CALGARY, Alberta, September 2, 2014 /PRNewswire/ --
Acquisition of Bakken ethane pipeline adds additional
fee-for-service pipeline infrastructure to Pembina's portfolio and establishes new growth
platform
Pembina Pipeline Corporation ("Pembina" or "the Company") (TSX: PPL; NYSE:
PBA) is pleased to announce that it has entered into agreements to
acquire the Vantage pipeline system ("Vantage") and Mistral
Midstream Inc.'s ("Mistral") interest in the Saskatchewan Ethane
Extraction Plant ("SEEP") for total consideration of US$650 million, subject to traditional closing
adjustments, ("the Transaction") from certain entities affiliated
with Riverstone Holdings LLC (the "Seller").
Transaction Highlights
Vantage is a recently constructed, approximately 700 kilometre
("km"), 40,000 barrel per day ("bpd"), high vapour pressure
pipeline that originates in Tioga, North
Dakota and terminates near Empress, Alberta. Vantage provides long-term,
fee-for-service cash flow and strategic access to the prolific and
growing North Dakota Bakken play for future natural gas liquids
("NGL") opportunities. Key Transaction highlights include:
- Geographic Diversification: The Transaction provides
geographic diversification of Pembina's pipeline and midstream
infrastructure, providing access to a new and prolific resource
play in North Dakota.
- Committed Volumes: Vantage is underpinned by a
long-term, take-or-pay transportation contract.
- Expansion Opportunities: Vantage is sized to reach an
ultimate capacity of approximately 60,000 bpd through modest
capital investment via the addition of two quarter point pump
stations.
- Cash Flow Per Share Accretion: The Transaction is
expected to be neutral to cash flow per share in 2015 and accretive
in 2016 on the basis of minimum volumes currently under contract
and a full year contribution from SEEP. Pembina foresees the potential for significant
accretion as additional volumes are secured.
"I am very happy to announce our agreement to acquire Vantage
and SEEP," said Mick Dilger,
Pembina's President and Chief
Executive Officer. "We have watched the development of these assets
with great interest as they represent an excellent opportunity to
expand our footprint into one of the most promising hydrocarbon
plays in North America and, as
such, the Transaction is a low-risk, logical step-out for
Pembina. We are excited to add
this infrastructure to our leading portfolio of pipeline assets.
Not only will the Transaction augment our fee-for-service cash flow
stream, but we expect opportunities associated with both Vantage
and SEEP to result in long-term shareholder value."
Description of Acquired Assets under the
Transaction
Vantage links a growing supply of ethane from the prolific North
Dakota Bakken play to the petrochemical market in Alberta. It originates from a large-scale gas
plant in Tioga, North Dakota
extending northwest, through Saskatchewan and terminating near Empress, Alberta, where it is connected to the
Alberta Ethane Gathering System ("AEGS") pipeline.
As part of the Transaction, Pembina is also acquiring pipeline
infrastructure from Mistral and Mistral's interest in SEEP, a
development-stage, 60 million cubic feet per day ("MMcf/d") (54
MMcf/d net to Pembina) deep cut
gas processing facility that is centrally located to service the
southeast Saskatchewan Bakken region. The pipeline infrastructure
includes an approximately 105 km, four inch ethane pipeline and an
approximately 75 km gas gathering pipeline, both of which are
currently under construction. SEEP will receive liquids-rich gas
produced from the Viewfield and the Flat Lake gas plants and from
TransGas' local system. The facility is underpinned by both a
long-term ethane sales agreement and a long-term, fee-for-service
processing agreement. SEEP is expected to produce approximately
4,500 bpd of ethane and will connect into Vantage through a
pipeline lateral that is also currently under construction.
Pembina expects SEEP and the
associated pipeline lateral to be in-service in mid-2015.
Pembina anticipates incurring
additional capital expenditures of approximately C$100 million (net to Pembina) prior to the end of 2015 in
connection with the Transaction in order to complete the
construction of SEEP and the associated gathering and delivery
system.
Stuart Taylor, Pembina's Senior Vice President, NGL &
Natural Gas Facilities commented: "SEEP and its associated pipeline
infrastructure are very attractive to Pembina. With these assets, we'll be making a
low-risk entry into the prolific Bakken play in Saskatchewan and we'll be adding another
fee-for-service gas plant to our portfolio."
Transaction Details
Pembina will acquire all the
issued and outstanding shares of Vantage Pipeline Canada ULC,
Vantage Pipeline US LP and Mistral and repay Vantage's bank
indebtedness of approximately US$224
million at closing. Pembina
intends to use cash of US$395 million
and US$255 million in common shares
to fund the Transaction. The Company expects to fund a portion of
the cash consideration with a bought-deal preferred share issuance
and existing credit capacity. The US$255
million common share portion will result in 5.61 million
shares being issued to the Seller.
The Transaction is subject to regulatory approvals (including
approval of the National Energy Board and under the Competition
Act (Canada) and
the Canada Transportation Act) and other customary closing
conditions, including the approval of the Toronto Stock Exchange.
The Transaction will have an effective date of August 1, 2014, and is expected to close in the
fourth quarter of 2014.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in
the United States. The securities
have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") or
any state securities laws and may not be offered or sold within
the United States or to U.S.
Persons unless registered under the U.S. Securities Act and
applicable state securities laws or an exemption from such
registration is available.
Advisors
CIBC is acting as exclusive financial advisor to Pembina, Blake, Cassels & Graydon LLP is
acting as Canadian legal counsel and Bracewell & Giuliani LLP
is acting as US counsel.
About Pembina
Calgary-based Pembina Pipeline
Corporation is a leading transportation and midstream service
provider that has been serving North
America's energy industry for 60 years. Pembina owns and operates pipelines that
transport various hydrocarbon liquids including conventional and
synthetic crude oil, heavy oil and oil sands products, condensate
(diluent) and natural gas liquids produced in western Canada. The Company also owns and operates gas
gathering and processing facilities and an oil and natural gas
liquids infrastructure and logistics business. With facilities
strategically located in western Canada and in natural gas liquids markets in
eastern Canada and the U.S.,
Pembina also offers a full
spectrum of midstream and marketing services that spans across its
operations. Pembina's integrated
assets and commercial operations enable it to offer services needed
by the energy sector along the hydrocarbon value chain.
Forward-Looking Statements &
Information
This document contains certain forward-looking statements and
information (collectively, "forward-looking statements") within the
meaning of the "safe harbor" provisions of applicable securities
legislation that are based on Pembina's current expectations, estimates,
projections and assumptions in light of its experience and its
perception of historical trends. In some cases, forward-looking
statements can be identified by terminology such as "expects",
"will", "expand", "would", "plans" and similar expressions
suggesting future events or future performance.
In particular, this document contains forward-looking
statements, pertaining to, without limitation, the following: the
Transaction, including the expected closing date of the Transaction
and the anticipated benefits of the Transaction to Pembina; the planned capacity of SEEP; the
anticipated capital expenditures related to Vantage and SEEP; the
expected in-service date of SEEP; expansion opportunities related
to Vantage; the ongoing utilization and expansions of and additions
to Pembina's business and asset
base, growth and growth potential. These forward-looking statements
and information are being made by Pembina based on certain assumptions that
Pembina has made in respect
thereof as at the date of this document including those discussed
below.
With respect to forward-looking statements contained in this
document, Pembina has made
assumptions regarding, among other things: the ability of the
parties to satisfy the conditions to closing of the Transaction in
a timely manner; ongoing utilization and future expansion,
development, growth and performance of Pembina's business and asset base; future
demand for fractionation and transportation services; future levels
of oil and natural gas development; and potential revenue and cash
flow enhancement; future cash flows.
Although Pembina believes
the expectations and material factors and assumptions reflected in
these forward-looking statements are reasonable as of the date
hereof, there can be no assurance that these expectations, factors
and assumptions will prove to be correct. Readers are cautioned
that events or circumstances could cause results to differ
materially from those predicted, forecasted or projected. By their
nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties that contribute to the
possibility that the predictions, forecasts, projections and other
forward-looking statements will not occur, which may cause actual
performance and financial results in future periods to differ
materially from any projections of future performance or results
expressed or implied by such forward-looking statements and
information. Risks and uncertainties inherent in the nature of the
Transaction include the failure the parties to satisfy the
conditions to the Transaction, including required regulatory
approvals, in a timely manner, or at all. Failure to so obtain such
approvals, or the failure to otherwise satisfy the conditions to
the Transaction, may result in the Transaction not being completed
on the proposed terms, or at all.
None of the forward-looking statements described above are
guarantees of future performance and are subject to a number of
known and unknown risks and uncertainties, including, but not
limited to: the failure to realize the anticipated benefits of the
Transaction following closing due to integration issues or
otherwise; the impact of competitive entities and pricing; reliance
on key industry partners, alliances and agreements; the strength
and operations of the oil and natural gas production industry and
related commodity prices; the continuation or completion of third-
party projects; regulatory environment and inability to obtain
required regulatory approvals; tax laws and treatment; fluctuations
in operating results; lower than anticipated results of operations
and accretion from Pembina's
business initiatives; reduced amounts of cash available for
dividends to shareholders; the ability of Pembina to raise sufficient capital (or to
raise capital on favourable terms) to complete future projects and
satisfy future commitments.
The forward-looking statements contained in this document
speak only as of the date of this document. Pembina does not undertake any obligation to
publicly update or revise any forward-looking statements or
information contained herein, except as required by applicable
laws. The forward-looking statements contained in this document are
expressly qualified by this cautionary statement.
Pembina Pipeline® is a registered trademark of Pembina
Pipeline Corporation.
For further information:
Investor Inquiries:
Scott Burrows
Vice President, Capital Markets
+1-(403)-231-3156
1-855-880-7404
e-mail: investor-relations@pembina.com
Media Inquiries:
Laura Lunt
Senior Manager, Regulatory, Environment & External
Relations
+1-(403)-231-7500