Veresen Midstream LP has completed its acquisition of certain natural gas gathering and compression assets supporting development in the Montney area of northeastern British Columbia from Encana Corp. and Cutbank Ridge Partnership for $461 million (Can.).
Veresen Midstream is a 50-50 partnership of Veresen Inc. and affiliates of Kohlberg Kravis Roberts & Co. LP. Cutbank Ridge Partnership (CRP) is a partnership of Encana and a subsidiary of Mitsubishi Corp.
The deal includes existing infrastructure comprised of gas gathering and compression facilities in the Dawson Creek area, consisting of 500 km of pipeline and 675 MMcfd of compression.
Under the terms of the agreement, Veresen Midstream will provide gathering and compression services to each of Encana and the CRP under separate fee-for-service arrangements in a dedicated area of mutual interest within the Montney resource play.
Veresen Midstream has agreed to undertake up to $5 billion (Can.) of midstream expansion to support development within the area of dedication. Encana will continue to operate the related facilities and lead future infrastructure construction on behalf of Veresen Midstream, which will oversee all commercial and other ownership activities.
“By unlocking value from these assets, we can redirect capital to strategic upstream opportunities, enhance our financial flexibility, and maintain involvement in facility construction and operatorship in one of our strategic growth areas,” said Renee Zemljak, Encana executive vice-president, midstream, marketing, and fundamentals.