Pembina Pipeline joint venture to acquire midstream assets from Veren for C$400M

Pembina Pipeline (PBA) announced that Pembina Gas Infrastructure, or PGI, a Western Canadian focused gas processing entity jointly owned by Pembina and KKR (KKR), has entered into agreements with Veren Inc. and certain affiliates thereof that include the acquisition of Veren’s Gold Creek and Karr area oil batteries and support for future infrastructure development. The net purchase price related to the acquisition of the batteries is C$400M. PGI will acquire four batteries in the Gold Creek and Karr areas, which include natural gas handling capacity of 320M cubic feet per day and liquids handling capacity of 53,000 barrels per day. Natural gas from the batteries is processed at PGI’s Patterson Creek Gas Plant and both the batteries and the Patterson Creek Gas Plant are connected to Pembina’s Peace Pipeline system. Veren will retain operatorship of the acquired assets, with operating costs and maintenance capital flowing through to Veren. Veren will also assume operatorship of the existing PGI-owned batteries in the area. Additionally, PGI will fund up to C$300 million, of which approximately one-third has already been committed, for Veren’s future battery and gathering infrastructure in the area. Veren will construct and operate the batteries, and PGI will construct and operate high pressure gathering pipelines. Veren will enter into a 15 year take-or-pay agreement for capacity at the acquired batteries, which also includes an area-of-dedication to PGI for gathering and processing services for all volumes Veren produces out of the Gold Creek and Karr areas. Anticipated annual adjusted EBITDA associated with the acquisition of the batteries is initially expected to be approximately C$50M. Further capital deployment in support of commitments will generate incremental contracted EBITDA from corresponding fees and increased plant utilization. The transaction will initially be funded using PGI’s existing credit facility. Closing is expected to occur in the fourth quarter of 2024 and is subject to the satisfaction or waiver of customary closing conditions, including all required regulatory approvals.