Benchmarks: Energy and Utility Networks

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energy and utility networks

This page provides some benchmarks, from energy and utility networks, for acquisitions and disposals during recent telecommunication booms and busts and the dot-com bubble.

It covers -

introduction
oil
electricity
water
gas
studies

There is a broader discussion of the electricity revolutions, of energy in the information economy and of utilicoms elsewhere on this site.

introduction

In explaning what went on in the energy and water sectors we can identify a range of reasons for the shape and extent of spending -

oil giants were wary about diversification, having been burnt by expansion into areas such as retailing and containers (eg Mobil) and alternative energy sources (eg Exxon, BP and Shell)
it was often cheaper (or merely easier) to buy a competitor than find/develop new reserves
enthusiasts made the case that the best defence in a supposedly 'eat or be eaten' environment was acquisition
perceptions that technical and management expertise was readily transferrable between markets
managers and M&A specialists underestimated regulatory constraints and misread signals about economic downturns, accordingly paying too much for assets (which were subsequently offloaded to competitors)
managers and directors confused personal ego and corporate interest amid the dance of what Michael Lewis calls the 'big swinging dicks'
assets were available for the first time through privatisation of government infrastructure/energy networks, coupled with ready access to finance from mutual funds, leveraged funds and other sources.

oil

Oil industry landmarks include -

Shell buys Belridge for US$3.6bn in 1979
du Pont buys Conoco for US$8.0bn in 1981
US Steel buys Marathon for US$6.6bn in 1981
Societe Nationale Elf Aquitaine buys Texasgulf for US$4.2bn in 1981
Occidental buys Cities Service for US$4.1bn in 1982
Chevron [Socal] buys Gulf for US$13.2bn in 1984
Texaco buys Getty in 1984
Mobil buys Superior for US$5.7bn in 1984
US Steel buys Texas Oil & Gas for US$4.0bn in 1985
Occidental buys MidCon for US$3.0bn in 1985
Amoco buys Dome Petroleum for US$4.1bn in 1987
Exxon buys Texaco Canada for US$4.1bn in 1989
Exxon joins with Mobil in US$250bn merger in 1999
BP buys Amoco for US$50bn in 1999
BP Amoco pays £3bn for Burmah Castrol in 1999
Enron sells stake in Enron Oil & Gas for US$600m in 1999
Total acquires Petrofina for US$11bn in 1999, becomes Total Fina
Repsol buys YPF for US$15bn in 1999
Total Fina buys Elf Aquitaine for US$48.8bn in 1999
BP buys ARCO for US$27bn in 2000
Shell and BP Amoco sell Altura for US$3.6bn in 2000
Tractebel buys Cabot LNG for US$680m in 2000
Chevron acquires Texaco for US$36bn in 2001
Phillips Petroleum acquires Tosco in 2001
Dominion buys Louis Dreyfus Natural Gas for US$1.7bn in 2001
Conoco and Phillips merge in 2001
Royal Dutch/Shell buys Pennzoil-Quaker State for US$3.2bn in 2002
RWE pays €4.1bn for Czech natural gas importer Transgas and eight regional gas distributors
China National Petroleum buys PetroKazakhstan for US$4.18bn
E.On buys Caledonia Oil & Gas for US$835m in 2005
ConocoPhillips agrees to acquire Burlington Resources for US$35.6bn in 2005
Cal Dive International agrees to pay US$1.4bn for Remington Oil & Gas in 2006

electricity

Contemporary examples of smart, unwise (or merely unlucky) buying in the electricity generation and distribution sector are -

PacifiCorp buys Powercor from Victorian government for $2.1bn in 1995
Victorian government sells CitiPower to Entergy for $1.57bn in 1995
Ohio Edison and Centerior merge as FirstEnergy in $4.8bn deal in 1996
Duke Energy buys PanEnergy for US $9.8bn in 1997
Enron buys Portland General Electric (PGE) in 1997
Entergy sells CitiPower business to American Electric Power (AEP) for $1.7bn in 1998
ScottishPower buys PacifiCorp for US$10.3bn in 1998
Sithe Energies buys fossil fuel and hydroelectric facilities of General Public Utilities (GPU) for US$1.7bn in 1999
Cheung Kong Infrastructure (CKI) and Hongkong Electric buy ETSA from South Australian government for $3.4bn in 1999
BEC Energy acquires Commonwealth Energy System in US$4.4bn merger
ScottishPower sells Powercor to Cheung Kong and Hongkong Electric for $2.31bn in 2000
ScottishPower sells PacifiCorp to Warren Buffett's MidAmerican for US$9.1bn in 2000
Veba buys EZH for €900m in 2000
Powergen's acquires LG&E Energy for US$5.4bn in 2000
Veba and VIAG merge as E.on in 2000
Singapore Power buys PowerNet in Victoria for $2.1bn in 2000
CKI and Hongkong Electric sell Powercor electricity retail business to Origin Energy for $315m in 2001
Duke Energy buys Westcoast Energy for US$8.5bn in 2001
FirstEnergy buys GPU for pver US$4.5bn in 2001
CKI buys CitiPower from AEP for $1.5bn in 2002
RWE buys Powergen for €15bn in 2002
RWE buys Innogy Holdings for €8.4bn in 2002
National Grid buys Niagara Mohawk for US$8.9bn in 2002
RWE buys Elektrizitaetwerke Wesertal from Fortum for €545m in 2002
Edison Mission sells Edison Australia, Asia and Europe to International Power and Mitsui for US$5.5bn
E.On buys Midlands Electricity for US$1.4bn in 2003
RWE buys Graninge in Sweden for €530m in 2003
Alinta buys Duke Energy's Asia-Pacific assets for $1.69bn in 2004
Texas Genco sold by CenterPoint Energy to Texas Pacific consortium for US$0.9bn in 2004
Exelon agrees to buy Public Service Enterprise Group (PSE&G) for US$13bn in 2004
Dynegy sells Illinois Power to Ameren for US$2.3bn in 2004
TXU sells Australian operation to Singapore Power for $5.6bn in 2004
Prime Infrastructure Group pays $NZ680m for Powerco in 2004
Duke buys Cinergy for US$9.1bn in 2005
AGL buys Southern Hydro for $1.43bn in 2005
NRG Energy buys Texas Genco for US$5.8bn in 2005
E.ON abandons US$19.4 takeover of Scottish Power 2005
Singapore Power spins off stake in Spark for $1.4bn in 2005
Babcock & Brown buys Portuguese wind energy and hydropower producer Enersis II SGPS for US$590m in 2005
Florida Power & Light agrees to acquire Constellation Energy Group for US$11bn in 2005
Gas Natural bids €22.5bn for Endesa in 2006

water

Examples from the water sector are -

ScottishPower buys Southern Water for £3.2bn in 1996
Enron buys Wessex Water for US$3bn in 1998
Kelda buys Aquarion for US$446m in 1999
RWE buys Thames Water for £6.8bn in 2000
Suez Lyonnaise des Eaux buys United Water Resources for US$1bn in 2000
RWE buys American Water Works for £4.2bn in 2001
ScottishPower sells Southern Water for £2.1bn in 2002
Wessex Water acquired by YTL for £1.24bn in 2002 after Enron collapse
Suez sells 75% stake in Northumbian Water for around £1.65bn in 2003
CKI buys Cambridge Water from Union Fenosa for £51m in 2004

Other infrastructure is highlighted later in this note.

gas

Examples from the gas distribution sector are -

Victorian government privatises gas network assets - Westar/Kinetik (for $1.67bn), Multinet/Ikon ($1.9bn) and Stratus/Energy 21 ($1.67bn) - in 1999
Transmission Pipelines Australia sold to General Public Utilities for $1bn in 1999
AlintaGas listed on ASX, 45% sold to United Energy and Utilicorp consortium for $1.4bn in 2000
RWE buys Transgas and Innogy for US$11bn in 2002
TXU sells TXU Gas Company to Atmos for US$1.9bn in 2004
CKI and United Utilities buy North England Gas Distribution Network from National Grid Transco for £1.3bn in 2005
Bass family agrees to sell the gas pipeline company Sid Richardson Energy Services to Southern Union for US$1.6n in 2005
Southern Union Company agrees to sell PG Energy to UGI for US$580m in 2005
National Grid buys Southern Union's Rhode Island gas distribution operations for £329m in 2006

studies

Works on oil, gas and electricity markets and business are highlighted in the discussion of energy as part of the Information Economy guide elsewhere on this site. They include Daniel Yergin's lucid The Prize: The Epic Quest for Oil, Money, and Power (New York: Simon & Schuster 1991) and Jeremy Leggett's The Carbon War: Dispatches from the End of the Oil Era (London: Allen Lane 1999).

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