Plains All American Pipeline crude oil storage tanks in West Odessa, Texas. (Angus Mordant/Bloomberg News)
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Keyera Corp. agreed to buy Plains All American Pipeline’s Canadian natural gas liquids business and some U.S. assets for C$5.15 billion in cash — about $3.8 billion U.S. dollars — significantly bulking up its pipeline system around the country.
Plains ranks No. 64 on the Transport Topics Top 100 list of the largest private carriers in North America and No. 11 among petroleum/chemical carriers.
The assets include more than 1,500 miles of pipeline infrastructure with capacity of more than 575,000 barrels a day, the Calgary-based gas and natural gas liquids midstream company said in a statement. Keyera expects to generate C$100 million in savings from the acquisition and boost distributable cash flow by a mid-teens percentage in the first year.
The deal — Keyera’s largest ever — will raise the company’s enterprise value as much as 46% to C$19 billion when it closes in the first quarter of next year, CEO Curtis Setoguchi said.
Foreign companies have been exiting the Canadian energy industry or reducing their exposure by selling assets to local companies. The deal gives Keyera operations in both eastern and western Canada, including processing capacity, storage infrastructure and truck and rail terminals. Income that had been going to the U.S. will now stay in Canada, Setoguchi said.
“Not only will it be under Canadian management — Canadian decision-makers’ hands — we will deploy that money in Canada now,” he said.
The transaction has been in negotiations for six months, but Keyera has been interested in the Plains assets for the past decade, he said. Keyera was able to strike the deal after paying down about C$500 million of debt, Setoguchi said.
For Plains, the deal helps make it more of a pure-play crude oil midstream play, and the company plans to use the proceeds for bolt-on acquisitions and buying back preferred and common shares.
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