Friday, October 14, 2016

Update On Sempra's Mexican Projects -- October 13, 2016


November 3, 2018: the pipeline mentioned below is now in service. The name of this well is the Valley Crossing Texas-To-Mexico gas pipeline.

Original Post

For me, personally, one of the best things I ever did was start the blog on the Bakken. Without question, without the blog I would not have kept up with things, and I certainly would not have had incredible good input from any number of readers.

There are so many energy stories out there, I cannot keep up. There are a number of non-Bakken energy stories that interest me more than others, because they help me put the Bakken in perspective; they help me better understand the oil and gas industry; and/or they help me understand the equity market.

One of the stories that has fascinated me is the Mexican energy story. RBN Energy has had a good series on Mexico, including a great article earlier today.

Now, SeekingAlpha is providing another update on Sempra Energy and Mexico. Like real estate, it's all about location, location, location, and in Sempra's case, being "next" to Mexico has been nothing but great news. One would have thought the same thing for MDU being in the heart of the Bakken, but that did not out so well. Whatever. I digress.

Back to Sempra. Over at SeekingAlpha:
  • Sempra Energy's IEnova Mexican unit says it raised $1.43B, pricing 344.9 million shares at 80 Mexican pesos/share ($4.22) in a global offering; the parent company participated in the capital increase, agreeing to buy shares for $350.7 million
  • IEnova will use the money to repay bridge financing for its recent $1.14B acquisition of state oil company Pemex's 50% stake in pipeline joint venture Gasoductos de Chihuahua, which is now wholly owned by IEnova, and to help finance the recent purchase of two wind farms in Mexico for $852M, including debt.
  • IEnova also is developing new projects; it owns 40% of a joint venture with TransCanada that won a contract from Mexico’s state electric utility to build a 500-mile, $2.1B offshore pipeline to carry natural gas from south Texas into Mexico.
I've blogged about Sempra, IEnova, and these issues at several posts earlier; this is one example, but a google search of the blog will provide additional posts. I assume the wind farms are being bought to a) comply with government mandates, current and future; and, b) to provide tax credits to offset their fossil fuel projects. I did not post that story, but it is being reported that Warren Buffett is making more off tax credits than he is producing electricity from wind/solar. I did not post it because it's a "dog-bites-man" story. 

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