Pembina Gas to Acquire Veren's Oil Batteries in Alberta
Natural gas from the batteries is processed at PGI’s Patterson Creek Gas Plant and both the batteries and the Patterson Creek Gas Plant are connected to Pembina’s Peace Pipeline system.
Pembina Gas Infrastructure Inc. (PGI) is acquiring Veren Inc.'s Gold Creek and Karr area oil batteries in Alberta.
PGI is a Western Canadian focused gas processing entity jointly owned by Pembina Pipeline Corporation and KKR.
PGI will acquire four batteries in the Gold Creek and Karr areas, which include natural gas handling capacity of 320 million cubic feet per day and liquids handling capacity of 53,000 barrels per day. The net purchase price related to the acquisition of the batteries is $291 million (CAD 400 million), Pembina said in a news release. The transaction will initially be funded using PGI’s existing credit facility.
Natural gas from the batteries is processed at PGI’s Patterson Creek Gas Plant and both the batteries and the Patterson Creek Gas Plant are connected to Pembina’s Peace Pipeline system.
Veren will retain operatorship of the acquired assets, with operating costs and maintenance capital flowing through to Veren. Veren will also assume operatorship of the existing PGI-owned batteries in the area, according to the release.
Additionally, PGI will fund up to $218 million (CAD 300 million), of which approximately one-third has already been committed, for Veren’s future battery and gathering infrastructure in the area. Veren will construct and operate the batteries, and PGI will construct and operate high pressure gathering pipelines, Pembina said.
Closing is expected to occur in the fourth quarter and is subject to the satisfaction or waiver of customary closing conditions, including all required regulatory approvals, according to the release.
Veren will enter into a 15 year take-or-pay agreement for capacity at the acquired batteries, which also includes an area-of-dedication to PGI for gathering and processing services for all volumes Veren produces out of the Gold Creek and Karr areas.
"We are thrilled to enhance and further align our strategic partnership with Veren, a top-tier growth focused Montney and Duvernay producer," PGI President and CEO Chris Rousch said. "This transaction demonstrates how our collaborative approach to infrastructure solutions creates a compelling value proposition for our customers”.
Pembina said the transaction “strengthens the existing partnership with Veren, a leading North American producer with 20 years of premium drilling inventory and prolific assets in the Montney and the Duvernay”.
“The existing legacy agreements with PGI will be amalgamated under a simplified structure to include the newly purchased batteries, existing assets, and further Veren Infrastructure development, all underpinned by 15 year take-or-pay and area-of-dedication agreements,” Pembina said, noting that this represents significant term extensions on the legacy agreements. Further, PGI has eliminated future non-revenue generating capital obligations associated with the legacy agreements and has reduced its exposure to operating expenses, Pembina stated.
Further, the Transaction allows Veren to operate upstream gathering and battery infrastructure, while PGI will continue to operate the Patterson Creek Plant. The alignment “further supports increased drilling activity and corresponding volumes in Veren’s development plan, which will utilize existing unused capacity at PGI’s Patterson Creek Gas Plant,” Pembina noted.
In July, PGI announced the acquisition of a 50 percent working interest in the 15-07 Kaybob Complex of Whitecap Resources Inc., a Western Canadian Montney and Duvernay producer.
PGI has also executed an agreement to support future infrastructure development in Whitecap’s Lator growth area, according to an earlier news release.
The acquisition of interest in the Kaybob Complex includes natural gas processing capacity of 165 million cubic feet per day and condensate stabilization capacity of 15,000 barrels per day. Whitecap will retain operatorship of the assets. Whitecap will also enter into a long-term take-or-pay agreement for PGI’s capacity in the Kaybob Complex and will commit to an area of dedication to PGI for all volumes Whitecap produces out of the area, according to the release.
Further, PGI has agreed to fund Whitecap’s Lator area development, including a new battery and gathering lateral, which PGI will own. In exchange, Whitecap has entered into long-term take-or-pay agreements with PGI for priority access to the Lator Infrastructure.
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