AltaGas has agreed to acquire Pipestone and Dimsdale natural gas assets in Canada, from Tidewater Midstream and Infrastructure, for a total consideration of C$650m ($481.7m).
The acquisition includes Pipestone natural gas processing plant Phase 1 and Phase 2 expansion project, and Dimsdale Natural Gas Storage Facility.
It also includes Pipestone condensate truck-in/truck-out terminal and related gathering pipeline systems, which are required to operate these assets.
The Canada-based energy company will pay $325m in cash and issue around 12.5 million AltaGas common shares, at a price of $26.07 per each share.
AltaGas president and CEO Vern Yu said: “We are excited that the Pipestone transaction will strengthen our Midstream value chain. The acquisition is consistent with AltaGas’ long-term strategy and provides us the opportunity to support industry-leading producers’ growth plans in one of Canada’s most prolific resource plays.
“The assets will deliver highly contracted take-or-pay and fee-for-service revenue that will also bring meaningful long-term LPG supply for AltaGas’ global exports platform.
“The acquisition should also deliver stable and growing earnings and cash flows, which will deliver strong long-term value creation for our stakeholders while reducing risk and providing long-term credit accretion.”
AltaGas said that the transaction will strengthen its midstream value chain through an expanded footprint in Alberta Montney and provide a long-term LPG supply for its global export platform.
The Phase 1 Pipestone facility is a modern sour deep-cut natural gas plant with 110MMcf/d of processing capacity and 20,000Bbls/d of liquids handling capacity.
It includes 67km of natural gas gathering pipelines and provides strategic egress connections to the NGTL and the Alliance pipeline systems.
The facility also includes the Pipestone condensate truck-in/truck-out terminal for liquids handling and value maximisation.
The Phase 2 Pipestone project is a fully permitted expansion project that will provide an additional 100MMcf/d of sour deep-cut natural gas processing capacity and an additional 20,000Bbls/d of liquids handling capabilities.
Dimsdale Gas Storage is a premier operational natural gas storage facility located east of the Pipestone 1 and 2 facilities, with a current working gas capacity of 15Bcf.
RBC Capital Markets served as financial advisors and Burnet Duckworth & Palmer as legal advisors to the Canadian energy company, on this transaction.
Yu added: “The Dimsdale Facility is a strategic natural gas storage asset that connects to the NGTL and Alliance pipeline systems and will provide Pipestone customers with egress certainty and the ability to manage pipeline maintenance and service disruptions in the years ahead.
“The Dimsdale Facility will also be one of only three facilities that will be able to serve the balancing needs of the Montney and Canadian LNG demand pulls mid-decade and will be the only integrated processing and storage facility in the Montney.
“The facility has current working storage capacity of 15 Bcf with the ability to more than quadruple effective capacity to 69 Bcf on attractive incremental capital investments.”
