Several energy companies based, or with a significant presence, in the Houston area are beginning to assess the impact Hurricane Laura had on their facilities.

Houston-based Westlake Chemical Corp. (NYSE: WLK) and master limited partnership Westlake Chemical Partners LP (NYSE: WLKP) announced late Thursday, Aug. 27, that initial assessments indicate their facilities in the Lake Charles area incurred limited physical damage. The employees who stayed at the facility during the hurricane are safe.

However, restarting the facilities, which were shut down as a precautionary measure before the storm, “will primarily depend upon the availability of electricity, industrial gases, and other feedstocks,” press releases state.

“We do not expect any material impact to (Westlake Chemical OpCo LP) or to the (MLP) as a result of Hurricane Laura as, pursuant to OpCo’s ethylene sales agreement with affiliates of Westlake Chemical Corp., (Westlake Chemical) is obligated to pay a margin and fixed costs for 95% of OpCo’s budgeted ethylene production, even following a force majeure event,” said Albert Chao, president and CEO of Westlake.

Houston-based Citgo Petroleum Corp., which is majority-owned by Venezuelan oil giant Petróleos de Venezuela SA (PDVSA), reported no safety issues or hydrocarbon releases directly related to Hurricane Laura at its Lake Charles Manufacturing Complex.

However, the refinery suffered damage due to high winds, and a detailed assessment is currently underway but will take several days. The company does not expect an immediate restart but will not issue a schedule until the assessment is complete.

“We are pleased to confirm that all of our employees are safe, and thanks to the advance preparation and hard work of our refinery employees, there wasn’t any flaring or release of hydrocarbons resulting from this ferocious storm,” Citgo President and CEO Carlos Jordá said in an Aug. 28 press release.

Houston-based Phillips 66 (NYSE: PSX) also has yet to determine restart timelines.

“Our response is now focused on ensuring the safety and well-being of our employees,” the company said in an Aug. 28 update. “Facility assessments are underway at all impacted locations and will likely take several days. Timelines for operational restarts are largely dependent on assessment impacts and access to electricity and other utilities in the region.”

The Netherlands-based Royal Dutch Shell PLC (NYSE: RDS.A, RDS.B), which has its Shell Oil Co. arm based in Houston, aimed to begin inspections of its Auger, Enchilada and Salsa assets Aug. 28.

“These inspections will enable us to determine when we can safely re-deploy personnel and resume operations to those platforms,” the company said in a 10 a.m. update. “Meanwhile, we are beginning to re-deploy personnel to all other assets that have not been impacted, including those in the Norphlet and Mars Corridors. Perdido was the only one of our nine operated assets that was not shut it and remains in production. Our drilling operations are in the process of restarting. As always, the safety of our people, the environment and our assets are Shell’s top priority.”

As of Aug. 27, London-based BP PLC (NYSE: BP), which has its U.S. headquarters in Houston, was preparing to inspect its company-operated facilities in the deepwater Gulf of Mexico.

“Production will remain shut-in until we have confirmation that our platforms are able to operate safely, pipeline companies have confirmed the operability of offshore pipelines and the shore-based transportation and receiving systems are working as necessary,” the company said in a statement. “Weather permitting, overflights will begin Friday (Aug. 28) to survey our facilities. At this time, we cannot predict how long this process will take, safety is our top priority as we move forward and determine next steps.”

By Olivia Pulsinelli – Assistant Managing Editor

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/08/28/energy-facilities-assessing-damage-hurricane-laura.html

When Southwestern Energy Co. acquires Montage Resources Corp. later this year, the combined company will likely be the third-largest natural gas producer in Appalachia — and a step closer to consolidation in the industry that has been hinted at but not yet become reality.

Springwoods Village-based Southwestern (NYSE: SWN) announced Aug. 12 that it would merge with Irving, Texas-based Montage (NYSE: MR) in an all-stock transaction valued at more than $200 million. The deal will likely close in the fourth quarter, pending approval from Montage shareholders. Montage’s biggest shareholder, Houston-based EnCap Investments, has agreed to vote its 39% stake in favor of the merger.

The deal will boost Southwestern’s position in northern West Virginia and eastern Ohio, providing more acreage in West Virginia than Southwestern has now and giving Southwestern a presence in Ohio. Southwestern is the fifth-largest shale gas producer in Pennsylvania. All of its holdings in the state are in the dry gas region of northeastern Pennsylvania.

CEO William Way said during a conference call Aug. 12 that Montage’s assets will be complementary to Southwestern’s, allowing the combined company to increase scale. It’ll add the dry gas Utica to Southwestern’s arsenal while adding to its assets in northern West Virginia, where increasing emphasis is being placed by companies like EQT Corp. (NYSE: EQT), which also sees growth opportunities in the Mountain State.

“Montage’s Utica experience in combination with SWN’s operational expertise is expected to accelerate the learning curve and economic potential of SWN’s existing West Virginia Panhandle Utica position,” Way said.

The combined company will have 786,000 acres across the three states with production of 2.8 billion cubic feet per day. About 80% of the production is natural gas.

Consolidation in the Appalachian natural gas industry has been long predicted by analysts — and by industry executives themselves — because of the mature nature of the Marcellus and Utica as well as the narrower growth opportunities. Some consolidation has occurred, most notably in 2018 with the EQT Corp.-Rice Energy Corp. merger. But even with low commodity prices and Covid-19 weighing on it, there hasn’t been a rush of deals.

“This is the kind of deal we’ve been looking for for a while,” said Andrew Dittmar, senior M&A analyst at Austin-based Enverus.

Dittmar noted that Southwestern-Montage is not a merger of equals but instead a deal that brings benefits of a larger asset base. He said that money for deals that had been there in the past isn’t there now, which has led to all-stock deals like this with no premiums.

Montage Resources sprang to life in February 2019 with the merger of Eclipse Resources and Blue Ridge Mountain Resources. Montage didn’t return a request for comment, and Southwestern didn’t take questions from analysts during its conference call Aug. 12 due to its stock offering announced earlier in the day.