Pembina Pipeline has agreed to acquire stakes in Alliance Pipeline, Aux Sable and NRGreen JVs from Enbridge in a deal worth a total of C$3.1bn ($2.30bn).
Under the deal terms, Pembina will acquire Enbridge’s stakes in the Alliance, Aux Sable and NRGreen JVs and in the related operatorship contracts, collectively known as ‘acquired business’.
The deal consideration includes around C$327m of assumed debt that represents Enbridge’s proportionate share of Alliance’s total debt.
Currently, Pembina owns a 50% stake in Alliance, Aux Sable’s operations in Canada, and NRGreen and around a 42.7% stake in Aux Sable’s US operations.
It also operates certain assets of the acquired business pursuant to various operation services agreements (COSAs).
Enbridge serves as operator of the remaining assets of the acquired business as part of other COSAs.
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Upon completion of the deal, Pembina will have a 100% stake in Alliance, Aux Sable’s Canadian operations and NRGreen.
It will also own around a 85.4% stake in Aux Sable’s US operations.
Furthermore, Pembina will serve as the operator of all of the Alliance, Aux Sable and NRGreen businesses.
Pembina Pipeline executive vice-president and chief financial officer Pat Murray said: “With this divestiture, we will have raised ~$14bn since 2018 at attractive valuations.
“Today’s transaction reinforces our disciplined approach to capital allocation. We remain committed to optimising our portfolio, enhancing our industry-leading cash flow profile by reducing commodity price exposure, bolstering our financial flexibility and maintaining a strong balance sheet.”
The proceeds from the sales will be used to fund a portion of the strategic gas utilities’ acquisitions in the US and for reducing debt.
Alliance is engaged in delivering liquids-rich natural gas sourced in Northeast B.C., Northwest Alberta and the Bakken region to Chicago, US.
Aux Sable operates natural gas liquids extraction and fractionation facilities in Canada and the US.
Subject to satisfaction or waiver of customary closing conditions, including regulatory approvals, the transaction is expected to complete in the first half of 2024.