AltaGas Ltd. has closed the previously announced acquisition of the Pipestone Assets, including: 1) the Pipestone Natural Gas Processing Plant Phase I and Phase II expansion project (individually, "Pipestone Phase I" and "Pipestone Phase II"); 2) the adjacent Dimsdale Natural Gas Storage Facility; 3) the Pipestone condensate truck-in/truck-out terminal; and 4) the associated gathering pipeline systems (collectively, the "Pipestone Assets") from Tidewater Midstream and Infrastructure Ltd. ("Tidewater"). Following the completion of key de-risking milestones, AltaGas has also declared a positive final investment decision ("FID") on the Pipestone Phase II expansion project.
PIPESTONE PHASE II FULLY CONTRACTED; CONSTRUCTION TO BEGIN IN 2024
The Pipestone Phase II expansion project is now 100 percent contracted under long-term take-or-pay agreements with a combination of marquee independent and investment grade producers. All Pipestone Phase II customers who are existing Pipestone Phase I customers have also agreed to multi-year contract extensions, further improving the long-term commercial profile of the Pipestone Assets.
With inclusion of these new agreements, the Pipestone acquisition is strongly risk accretive to AltaGas with the Company's take-or-pay and fee-for-service Midstream EBITDA mix set to increase by an estimated six percent with a commensurate decrease in commodity exposed EBITDA, once Pipestone Phase II comes online. In aggregate, more than 90 percent of the Pipestone Assets' normalized EBITDA1 is expected to come from take-or-pay or fee-for-service based contracts.
Given recent engineering and procurement de-risking steps taken, AltaGas is excited to move forward with sanctioning Pipestone Phase II. The expansion project will be constructed on a fixed price turnkey basis for the majority of the capital costs and will deliver critical gas processing and liquids handling capacity in the Pipestone region, which is one of the fastest growing liquids-rich natural gas developments in Canada.
TRANSACTION STRENGTHENS ALTAGAS' FOOTPRINT IN LIQUIDS-RICH ALBERTA MONTNEY
The Pipestone Assets strengthen AltaGas' midstream value chain through an expanded footprint in the Alberta Montney and provide meaningful long-term Liquified Petroleum Gas ("LPG") supply for the Company's global exports platform. The transaction is expected to be five percent EPS accretive and 0.1x net debt to normalized EBITDA1 accretive, once Pipestone II comes online.
"Closing this transaction and reaching a positive FID on Pipestone Phase II significantly strengthens our position in one of Canada's most prolific resource plays" said Vern Yu, AltaGas' President and CEO. "This acquisition is consistent with our long-term strategy through adding long-life infrastructure assets with highly contracted take-or-pay and fee-for-service revenue. The transaction also diversifies our customer base, brings meaningful long-term LPG supply to our global exports platform, and provides long-term growth through the Pipestone Phase II expansion and has the potential for additional expansion phases."
AltaGas welcomes its new customers, employees, contractors, and other stakeholders as part of this acquisition and looks forward to working together. The Company is excited to continue to support the robust growth in the Alberta Montney with key gas processing, liquids handling, and gas storage assets, all with global LPG connectivity that will facilitate the best outcomes for the Canadian energy industry.
