Keyera to Acquire Deep Cut Gas Plant in West Central Alberta
CALGARY, March 17, 2014 /CNW/ - Keyera Corp. (TSX:KEY) ("Keyera") announced today it has entered into an agreement with Whitecap Resources Inc. ("Whitecap") to acquire ownership interests in certain gas processing assets in west central Alberta, and in the associated oil and gas reserves. Whitecap is initially acquiring these assets as part of a larger transaction. Total cost to acquire the assets from Whitecap is approximately $113 million. The acquisition is subject to typical closing conditions, and is expected to close on May 1, 2014.
As part of this agreement, Keyera will acquire the following:
- an 85% ownership interest in the West Pembina 6-28 gas plant (the "Cynthia gas plant");
- varying ownership interests in certain oil batteries, compressors and gathering pipelines associated with the Cynthia gas plant;
- a 4.6% ownership interest in the Bigoray gas plant, bringing Keyera's ownership in that facility to 100%; and
- Nisku reserves currently tied into the Cynthia and Bigoray gas plants.
"We are very pleased with the acquisition of the Cynthia gas plant and associated facilities, as well as increasing our ownership in the Bigoray gas plant to 100%," said David Smith, Keyera's President and Chief Operating Officer. "The Cynthia gas plant is well positioned to provide deep cut processing solutions for new gas production from the numerous geological zones currently under development in the area. We expect to interconnect the plant with other Keyera facilities in the area, in order to relieve processing constraints at those facilities and provide an enhanced level of service for all of our customers."
The Cynthia gas plant has a licensed capacity of 78 million cubic feet per day, and is located in west central Alberta near Keyera's Pembina North, Brazeau North and Bigoray gas plants. The plant has a turbo expander capable of extracting a deep cut of ethane rich NGLs ("C2+ mix") from the raw gas stream. The plant also has an acid gas injection facility that enables it to handle sour gas. Current throughput is approximately 46 million cubic feet per day, and is largely associated gas and NGLs from Nisku oil production in the area. Upon closing, Keyera expects to become the operator of the facility. A maintenance turnaround is scheduled at the plant for May 2014, at an estimated cost of approximately $10 million.
The oil batteries and compressors are integral to the delivery of natural gas and NGL production to the Cynthia gas plant, as are the gathering pipelines.
Along with the gathering and processing facilities, Keyera is acquiring reserves from the Nisku geological horizon, with the associated wells producing into the Cynthia and Bigoray gas plants. Production from these wells averaged approximately 8,700 barrels of oil equivalent per day in 2013, of which about one third was crude oil and NGLs and two thirds natural gas. Because the reserves are in the late stages of their life cycle, Keyera currently estimates the production decline rate to be between 25% and 30% annually and has no plans to drill additional wells. Rights of first refusal exist on portions of the reserves and certain surface assets associated with the production.
Keyera Corp. (TSX:KEY) operates one of the largest natural gas midstream businesses in Canada. Its business consists of natural gas gathering and processing as well as the processing, transportation, storage and marketing of NGLs, the production of iso-octane and crude oil midstream activities.
Keyera's gas processing plants and associated facilities are strategically located in the west central, foothills and deep basin natural gas production areas of the Western Canada Sedimentary Basin. Its NGL and crude oil infrastructure, including pipelines, terminals and processing and storage facilities, as well as its iso-octane facility, are located in Edmonton and Fort Saskatchewan, Alberta, a major North American NGL hub. Keyera markets propane, butane, condensate and iso-octane to customers in Canada and the United States.
This document contains forward-looking statements based on Keyera's current expectations and assumptions relating to its business, the environment in which it operates, its future operations and the performance of its assets, including the newly acquired Cynthia gas plant and associated reserves and facilities. As these forward-looking statements depend upon future events, actual outcomes may differ materially depending on factors such as: the exercise of rights of first refusal; producer interest in the services being offered; future operating results of the assets; the ability of Keyera to execute each of their strategic initiatives in connection with the facilities and reserves to be acquired; changes in production decline rates; weather conditions; commodity supply/demand balances and prices; activities of producers, competitors, customers, business partners and others; overall economic conditions; access to capital and financing alternatives; operational risks associated with gas plant operation and oil and gas production; turnaround scheduling and costs; environmental liabilities; and potential delays or changes in producer development plans in the area; the legislative, regulatory and tax environment; and other known or unknown factors. There can be no assurance that the results or developments anticipated by Keyera will be realized or that it will have the expected consequences for or effects on Keyera. The closing of this transaction is subject to clearance under Competition Act (Canada). There is no guarantee that such clearance will be received in a timely basis or at all.
For additional information on these and other factors, see Keyera's public filings on www.sedar.com. Unless otherwise required by applicable laws, Keyera does not intend to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
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