Energy infrastructure company AltaGas has announced a deal with Tidewater Midstream & Infrastructure to purchase Pipestone natural gas processing plants and a storage facility for 650 million Canadian dollars ($480.3 million). The acquisition will bolster AltaGas' position in Alberta's resource-rich Montney region.
Strengthening Operations in Alberta
Under the agreement, AltaGas will acquire the Pipestone phase I processing plant and phase II expansion project, the Dimsdale natural gas storage facility, the Pipestone condensate truck-in-truck-out terminal, and the associated gathering pipeline systems necessary for operating these assets.
Strategic Investment Decision
The purchase price represents approximately 7.2 times the estimated run-rate normalized earnings before interest, taxes, depreciation, and amortization. AltaGas expects the acquisition to increase its per-share earnings by 5% starting from 2025.
However, the completion of the deal is contingent upon Tidewater and AltaGas reaching a final investment decision regarding the second phase of the Pipestone project. In order to facilitate the development and construction of the project, both companies have agreed to establish a new joint venture.
AltaGas will pay a total of C$650 million for the acquisition, which will be divided into C$325 million in cash and approximately 12.5 million of its shares.
Benefits for Tidewater
Tidewater expressed that the sale of these assets will unlock value for its shareholders and strengthen its balance sheet. The proceeds from the transaction will be used for various purposes, including the repayment of its senior credit facility.