SRN NEWS

By Dietrich Knauth NEW YORK (Reuters) – A U.S. bankruptcy judge on Thursday approved Spirit Airlines’ debt restructuring, clearing the budget airline to convert $795 million in debt to equity and emerge from bankruptcy as a private company. U.S. Bankruptcy Judge Sean Lane approved the airline’s restructuring proposal at a court hearing in White Plains, New York. Spirit’s bankruptcy plan cancels existing equity shares and hands ownership to Spirit’s lenders, which include investment funds managed by Pacific Investment Management Company, UBS Asset Management and Citadel Advisors. Spirit’s bankruptcy deal includes a proposal to raise $350 million in additional financing through the sale of new equity shares. The airline has said it expects to emerge from bankruptcy in the first quarter of 2025. “We will emerge as a stronger airline with the financial flexibility to continue providing guests with enhanced travel experiences and greater value,” Spirit Airlines CEO Ted Christie said in a statement on Thursday. Spirit recently rejected a proposed acquisition by fellow budget airline Frontier Group, saying the proposed buyout offered less value for Spirit’s creditors than the bankruptcy restructuring. Frontier’s latest offer would have allowed Spirit Airlines to retain 19% of the company’s equity. But Spirit said the offer carried additional financial costs, including costs associated with a longer stay in bankruptcy, and more risks, including the risk that U.S. regulators would reject the merger of the two airlines. Lane said on Thursday that he would issue a written decision overruling objections raised by the U.S. Securities and Exchange Commission and the Office of the U.S. Trustee, which is the U.S. Justice Department’s bankruptcy watchdog. The SEC and U.S. Trustee had opposed the way that Spirit’s bankruptcy plan released shareholders’ and creditors’ legal claims against non-debtors, like Spirit’s lenders and its executives. Spirit improperly assumed that the creditors gave their “consent” to the deal unless they returned a separate “opt out” form, according to the two government agencies. (Reporting by Dietrich Knauth; Editing by Daniel Wallis) Brought to you by www.srnnews.com

By Nicole Jao NEW YORK (Reuters) – Top U.S. refiners are poised to seek alternative sources for heavy, sour crudes, including running more domestic grades, as they await clarity around U.S. President Donald Trump’s threatened tariffs on imports from the nation’s top crude suppliers Canada and Mexico, executives said. Running more domestic crude, which is predominantly light, sweet shale oil, through U.S. refineries could be a win for Trump, who has vowed to boost the nation’s energy production and championed the fossil fuel industry. The tariffs, however, have generated concern among refiners, who are already watching profits slide from record highs in 2022 on softer demand, as they would now take a hit from higher feedstock costs. More than 70% of U.S. processing capacity is configured to run heavier grades, which are cheaper to import from Canada and Mexico. Trump, who took office on January 20, plans to charge a 25% tariff on Mexican crude and a 10% levy on Canadian crude beginning in March, a delay from his original plan. Canada, the biggest oil supplier to the U.S., exports some 4 million barrels per day (bpd) of crude into the U.S., 70% of which is processed by Mid-Continent refiners. Marathon Petroleum, the top U.S. refiner by volume, said its refineries in the Mid-Continent region could switch from processing heavy sour crude to other grades. “We could look to pivot to alternative crudes because of our logistics capabilities,” Rick Hessling, chief commercial officer at Marathon Petroleum, told investors during the company’s fourth-quarter earnings call this month. Hessling added that domestic crude from the Bakken shale formation in North Dakota and the Rocky Mountains could be among their options. Ohio-based Marathon operates 13 refineries in the U.S., six of which are located in the Midwest. Its 253,000-bpd refinery in Robinson, Illinois, processes large amounts of heavy crude from Canada. The refiner warned that costs could rise if Trump’s tariff plans go through, but the burden would primarily be borne by Canadian oil producers and, to a lesser extent, U.S. consumers. “We’re working with the administration and we’re working with agencies, as well as the trade associations, to be sure that the right people understand the implications of these decisions,” Marathon CEO Maryann Mannen said. Texas-based HF Sinclair, which operates seven complex refineries, could process more light sweet crude. “What we believe in our refineries is we have the ability to lighten up,” Steve Ledbetter, executive vice president of commercial at HF Sinclair, said during the company’s earnings call on Thursday. Its refining system is connected to the key crude oil delivery hub in Cushing, Oklahoma, Ledbetter added. Its 94,000-bpd oil refinery located in Sinclair, Wyoming, and 135,000-bpd refinery in El Dorado, Kansas, need to run a certain amount of heavy crude, he said. “But we can minimize what that is and introduce a lighter slate.” Independent refiner Delek, which operates four inland refineries, could run more light, sweet crude if it is economic to do so, its CEO Avigal Soreg said earlier this month. “We have knobs to open,” he said, emphasizing that the company would do whatever was most economic. However, converting units to process lighter crudes economically would require refiners to invest in new equipment. Lighter crude tends to produce higher volumes of petrochemical feedstock naphtha and less of the more profitable diesel and jet fuel, which could also force some operators to reduce the amount of crude they run overall. “If you’re configured to run heavy sour crude in the Midwest, your other options, broadly, are not going to be as desirable, as economic,” said Jason Gabelman, analyst at TD Cowen. TD analysts expect U.S. refiners that run Canadian crude on the margin to switch to light sweet crude, thereby increasing the prices of U.S. benchmark West Texas Intermediate crude futures (WTI) and global benchmark Brent crude. Both benchmarks are light sweet grades. Inland refiners that run Canadian crude as a core part of their diet would likely stick with their current crude slate, the analysts said. Phillips 66, HF Sinclair and Par Pacific Holdings have elevated exposure to Canadian crude, data from TD Cowen shows. Besides the lower transportation costs due to proximity, the price of a barrel of Canadian oil is still far cheaper for Midwest refiners than a comparative local grade produced in the Gulf of Mexico. A barrel of Western Canada Select (WCS) heavy crude in Hardisty, Alberta, was reported to trade last at about $13 under WTI, compared with Mars Sour, a U.S. medium sour crude produced along the U.S. Gulf of Mexico, at about a $2 premium to WTI. BRACING FOR IMPACT Ahead of the impending tariffs, U.S. imports of Canadian crude hit record highs in January. Valero Energy, the second largest U.S. refiner, anticipates a reduction in refining throughput if heavy crude feedstocks become limited, executives said during the company’s earnings call last month. “A lot depends on how far it goes and how deep you have to back off on some of those heavy barrels,” said Greg Bram, vice president of refining services. The San Antonio-based refiner’s 360,000-bpd Port Arthur refinery in Texas processes Mexican heavy sour crude oil into gasoline, diesel and jet fuel. “The Mid-Con needs Canadian oil to maintain throughput,” said PBF Energy CEO Matthew Lucey. “Anytime that there’s going to be disruption of that size, if it happens, it will have some impact on throughput.” Houston-based Phillips 66 said the tariffs may divert Canadian oil away from the U.S. at first, while the 457,000 bpd of Mexican crude that comes into the U.S. could move to Europe or Asia instead. “Without having really any clarity on what’s going to happen, there is no way we can really speculate on how we deal with it. We’re just going to have to deal with it when it comes up,” said Valero’s Chief Operating Officer Gary Simmons. (Reporting by Nicole Jao in New York; Editing by Liz Hampton and Marguerita Choy) Brought to you by www.srnnews.com

By Kemol King and Marianna Parraga GEORGETOWN (Reuters) – Suriname’s Staatsolie needs to secure an unprecedented $1.5 billion in bank financing this year to ensure it can participate in the country’s Gran Morgu energy project, the head of the state-owned company told Reuters. The project, led by TotalEnergies, is Suriname’s first major offshore project. The country has discovered reserves that may allow it to compete with neighbor Guyana as a prominent offshore crude- and gas-producing country once it sees the first oil in 2028. Staatsolie wants to partner with TotalEnergies and APA Corp in the project, to be developed at Block 58, which received a positive final investment decision in October. “We are talking to big banks in the world to finance,” Staatsolie’s managing director, Annand Jagesar, told Reuters in an interview on the sidelines of an industry conference in Guyana. “They’re very eager to do it.” He did not disclose the potential financiers. The oil and gas development is expected to cost about $12.2 billion in real terms. Staatsolie’s share in Gran Morgu would require $2.4 billion. The project’s development, which Jagesar said is 10% complete after a set of initial contracts worth up to $7 billion were secured, will need major investments from all partners. Staatsolie already paid $175 million of its own cash, with another payment deadline coming up this year. The company has also issued bonds to cover a portion of the capital requirement. For Staatsolie, this participation represents a first step towards the challenge of doubling the size of the company. “To participate and to learn from the big boys, that fits perfectly in our strategy,” Jagesar told Reuters. RAPID GROWTH The company sees its revenue almost tripling by 2029 to $1.77 billion, according to a company prospectus issued when it launched its most recent bonds. The biggest challenge for the company is raising cash soon enough to participate in big-ticket offshore projects. The state company may need to raise even more money in coming years if it decides to participate in a natural gas project to be operated by Malaysia’s Petronas, which is expected to have a final investment decision next year. Jagesar said it is Staatsolie’s intention to participate in Petronas’ Block 52, which could be the South American country’s first development completely focused on natural gas. Development of Block 52 could cost some $10 billion, with a potential 2031 start date, according to consultancy Wood Mackenzie. Staatsolie would have to raise another $2 billion to secure its 20% stake. However, the company’s participation in Block 58 could earn it about $700 million a year at peak production, Wood Mackenzie added. “The cash flow collected will alleviate many of the financing needs,” Wood Mackenzie’s Upstream Research analyst Luiz Hayum told Reuters. The timeline could play in Staatsolie’s favour, he said, as most of the Block 52 expenses would be done during the 2028-2031 period, after production begins at Block 58. (Reporting by Kemol King and Marianna Parraga; Editing by Simon Webb and Lisa Shumaker) Brought to you by www.srnnews.com

(Reuters) – Jennifer Granholm, the former U.S. secretary of energy and a Democratic two-term governor of Michigan, has been appointed to the boards of Edison International and its subsidiary, Southern California Edison, effective April 1, the company announced on Thursday. Granholm brings extensive experience in energy policy, particularly in advancing clean energy initiatives and zero-carbon technologies, from both her time in the Biden administration and her tenure leading Michigan. “We’re thrilled she is joining our boards, and we look forward to the guidance she will provide based on her understanding of the technical, political and economic forces shaping our industry today.” said Pedro J. Pizarro, president and CEO of Edison International, in a statement. The announcement comes as Southern California Edison faces multiple lawsuits alleging that its electrical equipment was responsible for igniting one of the major wildfires that have recently burned through the Los Angeles area, according to court filings from last month. (Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Alistair Bell) Brought to you by www.srnnews.com

WASHINGTON (Reuters) – Billionaire Elon Musk said on Thursday he is thinking of auditing the Federal Reserve, after calling for greater scrutiny of the central bank in the past. Musk made the comment at the Conservative Political Action Conference in National Harbor, Maryland. Musk’s cost-cutting program under the Department of Government Efficiency has swept through federal agencies since Donald Trump began his second term as president last month. (Reporting by Steve Holland and Nandita Bose in Washington; Editing by Chris Reese) Brought to you by www.srnnews.com