Veresen Inc. (FCGYF, VSN.T) and Kohlberg Kravis Roberts &
Co. (KKR.XX) have reached an agreement to buy some natural-gas
assets in Canada's Montney region from Encana Corp. (ECA, ECA.T)
and Mitsubishi Corp.'s Cutbank Dawson Gas Resources Ltd.
The two companies, under the joint partnership Veresen Midstream
Limited Partnership, have agreed to spend up to 5 billion Canadian
dollars (about $4.29 billion) to expand the operations in the
Montney region in northeastern British Columbia under a 30-year
fee-for-service arrangement.
The deals, expected to close in the first quarter, would give
Veresen Midstream about 500 kilometers of gas-gathering pipelines
and 675 million cubic feet per day of compression capacity in the
Dawson region along with a 200 MMcf/d Saturn compression station
that is under construction and other construction work in
progress.
This infrastructure currently gathers Encana and CRP's Montney
gas production and delivers it to various processing facilities,
including Veresen's Hythe and Steeprock plants.
Veresen said it would fund its equity position in the
partnership through the Hythe/Steeprock assets, valued at C$920
million(or about $790.2 million), with Veresen Midstream refunding
the amount above its C$500 million position ($429.4 million). KKR,
meanwhile, will contribute C$500 million in cash.
Under the agreement, Encana would--at least initially--continue
to manage construction and operations under a contract with Veresen
Midstream.
Veresen said the deal wouldn't affect its per-share profit
projection for the year.
Write to Maria Armental at maria.armental@wsj.com
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