Published: December 19, 2023 | Share This

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Enbridge has entered into a definitive agreement to sell its 50 percent interest in Alliance Pipeline and its 42.7 percent interest in Aux Sable to Pembina Pipeline Corporation for a purchase price of $3.1 billion, including non-recourse debt at Alliance of approximately $0.3 billion, and subject to customary closing adjustments.

Alliance delivers liquids rich natural gas sourced in Northeast B.C., Northwest Alberta, and the Bakken region to Chicago. Aux Sable operates NGL extraction and fractionation facilities in both Canada and the U.S., with extraction rights on Alliance, offering connectivity to key U.S. NGL hubs.

“Pembina’s business is built around integrated, difficult-to-replicate assets that provide an enduring competitive advantage and unequaled market access for customers. Alliance and Aux Sable are world-class energy infrastructure assets and increasing our ownership in them will further strengthen our growing franchise,” said Pembina’s President and Chief Executive Officer, Scott Burrows.

“This is a rare opportunity to consolidate interests in these assets at an attractive valuation multiple, with cash flow accretion and significant synergy potential. Aligning with Pembina’s strategy, the acquisition grows and strengthens our existing franchise and provides greater exposure to resilient end-use markets. Pembina is well positioned to benefit from growing volumes in the WCSB driven by near term catalysts, including new West Coast LNG export capacity, expanded crude oil export capacity, as well as developments in the Alberta petrochemical industry,” added Burrows.

“Pembina has enjoyed a strong relationship with Enbridge throughout our six years as partners in Alliance and Aux Sable,” said Pembina’s Senior Vice President and Chief Operating Officer, Jaret Sprott.

“Enbridge is a world-class company, with similar values focused on safety, people, customers, and the communities in which we operate. With this Acquisition, I look forward to welcoming Enbridge employees to Pembina, enhancing our relationship with Williams and strengthening our growing franchise and integrated service offering,” added Sprott.

The sale price represents an attractive valuation of approximately 11 times projected 2024 EBITDA for Alliance and approximately 7 times for Aux Sable, which is in line with other commodity exposed businesses.

“We are pleased to continue our strong track record of surfacing value for shareholders through an ongoing capital recycling program. With this divestiture, we will have raised ~$14 billion since 2018 at attractive valuations,” said Enbridge EVP and Chief Financial Officer, Pat Murray.

“Today’s transaction reinforces our disciplined approach to capital allocation. We remain committed to optimizing our portfolio, enhancing our industry leading cash flow profile by reducing commodity price exposure, bolstering our financial flexibility, and maintaining a strong balance sheet,” added Murray.

As part of the transaction, Pembina, a long-standing partner on Alliance and the current operator of Aux Sable, will also assume operatorship of Alliance. Enbridge will work closely with Pembina to ensure a safe and orderly transition.

“The Alliance and Aux Sable system has been a reliable and profitable asset for Enbridge for many years. We would like to thank our high-quality team for their commitment to safety and reliability,” said Enbridge EVP and President, Gas Transmission and Midstream, Cynthia Hansen.

The divestiture represents an important element of Enbridge’s financing plan. The sales proceeds will fund a portion of the strategic U.S. gas utilities acquisitions and be used for debt reduction. Any remaining acquisitions funding will be satisfied through utilizing any, or all, of the following financing programs available to Enbridge including our ongoing capital recycling program, issuance of further hybrid securities and bonds, reinstatement of their DRIP Program, or at-the-market equity issuances. 

The closing is expected to occur in the first half of 2024, subject to the receipt of regulatory approvals and customary closing conditions.

Pembina Pipeline Corporation is a leading energy transportation and midstream service provider that has served North America’s energy industry for more than 65 years. Pembina owns an integrated network of hydrocarbon liquids and natural gas pipelines, gas gathering and processing facilities, oil and natural gas liquids infrastructure and logistics services, and an export terminals business. Through its integrated value chain, they seek to provide safe and reliable energy solutions that connect producers and consumers across the world, support a more sustainable future and benefit customers, investors, employees and communities.

Enbridge safely connects millions of people to the energy they rely on every day, fueling quality of life through North American natural gas, oil, or renewable power networks and its growing European offshore wind portfolio. They’re investing in modern energy delivery infrastructure to sustain access to secure, affordable energy, and building on two decades of experience in renewable energy to advance new technologies including wind and solar power, hydrogen, renewable natural gas, and carbon capture and storage. They’re committed to reducing the carbon footprint of the energy they deliver, and to achieving net zero greenhouse gas emissions by 2050.

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