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Canadian Assets on Sale: Energy Transfer Sells Gas Processing Bussines to Pembina-KKR for $1.3 Billion04/19/2022
Under the agreement, Energy Transfer will sell its 51% interest in Energy Transfer Canada to the Pembina-KKR joint venture, for more than CA$1.6 billion (US$1.3 billion) including debt and preferred equity. KKR's funds already own the remaining stake.
TC’s assets include six natural gas processing plants with a combined operating capacity of 1.29 Bcf/d and an 848-mile natural gas gathering and transportation network in the Western Canadian Sedimentary Basin.
Through this agreement, Energy Transfer will be able to divest its high-quality Canadian assets at an attractive valuation, deleveraging its balance sheet and allowing it to redeploy capital within the U.S. market.
The Calgary-based company, Energy Transfer Canada, is one of Alberta's largest gas processors. As part of its portfolio of assets, the company owns six gas processing plants with a combined capacity of 1,290 MMcf/d, as well as a network of approximately 848 miles of natural gas gathering and transportation infrastructure.
As a result of the sale, Energy Transfer is slated to receive cash proceeds of approximately 340 million Canadian dollars (US$270 million), and close by the third quarter of 2022.
While this process is underway, Pembina and KKR will combine their western Canadian natural gas processing assets into a single, new joint venture entity — Newco, owned 60% by Pembina and 40% by KKR. Pembina will also be Newco's operator and manager.
This new entity will acquire Pembina's field-based natural gas processing, Veresen Midstream's portfolio (55% owned by KKR funds, 45% by Pembina), and ETC's business. And is expected to have a natural gas processing capacity of about 5 Bcf/d or about 16% of Western Canada’s total processing capacity. The worth of this joint venture will be around CA$11.4 billion (US$8.99 billion).
It is expected that all the deals will close late in the second or third quarter. According to Pembina, it plans to sell its interest in its Key Access Pipeline System as a way to finance the deal, and it is reviewing its portfolio for other noncore, nonoperating assets that might be sold in the process.
After the deal closes, Pembina plans to raise its dividend by 3.6%, as well as raise its share repurchase target to CA$350 million (US$275 million) from CA$200 million.
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Decades of free inventory from one deal: Vermilion Energy buys Leucrotta Exploration for $477 million
As part of its effort to expand its Montney Shale play, Vermilion Energy Inc. recently acquired Leucrotta Exploration Inc. for a net cash purchase price of CA$477 million. Vermilion has identified 275 high-quality, high-return, low-risk multi-zone drilling prospects. Top management believes, these prospects represent 20 or more years of low-risk, self-funding, high-deliverability shale drilling. Assuming the anticipated May closing date, Vermilion is increasing its capital budget for E&D in 2022 to $500 million and increasing guidance for production from 86,000 to 88,000 boe/d to take into account the Leucrotta acquisition.
By purchasing the gathering and processing assets of Trace Midstream, Williams' existing footprint gains expanded capacity in one of the nation's largest growth basins, bringing its Haynesville gathering capacity to over 4 Bcf/d — increasing more than 200% from 1.8 Bcf/d. The deal also includes a long-term commitment from Trace and Quantum to support Williams' Louisiana Energy Gateway project (LEG), which is aimed to deliver responsibly sourced Haynesville’s naturalgas to markets along the Texas and Louisiana GulfCoast
In order to sell its part of the sprawling Eagle Ford Shale acreage, Chesapeake Energy Corp. on January 18 concluded an agreement to trade its Brazos Valley region assets to WildFire Energy I LLC for $1.425 billion.
On January 6, Phillips 66 announced that it plans to acquire more than 43% of DCP Midstream LP for $3.8 billion, expanding the business in the oil & gas business.
On January 5 Northern Oil & Gas (NOG) concluded a deal to acquire working interests in Midland-Petro D.C. Partners LLC (MPDC)'s Mascot Project in the Midland Basin, according to a January 9 press release. Firstly estimated at $330 million in cash, the deal was signed with an additional 3.25% working interest added to the 36.7% agreed upon when the transaction was announced on October 19. NOG paid $29 million more for the additional interests, which now totalled 39.958%. Finally, the deal closed for $320 million in cash and $43 million in debt at signing in October with the finance of Minnetonka, Minn.-based NOG with cash on hand, operating free cash flow, and assistance from its revolving credit facility.