Tundra Energy to Acquire Enbridge’s South East Saskatchewan Pipeline System for $817 Million
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Privately-held Canadian energy infrastructure company Tundra Energy Marketing has signed an agreement to acquire pipeline system in South East Saskatchewan, Canada from an affiliate of Enbridge Income Fund for C$1.075bn ($817m).
Under the terms of the deal, Enbridge will sell its pipeline network, which includes liquids pipelines and facilities in southeast Saskatchewan and southwest Manitoba.
The South East Saskatchewan pipeline system comprise more than 1,600km of crude oil and liquids gathering pipelines, 547km of trunk line and four truck terminals.
Enbridge Income Fund Holdings president Perry Schuldhaus said the deal allows the Fund to monetize non-core assets at an attractive valuation.
Schuldhaus said: “We expect the transaction to be accretive to the Fund Group’s available cash flow from operations on a per unit basis and to generate a pre-tax gain of approximately $850m.”
The pipeline system is designed to transport approximately 175,000 barrels of crude oil per day to Enbridge’s Mainline system at Cromer, Manitoba.
Proceeds from the sale will be used by Enbridge to re-invest in its $9bn portfolio of projects including the Wood Buffalo Extension, Athabasca Twin and Norlite projects.
Schuldhaus added: “Importantly, the funds generated by this disposition will be sufficient to meet all of the Fund’s currently anticipated equity capital requirements through 2017 to support the organic growth that we expect will drive 10 percent annual increases in ENF’s dividend through 2019.”
Upon completion of the deal, the private midstream company will have over 250,000 barrels per day of crude oil production from Saskatchewan, Manitoba and North Dakota.
Subject to customary closing conditions, including the Canada Transportation Act and Canadian Competition Act approvals, the transaction is planned to be completed by the end of this year.
Earlier this month, Enbridge agreed to acquire US based firm Spectra Energy for C$37bn ($28bn) in a bid to create the largest energy infrastructure company in North America.
Source: (September 30, 2016) Energy Business Review
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