Bellatrix Exploration has entered into an agreement to sell a 35% minority interest in the O'Chiese Nees-Ohpawganu'ck deep-cut gas plant at Alder Flats (Alberta, Canada) to Keyera Partnership, one of the current co-owners of the Alder Flats Plant, for cash consideration of CAD112.5 million (US$86.8 million).
Bellatrix is currently a 60% owner in the Alder Flats Plant, which has a design inlet capacity of 230 mmcf/d and is being developed in two phases. Phase 1 was commissioned in May 2015 and Phase 2 is currently under construction and scheduled for completion in the first half of 2018. Phase 2 is expected to have a design inlet capacity of 120 million cubic feet per day.
As part of the transaction, Bellatrix and Keyera will enter into a midstream services and governance agreement pursuant to which Bellatrix will have exclusive access to the purchased capacity (approximately 80.5 mmcf/d post commissioning of Phase 2) for a term of 10 years, and will remain the operator of the Alder Flats Plant.
Following completion of the transaction, Bellatrix will retain a 25% interest in the Alder Flats Plant, and will also have the option to reacquire a 5% interest in the Alder Flats Plant near the end of the final year of the agreement at a cost of CAD8 million (US$6.2 million) and Keyera will own 70% of the plant.
The acquisition is subject to typical closing conditions and is expected to close in August. Bellatrix intends to use the cash proceeds from the transaction to partially repay indebtedness outstanding under its syndicated credit facilities.
David Smith, Keyera's President and Chief Executive Officer, stated:
"Keyera is pleased to increase our ownership interest in a fully-utilized gas plant within our core operating area and to continue our partnership with Bellatrix. The acquisition is expected to be immediately accretive to Keyera's distributable cash flow per share, which creates value for our shareholders. With strong geology supporting producer activity in the area, the Alder Flats Plant is expected to remain a core gathering and processing asset for Keyera and a cost-effective, networked processing solution for area producers over the long term."