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Thread: Enbridge to Purchase Spectra creating largest North American Intrastructure Company

  1. #1

    Default Enbridge to Purchase Spectra creating largest North American Intrastructure Company

    Huge news, but good news for Alberta perhaps, head office of Spectra in Houston will be relocated to Calgary. This will have impacts all throughout Edmonton with various tank farms and pipeliine operations needing to be merged.

    http://www.theglobeandmail.com/repor...ticle31717688/

    Canada’s biggest pipeline company, Enbridge Inc., has struck an agreement to acquire Houston-based Spectra Energy Corp. in a $37-billion deal that will create North America’s biggest energy infrastructure company.

    The combined entity would have a pro-forma enterprise value of about $165-billion and a diversified asset base including crude oil, liquids and natural gas pipelines, terminal and midstream operations, regulated utilities and renewable energy.

    The all-stock transaction values Spectra at about $37-billion, based on the closing price of Calgary-based Enbridge’s common shares on Friday.

    Head office will be located in Calgary and current Enbridge president and chief executive officer Al Monaco will become the president and CEO of the new company.

  2. #2

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    Other articles suggest no real movement:

    The natural gas infrastructure business would be based in Houston and the liquids business would be based in Edmonton, both companies said. The natural gas distribution business would remain based in Ontario.
    "Men never do evil so completely and cheerfully as when they do it from religious conviction" - Blaise Pascal

  3. #3

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    ^Enbridge is talking $540m of synergy savings. There will be impacts on the corporate side, for example, you wouldn't need an equity / treasury group in Houston anymore, there will still be operations, but a lot of the back office stuff will move north. Anytime a head office goes, there is an impact.

  4. #4

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    I meant no moving of headquarters. Staff is another story. $540M in savings in 2017/18: assuming avg cost per employee is $150,000 in salary, benefits, etc. that's a reduction of 3600 employees. You can bet HR, accounting, and other support departments will see massive consolidation.
    "Men never do evil so completely and cheerfully as when they do it from religious conviction" - Blaise Pascal

  5. #5

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    ^Yip, there is only one HQ, so where there was one in Calgary (Enbridge - although they also have a lot of corporate staff in Edmonton), and one in Houston (Spectra), there is now just one in Calgary. It will also have flow on impacts to all the professional service companies in Houston. All of a sudden lawyers / accountants are going to lose a major client. Spectra is a master limited partnership so there is going to be a ton of accounting compliance work that will move out of the city (assuming Enbridge don't maintain or recreate the MLP for capital).

    Its a very nice deal in terms of Enbridge being strong in liquids, Spectra in gas, quite complimentary.



    http://wpmedia.business.financialpos...y=60&strip=all
    Last edited by moahunter; 06-09-2016 at 01:26 PM.

  6. #6

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    Some interesting articles, suggesting, that the reason Enbridge and other oil companies are buying up US assets, is they can't get anything built in Canada anymore due to all the regulations / environmental groups:

    Harrie Vredenburg, with the University of Calgary's Haskayne School of Business, said there are strong opportunities for expansion between the combined forces.

    But Enbridge has also been stymied from building projects like Northern Gateway to move oil to the West Coast because of regulatory uncertainty, a problem facing other pipeline operators in Canada and the United States.

    "They're trying to grow and build their business and they've been frustrated because they've become a lightning rod for environmental opposition - climate change opposition to oil pipelines particularly - and they're looking for alternative growth strategies. They're not alone in doing this," he said.

    "They've spent a fortune, getting nowhere with regulatory systems. At the same time, the oilsands growth has slowed somewhat … it may be time to shift their portfolio somewhat."

    There's no doubt the deal is transformative, giving Enbridge more balance between its oil and natural gas businesses.

    With the merger, Enbridge will become the fourth-largest company in Canada, with assets extending from Zama City in northern Alberta to the U.S. Gulf Coast.
    http://www.connect2edmonton.ca/showt...ucture-Company

    This deal gives Enbridge a massive backlog of US capital projects to grow with.

  7. #7
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    Quote Originally Posted by moahunter View Post
    Some interesting articles, suggesting, that the reason Enbridge and other oil companies are buying up US assets, is they can't get anything built in Canada anymore due to all the regulations / environmental groups:

    Harrie Vredenburg, with the University of Calgary's Haskayne School of Business, said there are strong opportunities for expansion between the combined forces.

    But Enbridge has also been stymied from building projects like Northern Gateway to move oil to the West Coast because of regulatory uncertainty, a problem facing other pipeline operators in Canada and the United States.

    "They're trying to grow and build their business and they've been frustrated because they've become a lightning rod for environmental opposition - climate change opposition to oil pipelines particularly - and they're looking for alternative growth strategies. They're not alone in doing this," he said.

    "They've spent a fortune, getting nowhere with regulatory systems. At the same time, the oilsands growth has slowed somewhat it may be time to shift their portfolio somewhat."

    There's no doubt the deal is transformative, giving Enbridge more balance between its oil and natural gas businesses.

    With the merger, Enbridge will become the fourth-largest company in Canada, with assets extending from Zama City in northern Alberta to the U.S. Gulf Coast.
    http://www.connect2edmonton.ca/showt...ucture-Company

    This deal gives Enbridge a massive backlog of US capital projects to grow with.
    exactly..cuz Trudeau is giving the finger to Alberta....Enbridge was backed into a corner and HAD to make this move. Sad really, the way it looks we may never get our product out to any country except the States.....and they know they have our junk in a vice grip.

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