Encana Corporation (“Encana”) and the Cutbank Ridge Partnership (“CRP”), a partnership between Encana and a subsidiary of Mitsubishi Corporation, have completed the previously announced sale of certain natural gas gathering and compression assets supporting development in the Montney area of northeastern British Columbia to Veresen Midstream Limited Partnership (“Veresen Midstream”), a 50/50 limited partnership of Veresen Inc. and affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR”). Total cash consideration to Encana is approximately C$461 million.
Under the terms of the agreement, Veresen Midstream will provide gathering and compression services to each of Encana and the CRP under separate fee-for-service arrangements in a dedicated area of mutual interest within the Montney resource play. Veresen Midstream has agreed to undertake up to C$5 billion of new midstream expansion to support development within the area of dedication. Encana will continue to operate the related facilities and lead future infrastructure construction on behalf of Veresen Midstream, which will oversee all commercial and other ownership activities.
“By unlocking value from these assets, we can redirect capital to strategic upstream opportunities, enhance our financial flexibility and maintain involvement in facility construction and operatorship in one of our strategic growth areas,” says Renee Zemljak, Encana Executive Vice-President, Midstream, Marketing & Fundamentals. “We are pleased to establish a relationship with KKR and build upon our existing midstream relationship with Veresen as we continue our development in the Cutbank Ridge Partnership area.”
The transaction includes existing infrastructure comprised of gas gathering and compression facilities in the Dawson Creek area, consisting of approximately 500 kilometres of pipeline and 675 million cubic feet per day of compression.
Encana is a leading North American energy producer that is focused on developing its strong portfolio of resource plays, held directly and indirectly through its subsidiaries, producing natural gas, oil and natural gas liquids (NGLs). By partnering with employees, community organizations and other businesses, Encana contributes to the strength and sustainability of the communities where it operates. Encana common shares trade on the Toronto and New York stock exchanges under the symbol ECA.