[Context: On February 8, Canada Pension Plan Investment Board-backed Wolf Midstream announced plans to acquire an Alberta-based crude oil pipeline and terminal for $1.52bn. Further details and related links are below.]
WOLF MIDSTREAM | CPPIB
Wolf Midstream Inc. to Acquire Remaining 50% Interest in Access Pipeline; Wolf to hold 100% ownership interest in Access Pipeline
CALGARY, Feb. 8, 2018 /CNW/ – Wolf Midstream Inc. (Wolf) announced today that it has signed an agreement with MEG Energy Corp. (MEG) to acquire MEG’s 50% ownership interest in Access Pipeline (Access) and 100% ownership interest in the Stonefell Terminal for $1.52 billion plus capital commitments of approximately $90 million. With this acquisition, Wolf will become the 100% owner and operator of Access. Wolf completed the acquisition of its initial 50% interest in Access in October 2016. The transaction includes an initial term commitment of 30 years from MEG with respect to transportation services on Access and the use of the Stonefell Terminal.
In addition to the 30-year agreement, MEG and Wolf have established commercial parameters for the conversion of Access’ additional 16-inch unutilized pipeline to transport natural gas liquids. This agreement is in support of MEG’s proprietary ongoing enhanced bitumen recovery process and has allowed MEG to secure rights to a substantial portion of that pipeline’s capacity. This unutilized pipeline extends from the Sturgeon terminal in Alberta’s Industrial Heartland to the Christina Lake area.
The Access Pipeline system includes pipelines that transport blended bitumen and diluent between the Christina Lake area of Northeastern Alberta and Edmonton. The Stonefell Terminal connects MEG’s production facilities, through the Access system, to additional distribution connections, serving as a launch point for large volumes of blended products to reach multiple markets.
“With this transaction, Wolf will be well-positioned to expand Access Pipeline’s capacity for both bitumen blend and diluent to serve its two core customers and third-parties, as well as extend service through the unutilized 16-inch pipeline, now made possible through 100% ownership,” said Gord Salahor, Wolf’s Chief Executive Officer. “We are pleased to enter into this long-term partnership with MEG as it continues to grow its high-quality Christina Lake Project and with the opportunity to provide new market options for natural gas liquids in support of enhanced bitumen recovery initiatives for MEG and others.”
The transaction will be funded at closing by Wolf through an investment by Canada Pension Plan Investment Board (CPPIB) of up to $800 million and third-party debt financing.
The transaction is subject to regulatory approvals along with customary terms and conditions. Closing is expected in the first quarter of 2018. CIBC Capital Markets acted as lead financial advisor, RBC Capital Markets acted as left lead debt underwriter and also acted as a financial advisor and Norton Rose Fulbright Canada LLP acted as legal advisor to Wolf on this transaction.
About Wolf Midstream Inc.
Wolf is a private company based in Calgary dedicated to building, owning, and operating energy infrastructure in Western Canada. Wolf was formed in 2016 with an equity investment from CPPIB to focus on acquisition and development opportunities in Western Canada. Wolf management has a long and successful track record of operating energy infrastructure assets having previously led Mistral Energy Inc. and Taylor NGL Limited Partnership (formerly TSX: TAY.UN).