When there is any kind of stock slit, merger, spinoff or something which affects the value of shares/units, all existing options contracts are adjusted to reflect whatever happened to the shares. Thus you then help adjusted NRGY options contracts. Your brokerage account should highlight that. For example in Etrade, I have a few adjusted options contracts and they are highlighted with a bold red exclamation mark. For any such, I can drill down and see the precise deliverable and strike price of the adjusted contract. Note that both the deliverable and the strike price may change in the adjusted options contract. In the case of NRGY, what I posted below was what I looked up as the NRGY adjusted options and it matches precisely with what you said happened in your account.
I don't follow NRGY that closely and have forgotten the exact terms of the NRGY-SPH deal, however you can look it up, and I'm sure that you will find it precisely matches the new deliverable on the adjusted options contract.
Bottom line: what happened with your account was correct and you have no cause to think the brokerage did anything wrong. You just need to review the terms of the NRGY-SPH deal and confirm it matches the adjusted options contract deliverable.
P.S. Reading your post again, the final result sounds correct, however I am not sure why it was not all done at the same time when your option got exercised - not sure why the full adjustment was delayed till the option expiration date. That does seem funny, however I never had that happen so cannot comment from personal experience how that usually works.
Thanks much, your further explanation made me look deeper at my account and it has become clear what happened. I did expect the adjustment and it happened as you say, except that, for no reason I can come up with, I had received 32 shares of SPH but only 30 of which had been called back when my option was exercised. The 2 shares that remained in my account I sold shortly after and forgot about them. At expiration the cash in lieu I received of SPH AND the value of those two SPH shares were taken. When I saw three times the cash in lieu amount I received was taken I thought there was a problem, having forgot about the extra 2 shares so you and my brokerage (ML) are correct.
Thanks again for your help.
FYI, we've had an ML account for many years and in general, trading goes well, however, to call support is a nightmare! Maybe we're on a "place on hold" list because, even for the simplest question, we get put on hold for about 45 mins. and, if it needs a higher level, as long or longer for each pass along. Just thought I'd explain why I went the forum route before calling ML.