Report: French government delays Engie-NextDecade LNG deal in Brownsville

The signing of a $7 billion, 20-year contract to ship liquefied natural gas from a future terminal in Brownsville, Texas, to a customer in France was blocked by that country’s government, according to media reports.

French utility Engie SA was told by the French government to wait on signing the contract with Houston-based NextDecade Corp., which was due to supply Engie with LNG from its future terminal at the Port of Brownsville. The news was first reportedby a French outlet on Oct. 2 and confirmed by the American news site Politico on Oct. 21.

The French government, which is a minority stakeholder in Engie, apparently told the company to delay signing the contract last month over worries that U.S. shale gas was too dirty. It wasn’t clear whether the contract would be canceled or possibly signed at a later date.

While NextDecade (Nasdaq: NEXT) didn’t respond to a request for comment, an activist with the local branch of the Sierra Club praised the decision.

“The French government has banned fracking in their own country, so it should come as no surprise that they wouldn’t want to lock in decades of fracked gas imports from here in Texas, where fracking pollution is left unchecked,” Rebekah Hinojosa said in a statement.

The oil and gas industry has long touted natural gas as a cleaner alternative to fuel and a necessary step in the transition to renewables. The International Energy Agency reported in 2019 that replacing the world’s coal plants with natural gas plants could reduce global power sector emissions by 10% and total carbon dioxide emissions by 4%.

But environmental activists worry about the damage caused by fracking, which the U.S. Environmental Protection Agency said in 2016 could harm drinking water, as well as the release of more climate change-causing methane into the air. Methane is the largest component of natural gas and warms the planet at a higher rate than carbon dioxide, according to the EPA.

It isn’t clear whether the reported Engie contract delay will have an impact on NextDecade’s final investment decision in the Brownsville project, which is slated for next year. NextDecade’s project, called Rio Grande LNG, is scheduled to be the largest of three planned LNG facilities at the South Texas port. All of the projects are being developed by Houston-based companies, but none have broken ground.

By Jessica Corso – Reporter

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2019/08/15/houston-based-arm-of-french-energy-co-to-move.html

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Schlumberger’s Q3 revenue misses analysts’ expectations, stock falls

Oil field services giant Schlumberger Ltd. (NYSE: SLB), which has a primary office in Houston, reported revenue of nearly $5.26 billion in the third quarter.

That’s down 38% from $8.54 billion in revenue in the same period a year earlier but down just 2% from the company’s Q2 revenue of nearly $5.36 billion, according to an Oct. 16 press release. However, analysts had predicted Q3 revenue would come in higher than the Q2 figure, with an average estimate of $5.38 billion, according to Yahoo Finance.

Schlumberger’s stock opened Oct. 16 at $15.62 per share, down almost 5% from the Oct. 15 closing price, and continued to fall throughout the day, landing just under $15 each, down nearly 9%, shortly before markets closed. It’s the biggest one-day post-earnings drop for Schlumberger since October 2007, MarketWatch reports.

But Schlumberger is seeing improvements elsewhere.

The company reported a net loss of $82 million for the quarter, a significant improvement from losses of over $3 billion in Q2 and over $11 billion in the third quarter of 2019. When excluding $350 million in charges — most of which came from facility exit charges — and credits, Schlumberger’s Q3 net income was $228 million, or diluted earnings of 16 cents per share. That beat analysts’ average estimate of 12 cents per share.

In an Oct. 16 earnings call, Schlumberger CEO Olivier Le Peuchnoted that the company was making progress on its “intermediate goal of restoring 2019 EBITDA margins before the end of 2021.” The company’s organizational restructuring efforts are also going well.

“We are on track to realize most of our permanent structural cost savings as we exit this year,” Le Peuch said. “We also began the transition to our leaner, customer-aligned structure, comprised of Divisions and Basins, designed to support the basin-specific innovation that will solidify Schlumberger’s position as the performance partner of choice.”

In North America, Schlumberger achieved two key milestones: an agreement to combine the company’s OneStim pressure pumping business with Denver-based Liberty Oilfield Services Inc. and an agreement to divest Schlumberger’s low-flow artificial lift business in a cash transaction.

“The closing of these transactions will not only enhance our EBITDA margins at the global level but will further support lower capital intensity and an accelerated path to our financial goals for North America,” Le Peuch said.

However, the company’s short- to- midterm outlook is uncertain as the economic recovery remains fragile and the threat of another Covid-19 resurgence looms.

“Absent of a pause in demand recovery or higher Covid-19 disruption, the fourth-quarter activity will likely extend the trends experienced as we closed the third quarter, with the continuation of a modest activity uptake in North America and the stabilization towards a steady activity internationally, albeit with visible seasonal variations; the combination of which resulting into an about flat outlook overall for the quarter,” Le Peuch said.

“Looking out farther, the prevailing uncertainties make it much too early to call. However, directionally, and absent of a slowdown in the pace of economic recovery, we anticipate the overall activity to consolidate gradually during 2021. In line with the most recent IEA projections, we see that the conditions will exist to rebalance demand and supply, with improving demand recovery supported by economic stimulus measures and continued supply discipline from the major producers, ultimately resulting in a visible activity rebound.”

Schlumberger employed about 82,000 people worldwide as of Sept. 30, down from 85,000 as of June 30 and 103,000 as of the end of Q1.

By Olivia Pulsinelli – Assistant Managing Editor

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/10/16/schlumberger-q3-2020.html

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Houston’s largest energy employers donated more than $2M to federal campaigns

Political action committees organized by Houston’s 10 largest energy employers have donated more than $2 million to candidates for federal office since the start of 2019. That’s about 66% more than the comparable figure donated by employees at those companies.

Corporate PACs run by the energy companies with the 10 largest local headcounts contributed $2.48 million to federal campaigns since the start of 2019, according to data from the Center for Responsive Politics published on OpenSecrets.org. Individuals who worked at those companies donated about $1.49 million during that period.

That’s not to say local individuals were slow to open their wallets for candidates — Houston is one of the top cities for individual campaign contributions this election cycle.

The corporate PACs and the corresponding employees often expressed different political leanings in their campaign contributions. About 81% of funding from the corporate PACs went to Republican candidates, compared to 31% of the funding from individual donors. The remaining PAC contributions ended up with Democrats, while the employees donated 7% of their total to independents and 62% to Democrats, according to the CRP data.

Irving, Texas-based Exxon Mobil Corp. (NYSE: XOM) had the most active PAC of the top 10 employers, donating $858,300 to federal candidates, 78% of which went to Republicans. Exxon is also the top energy employer in the Houston area, at about 13,000 employees, according to Houston Business Journal research.

Wood, the company formed from a $2.7 billion merger between Scotland-based Wood Group and London-based Amec Foster Wheeler in 2017, has the fourth-largest local workforce among energy-related companies. However, data around Wood’s political activities could not be found via CRP or the Federal Election Commission, so it was not used in the overall analysis. That means that Halliburton Co. (NYSE: HAL), technically the 11th-largest energy employer in the city, was included instead.

By Joshua Mann – Senior Reporter

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/10/12/largest-energy-employers-political-campaigns.html

 

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LyondellBasell to pay Sasol $2B to form chemicals JV in Louisiana

LyondellBasell Industries NV (NYSE: LYB) is teaming up with Sasol Ltd. (NYSE: SSL) on a joint venture that will own and operate ethane and polyethylene facilities along the Louisiana coast.

The Netherlands-based LyondellBasell, which has its operational headquarters and executive team in Houston, will pay South Africa-based Sasol $2 billion for a 50% stake in the assets, according to an Oct. 2 press release. The deal is expected to close by the end of the year, and the joint venture will be called Louisiana Integrated PolyEthylene JV LLC.

The newly constructed assets include a 1.5-million-ton ethane cracker, a 900,000-ton low- and linear-low-density polyethylene plants, and associated infrastructure. LyondellBasell will operate the assets on behalf of the JV, while both companies will provide pro-rata shares of ethane feedstocks and will offtake pro-rata shares of cracker and polyethylene products at cost, per the release.

The deal will transfer some Sasol U.S. employees to LyondellBasell, though the release did not indicate how many. Meanwhile, Sasol will retain full ownership and operational control of several other assets in Lake Charles, Louisiana.

The deal will help Sasol achieve its goals of reducing net debt and shifting the company’s portfolio toward specialty chemicals, according to the release. For LyondellBasell, the deal helps the company expand in a core area of its business without the risks that come with building a new project from the ground up.

“This approach is consistent with our strategy of investing in high quality assets that meet our threshold for value creation while also maintaining our investment-grade rating and commitment to our dividend,” Bob Patel, CEO of LyondellBasell, said in the release. “The transaction is expected to be accretive to both cash flow and (earnings per share) within one year with significant upside as market conditions continue to improve.”

Before the Covid-19 coronavirus pandemic, LyondellBasell had seen significant growth in recent years. The company completed its acquisition of Ohio-based A. Schulman Inc. in August 2018. The deal was valued at $2.25 billion when it was announced in February 2018.

Also in August 2018, LyondellBasell broke ground on a $2.4 billion propylene oxide and tertiary butyl alcohol plant at its Channelview Complex — the final project in its $5 billion U.S. Gulf Coast organic growth program. However, the end of the growth program doesn’t mean the end of growth for the company, Dan Coombs, the company’s executive vice president of global manufacturing, projects, refining and technology, said in August 2018. At the time, LyondellBasell was considering billions of dollars in other organic projects, much of which will likely be spent in the U.S. and quite possibly on the Texas Gulf Coast.

After Covid-19 hit the U.S., LyondellBasell decided to slow construction operations at the Channelview site in the interest of health and safety. That resulted in Zachry Industrial Inc., a subsidiary of San Antonio-based Zachry Group, laying off workers at the site in April.

“We believe it is prudent to limit construction activities at this time,” Torkel Rhenman, LyondellBasell executive vice president of intermediates and derivatives, said in a March 30 press release. “We remain committed to the completion of this strategic investment.”

At the time, the project was about 30% complete, and LyondellBasell was working with its contractors and developers on a revised timeline. LyondellBasell’s other operations in Channelview and Bayport weren’t affected by the decision.

More recently, LyondellBasell announced the startup of a new joint venture polyolefin complex in China and a new molecular recycling facility in Italy, both in September.

LyondellBasell produced $34.73 billion in 2019 revenue, of which $3.39 billion was net income, according to the company’s most recent annual financial report.

Kirkland & Ellis LLP is serving as LyondellBasell’s legal counsel, while Gordon Dyal & Co. and J.P. Morgan are serving as LyondellBasell’s financial advisers. Latham & Watkins LLP is serving as Sasol’s legal counsel, while Bank of America is serving as Sasol’s financial adviser.

By Olivia Pulsinelli – Assistant Managing Editor

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/10/02/lyondellbasell-sasol-chemicals-jv-louisiana.html

 

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