Pembina announces another pipeline, promises to make more money,
Pembina Pipeline Corporation to acquire Alberta Oil Sands Pipeline Ltd.
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08:46 EST Thursday, November 01, 2001
/Not for distribution to United States Newswire Services or dissemination
in the United States/
CALGARY, Nov. 1 /CNW/ - Pembina Pipeline Income Fund (TSE - PIF.UN) announced today that its wholly owned subsidiary, Pembina Pipeline Corporation, will acquire 100% of the shares of Alberta Oil Sands Pipeline Ltd. (AOSPL) from AEC Pipelines, L.P., for $225 million cash. The transaction will close on December 31, 2001 subject to conditions customary for transactions of this nature, including receipt of regulatory approvals. The AOSPL transaction is an important strategic addition to Pembina's existing pipeline business, providing stable long term, contract-based returns and significant, low risk development potential.
AOSPL is the exclusive transporter for the Syncrude Project, shipping synthetic crude oil for the Syncrude Participants who include: AEC Oil Sands, L.P., AEC Oil Sands Limited Partnership, Canadian Oil Sands Investments Inc., Conoco Oil Sands Partnership, Imperial Oil Resources, Mocal Energy Limited, Murphy Oil Company Ltd., Nexen Inc., and Petro-Canada. The Syncrude Project, the world's largest producer of crude oil from oil sands, currently produces about 223,000 barrels per day (bpd) supplying 13% of Canada's petroleum requirements. The AOSPL pipeline system, which commenced operations in 1977, consists of 430 kilometers of mainline originating at Syncrude's production facilities north of Fort McMurray, Alberta and terminating at the transportation hub in Edmonton, Alberta. Other assets include pipeline loops and laterals, pumping and control equipment and the Redwater Pipeline.
An extensive multi-year expansion of Syncrude's processing and production facilities is currently underway, expected to double production by 2008 and enhance product quality. The expansion, referred to as "Syncrude 21", commenced in 1996 and the first two of four consecutive expansion stages are substantially complete. The Stage Three expansion, expected to increase production to 368,000 bpd by 2005, is currently in progress and Stage Four, slated for completion in 2007, is projected to increase production growth to 470,000 bpd. Pembina will participate in this significant growth via phased in expansion of AOSPL.
AOSPL transports synthetic crude oil for the Participants in the Syncrude Project under the terms of a long-term transportation agreement, which expires at the end of 2035 and may be extended beyond that date. The agreement provides for attractive returns on current and future invested capital as well as full recovery of all operating costs.
Robert B. Michaleski, President and Chief Executive Officer of Pembina, stated that, "This transaction provides Pembina the unique opportunity to participate in Canada's largest oil project. The addition of this asset to Pembina's existing network of pipeline operations will significantly benefit our Unitholders by providing important diversification of our business, spreading exposure between conventional crude oil and natural gas liquids and very long life oil sands reserves. These assets will contribute a low risk, long term component to our distributable cash flow stream." The transaction firmly establishes Pembina's prominent role in Canada's pipeline industry. On a pro forma basis, combined daily throughput for 2001 is expected to average about 735,000 barrels per day, generating revenues in excess of $225 million.
Mr. Michaleski also commented that, "We expect that incremental cash flow generated by the acquired assets will underpin Pembina's Unitholder distributions for many years to come, and will be accretive particularly following the completion of the Stage Three expansion in 2004."
Arrangements are in place with a Canadian chartered bank for the underwriting of a syndicated credit facility to finance the transaction and future capital requirements. Pembina will consider a public offering of securities within twelve months, the net proceeds of which will be used to reduce acquisition bank debt.
TD Securities Inc. is acting as exclusive financial advisor to Pembina with respect to this transaction.
This news release contains forward-looking statements that involve risks and uncertainties. Such information, although considered reasonable by Pembina at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated in the statements made. For this purpose, any statements that are contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such risks and uncertainties include, but are not limited to risks associated with operations, such as loss of market, regulatory matters, environmental risks, industry competition, and ability to access sufficient capital from internal and external sources.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction. No securities of Pembina Pipeline Income Fund have been registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold in the United States absent registration, or an applicable exemption from the registration requirements of such Act.
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For further information: Ms. Glenys Hermanutz, Manager, Investor Relations, Pembina Pipeline Corporation, (403) 231-7427, 1-888-428-3222, e-mail: investor-relations@pembina.com; To request a free copy of this organization's annual report, please go to newswire.ca and click on reports@cnw.
Does anybody think we should wait until they announce financing to buy, or just buy it now, it looks like a nice buy at these prices. |
