Page 15 - NorthAmOil Week 40

NorthAmOil PIPELINES & TRANSPORT NorthAmOil

TC Energy offers to buy

remainder of TC PipeLines

NORTH AMERICA NORTH American midstream player TC implied by the 20-day volume weighted aver-
Energy has proposed buying all of the shares of age prices of TC PipeLines’ common units and
TC PipeLines, an indirect subsidiary and mas- TC Energy’s common shares on the NYSE as of
ter limited partnership (MLP), that it does not October 2. A committee consisting of independ-
already own. TC Energy currently owns 23.96% ent directors will now be formed to review the
interest in TC PipeLines, according to data from offer, according to the statement.
Refinitiv, and is its top shareholder. TC Pipelines If the move goes ahead, it would mark the
owns interests in eight federally regulated US latest effort by the midstream industry to elim-
interstate natural gas pipelines. inate MLPs, which were previously more pop-
Under the proposal, TC PipeLines com- ular with pipeline operators in the US thanks to
mon unitholders would receive 0.650 of a their tax-efficient qualities. The collapse in crude
common share in TC Energy for each issued prices that began in 2014, followed by a sweeping
and outstanding publicly held common unit US tax reform introduced by President Donald
of TC PipeLines. This would represent a value Trump in 2017, hit MLPs’ stock prices in recent
of US$27.31 per common unit based on the years. A number of companies, including Hess
closing price of TC Energy common shares Midstream Partners, have since eliminated the
on the New York Stock Exchange (NYSE) on partnership structure or restructured the way
October 2, putting the overall value of the deal these units operate.
at $1.48bn. Analysts at Tudor, Pickering, Holt & Co.
TC Energy would take on $1.9bn of TC Pipe- (TPH) said this week that TC Energy’s offer is
Lines’ net debt under the transaction. too low, and that TC PipeLines should reject it
TC PipeLines said in a statement that this for a higher price. No timeline for a decision has
would be a 7.5% premium to the exchange ratio been provided.™

PERFORMANCE

Suncor to cut up to 15% of workforce

CANADA CANADA’S Suncor Energy has unveiled plans of our workforce by about 10-15%.”
to cut its staff numbers by up to 15% over the Seetal did not specify how many people this
next 18 months. The move is being made as the equated to, but noted that Suncor had 13,000
company deals with the impact of the coronavi- employees at the end of 2019, which would
rus (COVID-19) pandemic on oil demand and translate into 1,300-1,950 job cuts. She added
the broader economy. that all of the company’s operations – in the
Suncor’s CEO, Mark Little, told staff about the US, Canada and internationally – were under
looming layoffs via an internal webcast on Octo- review.
ber 2. The first tranche of job cuts, accounting for Price Street’s managing director and market
about 5% of the workforce, is due to be made in economist, Rory Johnston, commented that
the next six months. Suncor’s cuts appear to be part of a broader drive
CBC News cited Suncor spokesperson Sneh for efficiency across the industry.
Seetal as saying the company had already been “The drive now is going to be to increase effi-
in the process of making adjustments to its cost ciency and increase the amount of value they can
structure, which would have ultimately resulted extract from each barrel of their core production
in a smaller workforce. But the events of this year base,” Johnston was quoted by CBC News as
have sped up the pace of these changes. saying. “You might get a little bit of production
“Unfortunately, the unprecedented drop in growth, but I think the days of heavy growth are
oil prices, the continued impact of the global mostly behind us,” he added, noting that this
pandemic, an economic slowdown as well as would translate into fewer jobs.
continued market volatility have accelerated “I truly hope not, but I would not be surprised
those plans,” she said. “And as a result, over if we see some of the other Canadian majors fol-
the next 12-18 months, we will reduce the size low suit,” Johnston said.™

Week 40 08•October•2020 www. NEWSBASE .com P15