LNG

Chesapeake Energy Corp., the US natural gas producer with LNG interests and currently completing a merger with Southwestern Energy to create one of America’s biggest natural gas companies, reported a slump in profits and revenues in the first quarter, citing weak market dynamics.

EQT Corp., the leading US natural gas producer in the Appalachian shale basins and an emerging LNG player, reported a dropped in net income in the first quarter of 2024 as prices were lower, sales increased and a merger was agreed with Equitrans Midstream Corp.

The United States forecasts that the nation’s natural gas supply will increase to meet growing demand for domestic pipeline gas and liquefied natural gas exports, though benchmark Henry Hub prices are expected to remain subdued as US oil and gas production increases to new record levels.

Tellurian Inc., the developer of the US Driftwood LNG export plant proposed for Lake Charles in Louisiana, has resumed natural gas drilling in the Haynesville Shale basin in the north of the Gulf Coast state and could acquire more acreage.

The US Department of Energy’s Office of Fossil Energy has delivered a new report on likely impacts of the “ill-conceived” ban on hydraulic fracturing proposed by the incoming Administration that would cost millions of jobs and make gasoline and electricity prices much higher for all Americans while risking a recession.

Sempra Energy said it would exchange the publicly-held stake in its Mexican subsidiary and LNG plant developer IEnova for Sempra Energy shares and form a new North American infrastructure company grouping Cameron LNG in Louisiana, Costa Azul on Mexico’s Pacific Coast and the Port Arthur LNG project in Texas as well as other assets including natural gas pipelines.

Sempra currently owns 66.43 percent of IEnova, whose full name is Infraestructura Energética Nova, and is making a tender offer for the outstanding shares listed on the Mexican stock exchange, the Bolsa Mexicana de Valores (BMV) to be swapped for Sempra Energy shares.

The transaction for IEnova shares in Mexico is for the 29.83 percent, which were sold in an initial public offering in March 2013.

The IEnova IPO had been for 218 million shares which at the time raised the equivalent in pesos of $567 million.

The new Mexican share deal is necessary to clear the way for the pooling of Sempra’s LNG and natural gas and renewable assets into one company to be called Sempra Infrastructure Partners.

The San Diego, California-based company added that it would also sell a non-controlling interest in the Sempra Infrastructure Partners unit to help fund growth.

Sempra said it expected all transactions to be completed in the first quarter of 2021.

“The LNG portfolio consists of approximately 45 million tonnes per annum of LNG export capacity in development, construction or operation on the North American Pacific and Gulf Coasts,” said Sempra, in reference to Costa Azul, Cameron and the Port Arthur project.

With the IEnova shares of Mexican investors being exchanged for shares in Sempra, the US parent company Sempra Energy would be listed on the Mexican exchange in place of IEnova.

“We are excited about the announcement. In large measure, it is because we believe Sempra Infrastructure Partners is well positioned to be a leader in the global energy transition,” said Jeffrey W. Martin, Chairman and Chief Executive of Sempra Energy.

“By focusing on the critical need for new energy infrastructure right here in North America, both Sempra LNG and IEnova have created a significant pipeline of development projects that are expected to provide differentiated growth for decades to come,” added Martin.

“More importantly, this will provide an improved platform for innovation and potential new investments in renewables, hydrogen, energy storage and carbon sequestration," he added.

Martin said he was “especially excited” to be listing Sempra Energy shares on the BMV.

“Many of Mexico's most successful companies are listed there, and our plans to list our shares locally is a positive affirmation of our commitment to Mexico and desire to continue investing in the country and improving economic prosperity,” Martin explained.

“As part of Sempra Energy's family of companies, IEnova has delivered critical energy infrastructure to the country of Mexico for over two decades, supporting economic growth and the health and wellbeing of millions,” he stated.

In its stock-for-stock offer Sempra tendered for all the outstanding shares of IEnova at an exchange ratio of 0.0313 shares of Sempra Energy common stock for each ordinary share of IEnova.

Sempra Energy presented a non-binding offer to IEnova consisting of a fixed exchange ratio implying a price of 82 Mexican pesos ($4.10) per IEnova ordinary share, representing premiums of 11.6 percent and 22.6 percent over IEnova's 30-day and 90-day volume-weighted average stock prices.

To facilitate the exchange of the two sets of shares, Sempra Energy also filed a preliminary prospectus and exchange offer documents with the Mexican National Banking and Securities Commission and the BMV.

NextDecade Corp. of the US and North American pipeline company Enbridge Inc. of Canada, entered into a definitive agreement whereby Enbridge would acquire the Rio Bravo Pipeline Company from NextDecade, developer of the Rio Grande LNG export project.