Duke Energy buying Piedmont Natural Gas for about $4.9B

United States natural gas prices fell below $2 per million British thermal unit (MMBTU) during European trading on Tuesday, October 27. The project will link the gas fields located in West Virginia to Duke's North Carolina service area.

The PSC said that Kentucky's five major natural gas distribution companies expect their adjusted wholesale cost this November to be, on average, $3.85 per 1,000 cubic feet. Natural gas prices keep tumbling. Including debt, the value of the deal is $6.7 billion.

"Abundance of natural gas will become an increasingly important part of the energy mix as it shifts away from coal to continue", Good said.

"We have way more gas than the market ever could use in winter". LLC, a natural gas storage operator; Pine Needle LNG Co.

But whatever the weather or the cost of natural gas, consumers would still benefit by taking steps to reduce consumption, he said.

Gas prices are down by more than a third from this time past year, and have fallen by more than two-thirds from the peak reached in 2008, the PSC said. Natural gas is caught between growing supplies and falling demand. Buying a company like Piedmont could put Duke on a track to obtain customer growth of between 1.5 and 2 percent.

Compared to other peers in the Gas Utilities sector, Piedmont Natural hasn't performed in terms of quarterly revenue growth year over year at -0.04 vs. the industry average of 0.14.

In the 2014 election cycle, for example, Duke Energy's political action committee made over $1.5 million in contributions: $770,000 to federal candidates, $372,150 to state and local candidates, $208,500 to committees, $109,500 to national parties, and $58,250 to state and local parties, according to Center for Responsive Politics' OpenSecrets.org database. Antitrust clearance is also necessary. Deal details will be provided to Public Service Commission of South Carolina and the Tennessee Regulatory Authority, the companies said.

Lower natural gas prices mean lower revenues for natural gas producers such as Chesapeake Energy (CHK), Range Resources (RRC), QEP Resources (QEP), and Cabot Oil & Gas (COG). The regulated utility segment is the largest segment of its business. The $2 level for natural gas futures is a signal for natural gas exploration and production (E&P;) companies to lower their drilling activity, so that production decline and prices stabilize. Piedmont subsidiaries are invested in joint ventures (JV) such as unregulated retail natural gas marketing, regulated interstate natural gas transportation and storage, and regulated intrastate natural gas transportation businesses. These companies combined make up ~2% of the Vanguard Energy ETF (VDE).

Duke Energy will add one member of Piedmont's board of directors to its board after the transaction is closed.

Southern Company is in the process of acquiring AGL Resources, which is also a partner in Atlantic Coast (see Shale Daily, August 24).