Energy, water and telecoms regulators agree action plan in areas where consumers need most support

The UK’s energy, water and telecoms regulators have agreed a new action plan to ensure consumers are being treated fairly amid the cost of living crisis.

With wholesale energy prices and other input costs beginning to come down, Chancellor Jeremy Hunt said he wanted to make sure consumers benefit from these reduced costs. During the current period of high inflation and interest rates, this also includes ensuring higher interest rates are passed on to savers.

A meeting at number 11 Downing Street included the chief executives of Ofgem, Ofwat and Ofcom, along with the Competition and Markets Authority (CMA) and the Financial Conduct Authority (FCA).

The FCA is expected to report by the end of July on how the savings market is allowing savers to benefit from higher interest rates. Banks and building societies will be asked to explain the pace and extent of their pass through of interest rates, and how they are proactively supporting savers to switch to high interest rate products.

On Monday, the CMA will publish its review of the road fuel market. It will provide updates on the grocery sector in July, and housebuilding and rented accommodation in August, and also plans to launch work in at least two new areas.

Ofgem will take steps to ensure that all gas and electricity providers are passing falling prices onto consumers and keep the price cap formula under review so that it mirrors the costs facing suppliers.

Ofwat agreed to crack down on water companies that are not going far enough to support customers to pay their bills, access help and repay debts.

And Ofcom will push suppliers that have yet to introduce social tariffs (discount deals for vulnerable customers) to offer them in the broadband and mobile markets, as well as waive fees for customers who want to switch providers to access a social tariff.

The FCA, Ofcom, Ofwat and Ofgem will also publish a joint statement setting out shared expectations on treatment of customers in financial difficulties.

A follow-up meeting with the chancellor is due to be held later in the summer.

Allianz reportedly bids €1.8bn for Net4Gas

German insurer Allianz SE (ETR:ALV) has made an offer of €1.8bn ($2.3bn) for RWE AG’s (ETR:RWE) Czech gas transmission unit Net4Gas sro, outbidding local group Energeticky a Prumyslovy Holding as’s (EPH) €1.75bn bid, according to sources cited today by Slovak daily Hospodarske Noviny.

The paper quoted Miroslav Bodnar, advisor to Slovak utility SPP’s chairman Daniel Kretinsky. Bodnar also said that the sale was still ongoing.

EPH bought 49% in SPP in January for €2.6bn.

Earlier in March, Reuters cited insiders as saying that Allianz and Canadian investor Borealis Infrastructure Trust were preferred bidders in the race for Net4Gas, which runs over 3,600km of pipelines.

The company has more than 500 staff and generated some 11% of RWE’s net profit in 2011. Under an asset sale programme, RWE offered Net4Gas for sale last year.

Canada’s CBM discusses Indonesian JV with Exxon Mobil

Canadian gas company CBM Asia Development Corp (CVE:TCF) is holding talks with US oil major Exxon Mobil Corporation (NYSE:XOM) over the formation of a joint venture partnership for the development of coalbed methane (CBM) projects in Indonesia.

The announcement from CBM Asia made no mention of financial terms. The final conditions of the planned farm-in deal are subject to the parties negotiating and signing formal agreements and obtaining government approvals, CBM Asia said.

The talks revolve around CBM production sharing contracts (PSCs) in the Barito and Kutai Basins. The companies are to split ownership in the PSCs equally.

The portion of the deal concerning the Barito Basin in South Kalimantan envisions CBM Asia buying between 35% to 37.5% in three existing PSCs. Additionally, the Canadian group will hold rights to purchase a 35% interest in one additional PSC that ExxonMobil may invest in. The prospective partners intend to launch some pilot well test programmes, with CBM Asia covering certain operating costs.

With regard to the Kutai Basin, the plan is for CBM Asia to obtain the right to farm into 50% of the future participating interest Exxon Mobil may purchase in certain CBM PSCs. Once Exxon Mobil acquires an interest in one or more PSCs in the Kutai Basin and the necessary conditions have been met, government clearance included, the US company will transfer half of its interest to CBM Asia.

Possible buyers walk away from a deal to buy RWE’s stake in Suewag

German power and gas utility RWE (AG ETR:RWE) said talks over the sale of its 77.6% in utility unit Suewag to consortium of regional utilities had failed to lead to an agreement, due to differences on pricing, but it remained open to negotiate a deal with interested parties.

Regional utilities EVM and Stadtwerke Frankfurt am Main Holding GmbH, part of the bidding consortium, said in a statement that the group is not planning to continue negotiations with RWE.

RWE’s stake in the utility unit Suewag has been valued at between EUR700m (USD873m) and EUR800m by analysts cited by Reuters.
The German group is still aiming to dispose of up to EUR7bn worth of asset by the end of next year, it said.

It has so far disposed of 19.3% in regional utility VSE in a EUR83m deal and came near to selling its 24.95% in water utility Berlinwasser for EUR618m, Reuters said.

RWE is still planning to shed Suewag, its oil and gas exploration business DEA, Czech gas transmission firm NET4GAS and its stake in regional utility Kevag.

Last week, the company said it would cut 2,400 more jobs, apart from the initially announced 8,000 job cuts.

The utility, along with other German sector players, is striving to cope with the country’s decision to phase out nuclear power by selling assets and reducing costs.

Abraxas, Blue Stone Oil & Gas to break-up Blue Eagle JV

Texas-based oil and natural gas exploration and production company Abraxas Petroleum Corp (NASDAQ:AXAS) said it had signed a letter of intent (LoI) to break-up its Blue Eagle Energy LLC joint venture with Blue Stone Oil & Gas LLC after the partners failed to dispose of the entity earlier this year.

Blue Eagle Energy was formed in 2010 to develop the Eagle Ford Shale play in South Texas. Abraxas explained that the sale of the JV had turned unsuccessful as the price of oil fell during negotiations and the at-first-acceptable bids were reduced too much.

Abraxas holds some 34.7% interest Blue Eagle Energy. Now the partners will separate the assets, so Abraxas will include its portion in its bank borrowing base, resulting in increased liquidity. The company will also cut the confusion coming out of joint venture accounting and be able to count in its operating metrics production, reserves and cash flow, it said.

Under the terms of the LoI, Abraxas will retain a 100% stake in the Eagleford and shallower rights in Jourdanton, Atascosa County; 100% in Yoakum, DeWitt County; 25% in WyCross, McMullen County; and a 25% interest in the Nordheim, DeWitt County assets. The company calculates that the producing wells it will take have a capacity of 205 barrels of oil equivalent per day. The proven reserves to go to Abraxas are estimated at around 2.4m barrels of oil equivalent, while the probable reserves are 3.7m barrels of oil equivalent. The company will also get $7m (€5.7) in cash plus its share of the joint venture’s working capital.

Furthermore, Abraxas said it had wrapped up a $7.2m deal to take a partner’s share in jointly owned properties in Ward County, West Texas. The transaction amount excludes closing adjustments. That acquisition expands the company’s portfolio by 240 barrels of oil equivalent production per day and some 1.2 million barrels of oil equivalent of proved developed producing reserves. Natural gas accounts for 95% of the acquired assets.

Spain’s Enagas to acquire a 90% stake in Naturgas from EDP

Spanish natural gas transportation company Enagas SA (MCE:ENG) said it had agreed to take a 90% stake in sector firm Naturgas Energia Transporte SAU from Portuguese electric utility Energias de Portugal SA (ELI:EDP), or EDP, for EUR241m (USD291.5m).

Following the transaction, which is pending regulatory clearance, the Basque government will hold the remaining 10% of Naturgas through the Basque regional energy board (EVE). The move is in line with the 3rd EU Gas Directive, according to which vertically integrated energy operators need to separate their transmission activities from the remaining businesses.

The acquisition will allow Enagas to consolidate its position as the only transmission firm in the Spanish gas transmission trunk network, it said. In addition, the buyer will beef up its presence in the Basque county.

By taking control of this firm, Enagas will end up acquiring 450 km (279.6 miles) of high-pressure gas pipelines and the international Irun connection. The company intends to set up a new compressor station, thus boosting the capacity of the connection that heads from France into Spain to 2.1bn cu m (74.16bn cu ft) from the current 200m cu m. Furthermore, it plans to establish a 54 km gas pipeline between Bilbao and Treto.

Banco Bilbao Vizcaya Argentaria SA (MCE:BBVA), Bird & Bird LLP, Garrigues and PWC are providing advice to Enagas with regard to the transaction.

Shell names new deadline for Cove Energy bid

Royal Dutch Shell Plc (LON:RDSA) announced on Thursday a new extension until 25 July for its £2.20 ($3.41/€2.80) a share takeover offer for Cove Energy Plc (LON:COV), after securing 3.27% in the British oil and gas explorer by the previous deadline on 11 July.

Of the total acceptances, irrevocable commitments cover only 0.95% of the target’s capital, the buyer said.

The offer, valuing Cove at around £1.12bn in total, was agreed in April and outmatched by Thai oil and gas explorer PTT Exploration and Production Pcl (PINK:PEXNY), or PTTEP, which proposed in late May to buy Cove at £2.40 per share.

At the time, Shell said that in the light of the higher rival offer it was looking into options regarding its own bid. Its offer, launched on 2 May, was first extended to 13 June and further until 28 June and 11 July.

Shell wants to buy Cove to strengthen and diversify its global liquefied natural gas (LNG) portfolio of production and development projects, it has said. Cove’s board agreed to back the deal in April, but later withdrew its support and accepted the £1.22bn transaction with PTTEP, whose offer is also running with a new deadline set for 13 July. PTTEP said its bid won 0.25% acceptance by 6 July.

Both bids are subject to winning an acceptance level of at least 90%.

In an earlier comment, Cove’s CEO John Craven said that the offer from the Thai group represented substantial value for shareholders, while recognising the world-class nature of Cove’s assets in East Africa.

Forestar’s target Credo Petroleum gets no offers

US oil and gas explorer Credo Petroleum Corp (NASDAQ:CRED) announced on Tuesday it had received no alternative takeover approaches during the go-shop period agreed with its suitor Forestar Group Inc (NYSE:FOR) in June.

The agreement announced on 4 June for $14.50 (€11.60) a share, or some $146m in total, allowed Credo to seek alternative proposals during a 30-day period which ended on 3 July, the target firm said.

At the signing of the agreement, Credo’s chairman James T. Huffman said that the deal, backed by both companies’ boards, reflected the value built into Credo since it started its transition four years ago from natural gas to oil. Forestar’s size and substantial oil and gas portfolio would help step up that transition, while the tie-up would create synergies from the combined human and technical resources, Huffman added.

For Forestar, the acquisition of Credo would more than double its existing oil and gas production and proven reserves, give it operating flexibility and establish a strong platform for future growth, the group’s president and CEO Jim DeCosmo has said. It also serves Forestar’s Triple in FOR strategy to accelerate value realisation and boost net asset value through investments, he added.

Credo expects now to wrap up the deal in the second half of this year, pending a number of conditions, including clearance from its shareholders.

The transaction does not need the approval of Forestar stockholders and it is not subject to financing conditions.

The target company has substantial assets in regions including North Dakota Bakken and Three Forks, Kansas, Nebraska, the Texas Panhandle and Oklahoma.

National Grid completes disposal of New Hampshire distribution business

British power and gas distributor National Grid Plc (LON:NG) announced today it had wrapped up the $285m (€226.8m) sale of its New Hampshire electric and gas distribution units to a subsidiary of Canada’s Algonquin Power & Utilities Corp (TSE:AQN), or APUC.

The deal was signed back in December 2010 and got the final clearance by the New Hampshire Public Utilities Commission at the end of May 2012. Under its terms, National Grid sold Granite State Electric Co and Energy North Natural Gas Inc to APUC’s regulated distribution utility Liberty Energy Utilities (New Hampshire) Corp. The completion occurred yesterday.

The vendor said it had received gross proceeds of $309m, including working capital of $24m. The purchase price represents a multiple of 11.9 times the business’ EBITDA for the fiscal year to 31 March 2010. National Grid noted it plans to use the money for general funding purposes.

The British company announced in May 2010 it was considering its alternatives for an exit of both of its New Hampshire-based gas and electricity distribution businesses. National Grid was then approached by various suitors but decided that Algonquin’s proposal was the most attractive outcome for its stockholders.

E.ON sells gas grid to a Macquarie-led consortium for €3.2bn

German utility E.ON AG (ETR:EOAN) said it had agreed to sell its gas grid in Germany Open Grid Europe (OGE) to a consortium of Macquarie European Infrastructure Fund 4, Infinity Investments, British Columbia Investment Management Corp and Meag Munich Ergo for around EUR3.2bn (USD4bn).

E.ON said it would use the proceeds from this divestment to cut debt and invest in growth operations.

The group, which aims to raise some EUR15bn from disposals by 2013, said the sale of OGE brought it closer to that target. So far E.ON has sold assets worth over EUR12bn, it said.

OGE, the former gas transmission division of E.ON Ruhrgas AG, has been separated from the parent company in 2010 and established as an independent transmission operator in line with the European Union (EU) norms.

Now the firm operates the largest gas transmission system in Germany, serving as a key centre in Europe for shipments of bulk gas from Russia and Norway.

The Macquarie European Infrastructure Fund 4 of Australian banking group Macquarie Group Ltd (ASX:MQG) headed the buying consortium. Edward Beckley, head of Macquarie Infrastructure and Real Assets in Europe, commented that OGE was a very well run firm in a stable and regulated environment.

According to unnamed sources cited by Bloomberg, the buyers had resorted to nine banks to underwrite loans of over EUR2bn to help finance the deal.

E.ON said it expected to wrap up the sale in the third quarter of this year, pending clearance from the German Federal Cartel Office and the German Federal Ministry of Economics and Technology.