Weekly energy report: Texas firm completes natgas supply to Tyson plants

by The City Wire staff ([email protected]) 125 views 

Little known Gateway Energy Corp. announced recently it has reached an agreement to purchase four natural gas pipelines that deliver natural gas into poultry processing and rendering plants owned by Tyson Foods Inc.

The Tyson plants reside in Center and Seguin, Texas; Sedalia, Mo. and Texarkana, according to Gateway officials. In connection with the acquisition, Gateway is also seeking to acquire long-term contracts with Tyson Foods to transport natural gas at a fixed tariff rate into each plant.

Houston-based Gateway is buying the natural gas pipeline assets from Laser Pipeline Company LP for $1.1 million. Company officials expect the deal to close “on or before October 22, 2010, if certain conditions are met.”

Gateway CEO Fred Pevow said purchasing the natural gas pipelines at Tyson plants will transform the small company, which has operated in the red for several quarters.

“First, it is immediately accretive to earnings and cash flow per share. Second, it increases the size and diversification of our asset base with long-term, stable cash flow.” Pevow said. “Third, we should be able to manage the new assets without a material increase in general and administrative expenses."

In the second quarter, Gateway reported a net loss of $957,009, or ($0.05) per diluted share.

Tyson spokesman Gary Mickelson said the Springdale-based meat giant will “continue to explore ways to ensure we’re buying natural gas in the most cost effective way possible.” Mickelson would not provide any information on Tyson tariff rate for natural gas and other energy-related costs at its facilities across the U.S. due to “proprietary reasons.”

While gasoline prices for Arkansas motorist have remained steady going into the fall driving season, diesel fuel costs have continue to pinch the transportation industry in the pocket.

At $2.69 per gallon, the U.S. average price for regular gasoline fell three cents from last week but was 20 cents above last year at this time, according to the Energy Information Administration.

The U.S. average price for diesel fuel fell 1 cent to $2.95 per gallon, but 35 cents above last year. The East Coast and Midwest prices were $2.95 per gallon and $2.93 per gallon, respectively.

The Gulf Coast price fell 1 cent to $2.88 per gallon. The Rocky Mountain average fell two cents to $3.01 per gallon. The West Coast average held at $3.12 per gallon, while the average in California fell a penny to $3.14 per gallon.

As most trucking firms wrap up their third quarter operations, the rising fuel prices and continued concerns about the economy have muted optimism in the sector. At the same time, Wall Street analysts recently downgraded several top trucking firms.

On Monday, Bank of America Corp.’s Merrill Lynch division downgraded shares of JB Hunt from a “neutral” rating to a “buy” rating in a research note to investors.  Merrill Lynch also lowered their price target from $41 to $39 a share.