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The Deal between TC Energy and Mexican Utility is Concluded to Build $4.5 Billion Gas Pipeline
08/30/2022
TC Energy Corp. had reached a deal with a Mexican state utility to build a $4.5 billion natural gas pipeline, according to a company release on Aug. 4.
The natural gas to Mexico's central and southeast regions will be furnished by the 1.3 bcfd offshore Southeast Gateway Pipeline, the Canadian pipeline operator said.
Due to the most serious trade spat with Mexico over the United States-Mexico-Canada Agreement, Canada and the United States made the deal with Comisión Federal de Electricidad (CFE).
TC Energy and CFE in conjunction with the alliance also took the final investment decision (FID) on the 715-km Southeast Gateway. The pipeline will serve southeast Mexico, starting onshore in Tuxpan, Veracruz, then proceeding offshore, making landfall at Coatzacoalcos, Veracruz, and Dos Bocas, Tabasco.
TC Energy noticed that sanctioning the pipeline would expand its secured capital program to $33 billion and could complete its 2021-2026 adjusted EBITDA uptick outlook.
Additionally, a senior foreign ministry official in Mexico Roberto Velasco claimed last month that TC Energy had approved to build a $5 billion gas pipeline in the Gulf Coast state of Veracruz.
Subject to regulatory approvals from Mexico’s economic competition commission and its Regulatory Energy Commission, CFE will have the opportunity to hold a 15% equity interest in TGNH. Regulatory approvals related to CFE’s equity participation are expected to take up to 24 months.
TC Energy and the CFE have agreed to combine previous transportation service agreements (TSA) executed between TC Energy’s Mexico-based subsidiary, Transportadora de Gas Natural de la Huasteca (TGNH), and CFE in connection with shared natural gas pipelines in central Mexico under a single, US dollar-denominated take-or-pay agreement extending through 2055. This new TSA will also govern related new infrastructure projects to be developed.
These two companies also agreed to mutually finish presently suspended international arbitration (OGJ Online, Nov. 8, 2021) between the two related to the 886-MMcfd Tula-Villa de Reyes and Tuxpan-Tula (TXTL) pipelines, with TC Energy earning a return on and of all previous capital invested. TC Energy and CFE have also decided to work together to complete TXTL’s central segment, subject to fourth-quarter 2022 FID.
TC Energy builds and operates safe and reliable energy infrastructure. This includes 93,300 km (57,900 miles) network of natural gas pipelines, which supplies more than 25 percent of the clean-burning natural gas consumed daily across North America to heat homes, fuel industries, and generate power.
Also, the existing oil & liquids pipeline infrastructure, approximately 4,900 km (3,045 m), connects Alberta crude oil supplies to U.S. refining markets in Illinois, Oklahoma, Texas, and the U.S. Gulf Coast. The Keystone Pipeline System, the largest liquids pipeline asset, moves approximately 20 percent of western Canadian crude oil export to key refining markets. The company has located storage terminals in Canada and the U.S., including Hardisty, AB.; Cushing OK; and Houston, TX.
Meanwhile, TC Energy’s portfolio of energy infrastructure assets includes investments in seven power generation facilities with a combined generating capacity of approximately 4,200 megawatts (MW) – enough to power more than 4 million homes, and moreover, approximately 75 percent of our power capacity is emission-less.
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Earthstone Expands Due to Acquisition of Titus’ Delaware
Earthstone Energy Inc., based in Texas, announced the transaction on June 28: the acquisition of Titus Oil&Gas which will raise production in the Delaware Basin by 26%. The $627 million acquisition fills the Permian Basin in Eddy and Lea counties, N.M. with 86 net locations on 7,900 net acres of leasehold, while it is not clear how much of the leasehold might be on federal acreage It is Earthstone’s seventh acquisition since 2021, a span that includes the closing of approximately $1.89 billion in acquisitions in the Permian Basin. The purchase of Titus Oil & Gas Production LLC and Titus Oil & Gas Production II LLC, privately held companies backed by NGP Energy Capital Management LLC, is estimated at $575 million in cash and it is the equivalent of $52 million in stock (3.9 million shares of its Class A common stock based on the June 24 closing price). Titus shared that its net production in June was 31,800 boe/d. The company had reserves of approximately 28.9 MMboe. Earthstone is sure its net production will increase, at the midpoint, by 20,500 boe/d (65% oil) in the fourth quarter.
Welcome 2024: A Look Back at 2023 Top Oil and Gas Sector Deals
2023 was quite a year for the oil and gas sector, with some big deals making the news. In the US, giants like ExxonMobil and Chevron grabbed headlines with their plans to acquire companies like Pioneer and Hess. Internationally, ADNOC wasn't left behind, expanding its reach as well. As we ring in the new year, let's recap the biggest oil and gas deals of 2023.
Continental Resources is expanding its operations in the Midland Basin, including taking over some assets that used to belong to Occidental Petroleum. The company plans to use its expertise in exploration in this area.
Equinor and EQT Corporation have agreed that Equinor will exchange its operated assets in the Marcellus and Utica shale formations in Ohio for a stake in EQT’s non-operated interests in the Northern Marcellus formation.
Appalachian Basin (formerly Marcellus and Utica) covers most of New York, Pennsylvania, Eastern Ohio, West Virginia, and Western Maryland in the north, reaching down to parts of Northwest Georgia and Northeast Alabama in the south. The basin is massive, covering about 185,000 square miles, roughly 1,000 miles long from northeast to southwest, and in some places, it's up to 300 miles wide. In this area, some major companies are making significant investments. EQT stands out as the largest producer in the Appalachian Basin, with other key players including Chesapeake, Range Resources, Antero, Repsol, and Gulfport also actively investing.