AltaGas Ltd. has entered right into a definitive settlement with Tidewater Midstream and Infrastructure Ltd. to accumulate a number of Pipestone pure fuel belongings in Montney for a complete consideration of $481.7 million (CAD 650 million), “inclusive of synergies and the incremental capital that AltaGas will deploy to finish the Pipestone Part II growth challenge”, the businesses mentioned in separate information releases Thursday.
The belongings to be acquired embrace the Pipestone Pure Gasoline Processing Plant Part I and Part II enlargement challenge, the adjoining Dimsdale Pure Gasoline Storage Facility, the Pipestone condensate truck-in/truck-out terminal, and the related gathering pipeline methods required to function these belongings.
The acquisition is contingent on Tidewater and AltaGas making a constructive remaining funding resolution (FID) for the Pipestone Part II challenge. To facilitate reaching an FID, AltaGas and Tidewater are forming a brand new three way partnership (JV) to advance the ultimate steps required to develop and assemble the challenge. The phrases of the Pipestone JV will allow the events to proceed to collaborate on the Pipestone Part II challenge, even when the acquisition doesn’t proceed, AltaGas mentioned.
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The full consideration of $481.7 million (CAD 650 million) consists of $240.9 million (CAD 325 million) in money and the issuance of roughly 12.5 million AltaGas widespread shares to Tidewater, which will likely be priced at $19.32 (CAD 26.07), primarily based on AltaGas’ 10-day quantity weighted common worth as of August 30, with the shares to be issued and transferred to Tidewater on the time of closing and topic to typical closing changes, AltaGas mentioned.
AltaGas mentioned it plans to fund the transaction via a mix of short-term debt from the corporate’s present liquidity and the issuance of widespread fairness from the treasury. The transaction is topic to regulatory approvals and customary closing circumstances and is predicted to shut earlier than the top of 2023, the corporate mentioned.
AltaGas mentioned the transaction will strengthen its midstream worth chain via an expanded footprint within the Alberta Montney Formation and can present a “significant” long-term liquified petroleum fuel provide for its world export platform, including that the transaction is “anticipated to be 5 % EPS [earnings per share] accretive in 2025 ahead whereas being 0.1x internet debt to normalized EBITDA credit score accretive in 2025 ahead”.
Tidewater mentioned it expects to make use of the web proceeds from the transaction for common company functions, together with reimbursement for its senior credit score facility. Following the transaction, the corporate mentioned it should proceed to give attention to surfacing worth throughout its remaining midstream, downstream, and renewable fuels belongings.
The Pipestone Part I facility is a contemporary bitter deep-cut pure fuel plant with 110 million cubic ft per day (MMcfpd) of processing capability and 20,000 barrels per day (bpd) of liquids dealing with capability situated within the coronary heart of Alberta Montney, in response to AltaGas. The power is at present 100% contracted with roughly 85 % of the volumes coming from long-term take-or-pay contracts with credit-worthy prospects. The power contains 41.6 miles (67 kilometers) of pure fuel gathering pipelines which can be tied to key manufacturing areas and supply strategic egress connections to the Nova Gasoline Transmission Ltd. and the Alliance pipeline methods. The power additionally contains the Pipestone condensate truck-in/truck-out terminal for liquids dealing with and worth maximization.
Pipestone Part II is a totally permitted, shovel-ready enlargement challenge that may present an extra 100 MMcfpd of bitter deep-cut pure fuel processing capability and an extra 20,000 bpd of liquids dealing with capability, in response to AltaGas. Put up-FID, the challenge is predicted to be absolutely dedicated beneath agency take-or-pay and fee-for-service service agreements. Pipestone Part II is predicted to scale back working prices and improve run-time efficiencies for the broader Pipestone complicated.
The Dimsdale pure fuel storage facility is situated east of the Pipestone I and II amenities. Its present working fuel capability of 15 billion cubic ft (Bcf) could be elevated greater than four-fold to 69 Bcf. Linked to Alliance and NGTL pipeline methods, the storage facility supplies Pipestone prospects with egress certainty and will likely be one among solely three amenities in a position to serve the balancing wants of the Montney and Canadian LNG demand pulls mid-decade and would be the solely built-in processing and storage facility within the Montney, AltaGas mentioned. The power is situated upstream of the James River bottleneck factors.
“We’re excited that the Pipestone transaction will strengthen our Midstream worth chain”, AltaGas President and CEO Vern Yu mentioned. “The acquisition is in line with AltaGas’ long-term technique and supplies us the chance to help industry-leading producers’ progress plans in one among Canada’s most prolific useful resource performs. The belongings will ship extremely contracted take-or-pay and fee-for-service income that can even deliver significant long-term LPG [liquefied petroleum gas] provide for AltaGas’ world exports platform. The acquisition must also ship steady and rising earnings and money flows, which is able to ship sturdy long-term worth creation for our stakeholders whereas lowering danger and offering long-term credit score accretion.”
“We consider the transaction unlocks important worth for our shareholders whereas strengthening our stability sheet to raised deal with alternatives throughout our diversified portfolio of power and power transition infrastructure belongings”, Tidewater interim CEO Rob Colcleugh mentioned.
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