Canadian Natural Resources Limited (ticker: CNQ) said it has reached an agreement to sell all of its interests in the Cold Lake Pipeline to Inter Pipeline Ltd.
The transaction consists of the monetization of the Company’s entire 15% ownership interest of Cold Lake Pipeline Ltd. and its 14.7% ownership interest in the Cold Lake Limited Partnership. When the deal closes CNQ will receive gross proceeds of $350 million in cash and 6,417,740 common shares of Inter Pipeline at an ascribed value of $177.5 million for total value of approximately $527.5 million, the company said in a press release. The transaction is targeted to close in 2016. Canadian Natural said it retained BMO Capital Markets to act as financial advisor for the transaction.
Canadian Natural expects to record an after-tax gain on disposition of approximately $200 million, based upon preliminary value allocations.
To transport its Kirby North volumes, Canadian Natural has secured firm pipeline transportation capacity with Inter Pipeline for the Kirby North production and diluent volumes, with first production targeted for the first quarter of 2020. This will effectively integrate with the existing transportation arrangements for Canadian Natural’s producing Kirby South volumes. After completion of the sale, Canadian Natural will retain access to the Cold Lake Pipeline system for portions of its crude oil volumes.
Canadian Natural has a large land position in Western Canada and operations in the U.K. portion of the North Sea and Offshore Africa.