CALGARY, March 17, 2014 /CNW/ - Keyera Corp. (TSX:KEY) ("Keyera")
announced today it has entered into an agreement with Whitecap
Resources Inc. ("Whitecap") to acquire ownership interests in certain
gas processing assets in west central Alberta, and in the associated
oil and gas reserves. Whitecap is initially acquiring these assets as
part of a larger transaction. Total cost to acquire the assets from
Whitecap is approximately $113 million. The acquisition is subject to
typical closing conditions, and is expected to close on May 1, 2014.
As part of this agreement, Keyera will acquire the following:
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an 85% ownership interest in the West Pembina 6-28 gas plant (the
"Cynthia gas plant");
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varying ownership interests in certain oil batteries, compressors and
gathering pipelines associated with the Cynthia gas plant;
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a 4.6% ownership interest in the Bigoray gas plant, bringing Keyera's
ownership in that facility to 100%; and
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Nisku reserves currently tied into the Cynthia and Bigoray gas plants.
"We are very pleased with the acquisition of the Cynthia gas plant and
associated facilities, as well as increasing our ownership in the
Bigoray gas plant to 100%," said David Smith, Keyera's President and
Chief Operating Officer. "The Cynthia gas plant is well positioned to
provide deep cut processing solutions for new gas production from the
numerous geological zones currently under development in the area. We
expect to interconnect the plant with other Keyera facilities in the
area, in order to relieve processing constraints at those facilities
and provide an enhanced level of service for all of our customers."
The Cynthia gas plant has a licensed capacity of 78 million cubic feet
per day, and is located in west central Alberta near Keyera's Pembina
North, Brazeau North and Bigoray gas plants. The plant has a turbo
expander capable of extracting a deep cut of ethane rich NGLs ("C2+
mix") from the raw gas stream. The plant also has an acid gas
injection facility that enables it to handle sour gas. Current
throughput is approximately 46 million cubic feet per day, and is
largely associated gas and NGLs from Nisku oil production in the area.
Upon closing, Keyera expects to become the operator of the facility. A
maintenance turnaround is scheduled at the plant for May 2014, at an
estimated cost of approximately $10 million.
The oil batteries and compressors are integral to the delivery of
natural gas and NGL production to the Cynthia gas plant, as are the
gathering pipelines.
Along with the gathering and processing facilities, Keyera is acquiring
reserves from the Nisku geological horizon, with the associated wells
producing into the Cynthia and Bigoray gas plants. Production from
these wells averaged approximately 8,700 barrels of oil equivalent per
day in 2013, of which about one third was crude oil and NGLs and two
thirds natural gas. Because the reserves are in the late stages of
their life cycle, Keyera currently estimates the production decline
rate to be between 25% and 30% annually and has no plans to drill
additional wells. Rights of first refusal exist on portions of the
reserves and certain surface assets associated with the production.
About Keyera
Keyera Corp. (TSX:KEY) operates one of the largest natural gas midstream businesses
in Canada. Its business consists of natural gas gathering and
processing as well as the processing, transportation, storage and
marketing of NGLs, the production of iso-octane and crude oil midstream
activities.
Keyera's gas processing plants and associated facilities are
strategically located in the west central, foothills and deep basin
natural gas production areas of the Western Canada Sedimentary Basin.
Its NGL and crude oil infrastructure, including pipelines, terminals
and processing and storage facilities, as well as its iso-octane
facility, are located in Edmonton and Fort Saskatchewan, Alberta, a
major North American NGL hub. Keyera markets propane, butane,
condensate and iso-octane to customers in Canada and the United States.
Disclaimer
This document contains forward-looking statements based on Keyera's
current expectations and assumptions relating to its business, the
environment in which it operates, its future operations and the
performance of its assets, including the newly acquired Cynthia gas
plant and associated reserves and facilities. As these forward-looking
statements depend upon future events, actual outcomes may differ
materially depending on factors such as: the exercise of rights of
first refusal; producer interest in the services being offered; future
operating results of the assets; the ability of Keyera to execute each
of their strategic initiatives in connection with the facilities and
reserves to be acquired; changes in production decline rates; weather
conditions; commodity supply/demand balances and prices; activities of
producers, competitors, customers, business partners and others;
overall economic conditions; access to capital and financing
alternatives; operational risks associated with gas plant operation and
oil and gas production; turnaround scheduling and costs; environmental
liabilities; and potential delays or changes in producer development
plans in the area; the legislative, regulatory and tax environment; and
other known or unknown factors. There can be no assurance that the
results or developments anticipated by Keyera will be realized or that
it will have the expected consequences for or effects on Keyera. The
closing of this transaction is subject to clearance under Competition
Act (Canada). There is no guarantee that such clearance will be
received in a timely basis or at all.
For additional information on these and other factors, see Keyera's
public filings on www.sedar.com. Unless otherwise required by applicable laws, Keyera does not intend
to publicly update or revise forward-looking statements, whether as a
result of new information, future events or otherwise.
SOURCE Keyera Corp.
