Pembina Pipeline Corporation (NYSE:PBA) shares are trading higher after the company disclosed that its joint venture, Pembina Gas Infrastructure Inc. (PGI), reached agreements with Veren Inc. and its affiliates.
PGI is a Western Canadian-focused gas processing entity jointly owned by Pembina and KKR & Co. (NYSE:KKR).
The deal includes the acquisition of Veren's Gold Creek and Karr area oil batteries, with a net purchase price of CAD$400 million (CAD$240 million net to Pembina), and supporting future infrastructure development.
In particular, PGI will acquire four batteries in the Gold Creek and Karr areas, with a natural gas handling capacity of 320 million cubic feet per day and a liquids handling capacity of 53,000 barrels per day.
As per the deal, Veren will retain operatorship of the acquired assets, including covering operating costs and maintenance capital. Additionally, Veren will take over the operation of the existing PGI-owned batteries in the area.
Also, Veren will enter into a 15-year take-or-pay agreement for capacity at the acquired batteries. This agreement includes an area-of-dedication to PGI for gathering and processing services for all volumes Veren produces from the Gold Creek and Karr areas.
PGI will also provide up to CAD$300 million for Veren's future battery and gathering infrastructure in the area, with about one-third of this amount already committed.
Pembina expects the acquisition to generate an initial annual adjusted EBITDA of around CAD$50 million (CAD$30 million net to Pembina).
The deal is anticipated to close in the fourth quarter of 2024, pending the fulfillment or waiver of standard closing conditions.
Investors can gain exposure to the stock via VanEck Energy Income ETF (NYSE:EINC).
Price Action: PBA shares are up 1.74% at $41.17 at the last check Monday.
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