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Pembina (PBA) to Acquire Enbridge's Joint Ventures for $2.3 Billion - C$3.1 Billion
12/15/2023
Pembina Pipeline Corporation PBA, a well-known player in the Canadian midstream sector, recently announced its plan to acquire Enbridge Inc.'s remaining shares in the Alliance Pipeline, Aux Sable pipelines, and NRGreen joint ventures. The deal, valued at C$3.1 billion or US$2.3 billion, marks a key step for Pembina in asserting its leadership in North America's natural gas transportation sector. This strategic acquisition is expected to considerably boost Pembina's growth and profitability in the coming years.
"The sales proceeds will fund a portion of the strategic U.S. gas utilities acquisitions and be used for debt reduction," Enbridge said.
Background Details
The Alliance Pipeline is an essential part of the North American energy infrastructure, stretching approximately 3,888 kilometers (2,414 miles). It plays a crucial role in transporting natural gas from western Canada to the bustling Chicago market.
Located in Illinois, the Aux Sable processing plant is a vital link in this chain, processing the natural gas liquids (NGL) from the pipeline.
“Alliance and Aux Sable are world-class energy infrastructure assets and increasing our ownership in them will further strengthen our growing franchise.”
- Scott Burrows, Pembina’s President and CEO
Acquisition Details
Pembina is set to acquire a 50% interest in Alliance and a 42.7% interest in Aux Sable, along with stakes in NRGreen joint ventures. Additionally, Pembina will take on C$327 million of Enbridge's debt in Alliance. This move is a big deal for Pembina, giving them full control over these critical assets and enhancing their flexibility and efficiency in operations.
- By taking over Enbridge's stakes, Pembina significantly expands its role in the natural gas transportation market.
- Owning both the Alliance Pipeline and Aux Sable plant means Pembina can operate more efficiently, saving costs and improving the integration of its gas transportation and processing operations.
- This move fits well with Pembina's growth plans. It helps the company diversify its business and reduce its dependence on any single type of commodity, potentially leading to more stable and growing revenues.
- With this acquisition, Pembina strengthens its ability to support the move towards cleaner energy, as natural gas and NGLs are key in this transition.
The deal is expected to close in the first half of 2024, pending regulatory approvals and standard closing conditions.
"The Alliance and Aux Sable system has been a reliable and profitable asset for Enbridge for many years. We would like to thank our high-quality team for their commitment to safety and reliability."
- Cynthia Hansen, EVP and President, Gas Transmission and Midstream
Pembina Pipeline Corporation (PBA) Overview
Pembina Pipeline Corporation, with over 65 years of service in North America's energy sector, specializes in energy transportation and midstream services. The company boasts a wide-ranging operation network, including hydrocarbon liquids and natural gas pipelines, gas processing facilities, and logistics services. For 2024, Pembina projects an adjusted EBITDA between $3.725 and $4.025 billion and plans a capital investment of $880 million, reflecting its commitment to providing reliable energy infrastructure. Its shares are traded on the Toronto and New York stock exchanges under the symbols PPL and PBA.
Enbridge Inc. Overview
Enbridge Inc., a longstanding energy company, is making strides in sustainable energy. Based in Calgary, Alberta, Enbridge is known for supplying natural gas, oil, and renewable power in North America and expanding into European offshore wind projects. With a history of over a century in traditional energy and two decades in renewables, the company is now focusing on innovative technologies like hydrogen and carbon capture to achieve net-zero emissions by 2050.
Enbridge's shares are listed on the Toronto and New York stock exchanges under the symbol ENB. The company's shift towards sustainable energy solutions reflects its commitment to a greener future
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