Pembina Gas Infrastructure (PGI) has agreed to acquire four oil batteries in the Montney Formation, Alberta, Canada from Veren (formerly Crescent Point Energy) for C$400m ($295m).
The deal also includes a long-term partnership involving infrastructure assets in the region.
Pembina Gas Infrastructure, a joint venture between Pembina Pipeline and KKR, focuses on gas processing in Western Canada. Pembina Pipeline’s contribution to the transaction amounts to C$240m.
Pembina Gas Infrastructure president and CEO Chris Rousch said: “We are thrilled to enhance and further align our strategic partnership with Veren, a top-tier growth-focused Montney and Duvernay producer. This transaction demonstrates how our collaborative approach to infrastructure solutions creates a compelling value proposition for our customers.”
The four oil batteries are located in the Gold Creek and Karr areas. They have a combined natural gas processing capacity of 320 million cubic feet per day and a liquids handling capacity of 53,000 barrels per day.
The natural gas from these batteries will be processed at Pembina Gas Infrastructure’s Patterson Creek Gas Plant. Both the batteries and the Patterson Creek Gas Plant are connected to the Peace Pipeline system owned by Pembina Pipeline.
Veren will retain operational control of the acquired oil batteries, with associated operating costs and maintenance capital remaining with it. The company will also take over the management of existing Pembina Gas Infrastructure-owned batteries in the area.
Pembina Gas Infrastructure will invest up to C$300m, approximately one-third of which is already committed, to support Veren’s future battery and gathering infrastructure in the region.
Veren will be responsible for constructing and operating the new batteries, while Pembina Gas Infrastructure will handle the construction and operation of high-pressure gathering pipelines.
In addition, Veren will enter into a 15-year take-or-pay agreement for capacity at the acquired batteries. This agreement includes an area-of-dedication for Pembina Gas Infrastructure, covering gathering and processing services for all volumes produced by Veren from the Gold Creek and Karr areas.
The transaction is expected to close in Q4 2024, subject to standard closing conditions and regulatory approvals.
CIBC Capital Markets is advising Veren on financial matters, while BMO Capital Markets is providing strategic advice for the transaction.
