The deal has a total consideration of $650m (C$877.5m) and includes the assumption of power leases at the Pipestone operation.
Under the deal, AltaGas will acquire Tidewater Midstream and Infrastructure’s Pipestone Natural Gas Processing Plant Phase I and Phase II expansion project; the adjacent Dimsdale natural gas storage facility; the Pipestone condensate truck-in/truck-out terminal; and the associated gathering pipeline systems to operate these assets.
In exchange, AltaGas will pay $325m in cash and issue around 12.5 million AltaGas common shares, with each share priced at $26.07.
Tidewater interim CEO Rob Colcleugh said: “We believe the transaction unlocks significant value for our shareholders while strengthening our balance sheet to better address opportunities across our diversified portfolio of energy and energy transition infrastructure assets.”
Proceeds from the transaction will be used by Tidewater for general corporate purposes including the repayment of its senior credit facility.
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Tidewater expects its remaining midstream assets to benefit from the surging demand for natural gas processing, extraction/fractionation, storage and marketing services in Western Canada.
In a press statement, AltaGas said: “The Pipestone transaction strengthens AltaGas’ midstream value chain through an expanded footprint in the Alberta Montney and provides meaningful long-term Liquified Petroleum Gas (LPG) supply for our global exports’ platform.”
Subject to customary closing conditions and regulatory approvals, the transaction is planned for completion in the fourth quarter of 2023.