Well, at least enough to buy a burger at Zach’s hamburgers…
Back in the 1970s, as a good loyal Duke Power employee, I bought company stock and forgot it. In 1997, Duke Power decided they wanted to be in the natural gas business, so they acquired Panenergy, which operated a number of natural gas companies. The company changed from Duke Power to Duke Energy.
In 2006, Duke Energy decided it no longer wanted to be in the natural gas business, so it spun off their natural gas transmission business in an entity called Spectra Energy, based in Houston. For each share of DUKe Energy stock, I got one share of Spectra Energy.
So I still own 64 shares of SE, and after I started buying individual stocks, bought another 400 shares. It is a reliable dividend, and a Beta of less than 1.0 (meaning it is less likely to up if stocks go up, less likely to go down if stocks go down). The thought process was as fracking picks up volume, it takes time to build new pipelines, so owners of existing pipelines are sitting in the driver’s seat.
Canadian pipeline company Enbridge thinks the same thing. Facing opposition in Canada from Trudeau, and opposition from Obama and the US State Department over the Keystone XL pipeline, they’ve concluded an Enbridge / Spectra merger makes sense, to the tune of $28 million.
Owning US pipelines with established rights of way means building new pipelines next to the existing pipelines without significant regulatory obstacles. Easements or leases are already in place. Won’t let us build Keystone XL? We’ll just expand the capacity of existing transnational pipelines and use a different path to get to Houston, or add refining capacity in NW Indiana.
Spectra just recently got approval to build a gas pipeline from Houston to Brownsville, to feed a New Mexican pipeline that will allow Mexico to switch power generation from oil to natural gas.
Earlier this Spring, Canadian gas pipeline company Transcanada made a cash offer to buy the Columbia Natural gas pipeline system. That acquisition closed on June 1st. Between the railroads and pipelines, not much is is going to move inside the United States except at the hands of Canadian companies.
Donald Trump – your move?
So SE went up $4.85 per share today, mirroring the offer from Enbridge.