Tidewater Midstream Deal with TransaltaI am thinking this deal should benefit BBI indirectly.
Agreement with TransAlta to construct Inter-Alberta Pipeline Network
Tidewater Midstream and Infrastructure Ltd. (“Tidewater”) (TSX:TWM) and TransAlta Corporation (“TransAlta”) (TSX:TA) (NYSE:TAC) announced today that the two companies have entered into a Letter of Intent (“LOI”) for Tidewater to construct a 120 km natural gas pipeline from its Brazeau River Complex (“BRC”) to TransAlta’s generating units at Sundance and Keephills. The pipeline is expected to cost approximately $150 million and is supported by a 15 year take or pay agreement with TransAlta.
The pipeline will provide initial capacity of 130 MMcf/d by 2020, and have expansion capability to 340 MMcf/d, which represents approximately 50% of TransAlta’s gas requirements at full capacity of the generating units at Sundance and Keephills. Under the LOI, TransAlta has the option to invest up to 50% in the pipeline.
“Construction of the natural gas pipeline supports our strategy of being a low-cost provider of firm, clean and reliable energy”, said Dawn Farrell, President and Chief Executive Officer of TransAlta. “In addition, having greater access to natural gas allows TransAlta to blend natural gas with the coal, prior to fully converting the units, allowing us to take advantage of low natural gas prices and reduce our carbon costs.”
“Tidewater is excited to enter into a long term arrangement with TransAlta which is supported by a 15 year take or pay agreement that provides oil and gas producers throughout Western Canada with direct connectivity to a new, large demand source”, said Joel MacLeod, President and Chief Executive Officer of Tidewater. “This agreement with TransAlta enables Tidewater to transport production direct from the wellhead through Tidewater’s extensive natural gas processing and storage infrastructure network direct to an end market.”
Proposed issuance of senior unsecured notes
Tidewater intends to issue, subject to market and other conditions, a proposed private placement of senior unsecured notes (the “Notes”).
Tidewater intends to use the net proceeds from the offering for a non-permanent repayment of indebtedness under Tidewater’s existing credit facility, drawn to fund its various capital projects, and for general corporate purposes.
The Notes will not be qualified for distribution to the public under the securities laws of any province or territory of Canada and may not be offered or sold in Canada, directly or indirectly, other than pursuant to applicable private placement exemptions. The Notes will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the Notes in any jurisdiction.
Deep Basin and Montney region acquisition
Tidewater’s previously announced acquisition of certain assets in the Deep Basin and Montney region for net cash consideration of $34 Million, subject to customary adjustments, has closed in escrow. Final closing of the transaction is subject to regulatory license transfer approvals and is expected to occur in December 2017. An immaterial portion of the assets is being held in escrow pending resolution of a right of first refusal challenge.