TransCanada Corp. has agreed to buy Columbia Pipeline Group for $10.2-billion (U.S.), a deal that will give it a major position in the massive Marcellus shale gas region in the U.S. Northeast.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
StuBee wrote:Here we go again... TRP has announced a 10B$ acquisition, an American NG transporter called Columbia. They have paid a hefty premium (around 30%). TRP has also issued 4B$ in new shares (about 10% of there float) at about 4$ below todays closing.
They appear to have sound (though perhaps defensive) reasons for doing this.
Question: Does this have any impact on the "Canadian Mainline" which is currently being considered for conversion to oil transport for Energy East?
<RANT> I say turn the Canadian Mainline around, suck us easterners dry, and feed the west as they convert from coal to other forms of electricity generation <END RANT>
I imagine that my outburst does not make any sense... But this whole Energy East "experiment" is turning into a "pipeline project that will never happen".
StuBee
OOPS my bad...I had not seen that there was already a TRP thread...
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
Guess if Canada is too stupid to recognize where their bread and butter really comes from, companies will go elsewhere for opportunities.
Not exactly sure what Columbia will do for TRP albeit they are pretty central to the Marcellus shale and are interconnected with each other to some degree. But their mainline systems from the Gulf Coast have to be getting a bit long in the tooth and maybe not running full (my speculation only).
The takeover, which also includes the assumption of $2.8-billion (U.S.) of Columbia’s debt, helps solve a thorny problem for TransCanada’s decades-old west-to-east gas transport franchise. It has been threatened by rapid growth in the Marcellus shale formation over the past decade, which undercut the company’s share of the lucrative U.S. Northeast market
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
Columbia through Marcellus and Utica has been very active in NE United States (and doing what Shakespeare has quoted). However, Columbia also owns (and is expanding) a connection with the gulf coast and their LNG facilities (exportation???).
Perhaps the Canadian mainline can be "rededicated" to serving eastern Canada (effectively killing EE) and the Marcellus/Utica production can be sent towards the Gulf of Mexico (finally tidewater!!...)
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle
Also represents a massive dividend increase, but not for existing shareholders.
Underwritten by RBC and TD, I see. I expect to see shortly some glowing analyst reports from RBC and TD praising the merits of the "transformational" deal which they will characterize as "fairly priced" as they hawk the shares and raise their target prices on TRP . . .
Just being cynical here. I am not sure yet what to make of it. I do think TRP and ENB need to diversify away from the big projects in Canada that no one seems to want, but I also believe they should be embracing renewables, because that's where a lot of government and institutional money is going to go in the coming years.
It is going to take some solid government policy initiatives to make renewables worth putting in money 'up front' versus 'pay as you go'. For example, Norway had generous policy initiatives to encourage electric cars, e.g. tax breaks plus filling stations plus ?? plus ?? and then provided some compensation to the electrical transmission system to strengthen itself for unpredictable electrical surges. Only then will industry commit to the capital needed. As of now, Canada is just putting on the lipstick for show with no assurrances for corporate shareholders.
It is going to take some solid government policy initiatives to make renewables worth putting in money 'up front' versus 'pay as you go'.
I think w are seeing some of those initiatives coming from Quebec, Ontario, and BC; and now Alberta and Saskatchewan have made some bold announcements. I wouldn't be making the argument for 100% renewables, but increasing the weighting, say from 5% to 10%, represents a huge increase; billions of new investment. A lot of that money will come from investment dollars / tax incentives that are NOT going towards fossil fuels.
I'm trying to think like an investor here - follow the money
I have to see it first. For example, transmission capacity for Southern Alberta wind farms lagged the actual installation of the turbines for a number of years. Until substance is underway, capital is only cautiously invested and only when the investor believes it is real. IOW, show me the money and then we can follow the money.
So it appears that the 10% dilution of the TRP share float at a 7% discount to yesterday's closing price is a non-event. (As I write, the price of TRP is relatively unchanged).
Question: Are subscription receipts a marketable security (is there a secondary market)? Perhaps entities such, as CPPIB or CDP, snap up the 4B$, sit on them until the deal closes (meanwhile receiving the TRP dividend) and then (once they have become shares) they become marketable securities .
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle
Shakespeare wrote:NG is an intermediate step from coal to renewables and should be viable for some years - barring cold fusion or Douglas-Martin sunscreens.
Not necessarily the right thread, but is a segue way into what could be a game changer for forward thinking energy companies to pursue renewables