TSX:ALA - Post Discussion
Post by
retiredcf on Jun 14, 2024 8:26am
RBC
June 13, 2024
AltaGas Ltd.
Quick Take: Agreement with Birchcliff adds to LPG export tolling profile
TSX: ALA | CAD 30.72 | Outperform | Price Target CAD 34.00
Sentiment: Neutral
Our take
We view the agreement as a modest positive for AltaGas' shares due to the increase in long-term liquefied petroleum gas (LPG) tolling volumes that help de-risk the company's midstream segment, with no impact on AltaGas' processing profitability or take- or-pay contracting at the Gordondale plant.
Details
AltaGas' net profitability at Gordondale remains unchanged, while helping deliver benefits to Birchcliff. As part of the enhanced partnership, Birchcliff (TSX: BIR; Outperform; covered by RBC Capital Markets analyst Michael Harvey) will take over operatorship of AltaGas' 100%-owned Gordondale deep-cut gas processing facility. The agreement will allow Birchcliff to realize opportunities between the Gordondale plant and its 100%-owned and operated Pouce Coupe facility, including lower operating costs, reduced downtime and the optimization of natural gas liquids recoveries. The Gordondale and Pouce Coupe plants are pipeline connected, and are located roughly six miles apart.
No change to Gordondale's ownership or the existing take-or-pay contract. AltaGas intends to retain its ownership of the Gordondale plant, and the facility will continue to operate under the existing take-or-pay agreement, which will continue until at least December 31, 2032.
Additional long-term tolling agreements for AltaGas' LPG export business. Birchcliff has also entered into additional long-term tolling agreements covering the export of LPG volumes through AltaGas' global exports assets.
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