Opinion

Energy Infrastructure Company Closes 'Transformational' Acquisition


An iASecurities report discussed the benefits of the merger and next steps for the acquirer.

Pipes

A July 9 iA Securities research note indicated that AltaGas Ltd. (ALA:TSX) closed its CA$9 billion deal with WGL Holdings and iASecurities raised its per share target price on Buy rated AltaGas to CA$30 from CA$29. The current share price is about CA$28.19. "This highly anticipated transaction is material as it essentially doubles the company's enterprise value and provides investors with additional exposure to power, utilities and midstream assets in the United States," wrote analyst Elias Foscolos.

Per the acquisition agreement, AltaGas issued CA$2.5 billion in equity, Foscolos explained. It did so through conversion of outstanding installment receipts into 80 million shares and through a bridge loan of CA$2.3 billion.

The company intends to reduce the bridge financing by issuing about CA$0.98 billion of hybrid/preferred securities and by divesting about CA$1.4 billion in assets. The sale of assets and the hybrid financing are the next catalysts for the company, the announcement of which "we believe equity investors will be eagerly anticipating," Foscolos commented.

With the closing of the WGL transaction, AltaGas "is a transformed company," Foscolos noted and explained why.

One, it becomes a more U.S.-focused, lower-risk company with an estimated 70%-plus of EBITDA to originate in the States. Only 10–15% of 2019 EBITDA will be exposed to short-term commodity prices. Medium- and long-term agreements will support about 80% of AltaGas' 2019 EBITDA.

Two, the merger provides the company with a large project pipeline. By incorporating WGL's midstream franchise in the Marcellus/Utica Basin, AltaGas will boost its CA$2 billion of internal growth capital projects to CA$5.8 billion.

Three, the transaction increases AltaGas' common equity valuation by roughly CA$2.2 billion, thereby increasing its market cap, too.

Also noteworthy, Foscolos said, is that adjusted funds from operations are expected to grow by about 10% through 2020, which could support a larger dividend. In fact, AltaGas is targeting an 8–10% dividend increase.

Moving forward, AltaGas "still needs to execute on a number of fronts," Foscolos indicated. It must integrate WGL into its company. It must divest of CA$1.4 billion of assets, which "could be more challenging." If it cannot do this, it plans to make up any difference by issuing debt. Lastly, the company must close the CA$0.98 billion hybrid financing.


Visit source site

https://streetwisereports.com/article/2018/07/10/e...

Streetwise ReportsAcquisitioniA SecuritiesAltaGasTSX

More items from oilvoice


Seasonality in Brazilian Petroleum Liquids Production is Driven by Biofuels

Source: U.S. Energy Information Administration, International Energy Statistics , and Short-Term Energy Outlook Brazil's ethanol output is seasonal and typically peaks during the fourth quarter (October–December) of each year. The peak coincides with the harvest of sugarcane, the primar ...

OilVoice Press - OilVoice


Posted 2 days agoOpinion > EIAEnergy Information Administration EIABrazil +4

Africa Energy - Market Announcement

VANCOUVER, Sept. 21, 2018 /CNW/ - Africa Energy Corp. (TSX Venture: AFE) (Nasdaq First North: AEC) ("Africa Energy" or the "Company") acknowledges the stock trading halt in Pancontinental Oil and Gas NL (ASX: PCL) ("PCL") today pending an announcement regarding the Cormorant-1 well offshore the R ...

OilVoice Press - OilVoice


Posted 2 days agoPress > Africa EnergyASXAfrica +2

NPD: Delineation of the Hanz Field and Dry Wildcat Well in the North Sea - 25/10-16 S, A and C and 25/10-16 B

Aker BP ASA, operator of production licence 028 B, has concluded the drilling of appraisal wells 25/10-16 S, A and C on the Hanz field, as well as wildcat well 25/10-16 B drilled in production licence 915 just southeast of the Hanz field. The wells were drilled about 14 kilometres north of the Iv ...

OilVoice Press - OilVoice


Posted 2 days agoPress > NPDNorwegian Petroleum DirectorateNorway +7

Tower Resources: South Africa Update – Farm-out Process

Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM-listed oil and gas company with its focus on Africa, is pleased to provide the following update on its Algoa-Gamtoos licence in South Africa, in which the Company holds a 50% interest through its wholly owned subsidiary Rift Pe ...

OilVoice Press - OilVoice


Posted 2 days agoPress > Tower ResourcesSouth AfricaOffshore +5

South Africa Update – Farm-out Process

Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM-listed oil and gas company with its focus on Africa, is pleased to provide the following update on its Algoa-Gamtoos licence in South Africa, in which the Company holds a 50% interest through its wholly owned subsidiary Rift Pe ...

OilVoice Press - OilVoice


Posted 2 days agoPress
All posts from oilvoice