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AltaGas to Purchase Tidewater Midstream Assets in $480 Million Deal
09/14/2023
AltaGas announced plans to acquire Tidewater's Phase 1 and II expansions of the Pipestone Natural Gas Processing Plant, a truck terminal, and related pipelines.
Recently AltaGas Ltd. revealed that it had finalized a deal with Tidewater Midstream and Infrastructure Ltd. to purchase an array of midstream assets, storage solutions, and terminals for a sum of CA$650 million (approximately US$480 million).
AltaGas will be taking ownership of Tidewater's Phase 1 and II expansion efforts for the Pipestone Natural Gas Processing Plant, as well as the nearby Dimsdale Natural Gas Storage Facility. In addition, the deal includes the acquisition of Pipestone's truck-in/truck-out condensate terminal and its affiliated pipeline networks.
The company stated that this acquisition is poised to enhance AltaGas's midstream operations by enlarging its presence in Alberta's Montney Shale. Furthermore, the deal is designed to secure a sustainable long-term supply of LPG to support AltaGas's global export initiatives.
Overview of the Pipestone Assets
- Pipestone Phase I: An advanced sour deep-cut gas processing facility situated in Alberta's Montney basin, featuring a processing throughput of 110 MMcf/d and a liquids handling capability of 20,000 bbl/d.
- Pipestone Condensate Terminal: A specialized truck-in/truck-out terminal engineered to maximize the value chain of Pipestone-derived liquid commodities.
- Pipestone Phase II: A fully-permitted, shovel-ready extension projected to contribute an additional 100 MMcf/d of sour deep-cut gas processing capacity and augment liquids handling by 20,000 bbl/d.
- Dimsdale Gas Storage: A high-caliber operational natural gas storage asset, proximally located to Pipestone I and II installations, with an extant working gas capacity of 15 Bcf, scalable up to 69 Bcf.
The total transaction value stands at $650 million, which includes $325 million in cash and the distribution of roughly 12.5 million AltaGas common shares to Tidewater. This acquisition hinges on both companies making a favorable Final Investment Decision (FID) for the Pipestone Phase II development. In a move to expedite the FID, AltaGas and Tidewater have forged a new joint venture aimed at completing the requisite steps for the project's construction and development. This partnership framework allows for continued cooperation on Pipestone Phase II, even if the primary acquisition fails to materialize.
AltaGas stated that the deal would represent an estimated 7.2x run-rate normalized EBITDA, factoring in synergies and additional capital investments for the Pipestone Phase II completion. Financially, the acquisition is projected to enhance earnings per share (EPS) by five percent from 2025 onwards, while contributing to a 0.1x decrease in the net debt-to-normalized EBITDA ratio, also starting in 2025.
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