capital fund focused on tech investments to reduce the impact on climate change. The fund, which is stated to be named The Climate Pledge Fund, will invest in companies across many industries, including transportation, energy generation, battery storage, manufacturing, and food and agriculture. According to BloombergNEF, private-equity investments in clean energy reached $10.5 billion in 2019, up more than 6% compared to the prior year and the highest since 2010.6
Pipeline Gets the Green Light from the Supreme Court
The U.S. Supreme Court has voted in favor of removing a significant legal barrier to the construction of an $8 billion pipeline that would deliver natural gas from West Virginia to the East Coast. The ruling will allow the pipeline to run beneath a piece of the Appalachian National Scenic Trail in the state of Virginia. Natural gas giants, Dominion Energy Inc. and Duke Energy Corp., are major investors in the project that will ultimately transport natural gas from West Virginia across 600 miles to sites in Virginia and North Carolina. The pipeline was announced in 2014 but has since faced significant delay.7
Berkshire Hathaway Energy Strikes Deal With Dominion Energy
Warren Buffet and Berkshire Hathaway have decided to buy $9.7 billion of assets from the Gas Transmission & Storage segments of Dominion Energy. The deal was finalized and announced on July 5, 2020. Dominion over the last several years has executed several mergers and acquisitions and the divestiture of Blue Racer Midstream. The announcement comes a few weeks after Dominion decided to abandon its plans for the Atlantic Coast pipeline due to mounting regulatory concerns.8
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
- Tallgrass Energy, LP
- GIC Special Investments Pte. Ltd.; The Blackstone Group Inc.; Enagás, S.A.; National Pension Service
- $7,267.16
- EQM Midstream Partners, LP
- Equitrans Midstream Corporation
- $1,780.27
- Vectren Infrastructure Services Corporation
- PowerTeam Services, LLC
- $850.00
- MVerge Companies
- PowerTeam Services, LLC
- $850.00
- Symmetry Energy Solutions LLC
- Energy Capital Partners, LLC
- $286.00
- Assets of Alta Holdings
- BCE-Mach III LLC
- $232.00
- NGL Terminal Assets of Plains All American Pipeline, L.P.
- Crestwood Equity Partners LP
- $160.00
- Certain Upstream and Midstream Assets
- Diversified Gas & Oil PLC
- $145.00
- TAS Energy Inc.
- Comfort Systems USA, Inc.
- $120.00
- Leasehold Interests In Operating Solar Photovoltaic Electric Generating Projects
- Goldman Sachs Renewable Power LLC
- $85.20
Contacts
Data Assumptions This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only. Glossary EBIT - Earnings Before Interest and Taxes Sources:
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